HME Today: Assuming that the second round of competitive bidding goes forward for providers in the 70 named MSAs, how can software help round two bidders submit lower bids while surviving reduced Medicare allowables?

Esther Apter, president and CEO of MedFORCE Technologies Inc and Healthcare Management Solutions Inc, Chestnut Ridge, NY: Submitting the appropriate bid involves a complex set of questions that providers in these areas must ask. I don't want to trivialize the issues providers face by making the supposition that computer technology alone can solve their problems. What I do know is, making the appropriate bid is a combination of knowing your costs for delivering specific products and services, and then submitting a bid that allows you a margin of profit that you can survive on. After providers have analyzed their costs, it will be necessary, in most cases, to begin finding ways to reduce operational expenses—and computer technology can assist in this endeavor.

Esther Apter

K. Mark Blount

Brian Williams

Using computer technology such as document imaging, patient management systems, electronic remittance notices, and workflow management solutions (to name a few) provides unequaled efficiencies. In some circumstances, providers have found that they have been able to remove as much as 20% of their overall overhead expense, and up to 40% in particular areas of their business.

With solutions that have an ROI that can be measured in months, it makes the move to computer technology a simple choice to make. You must do it to survive. Most of the large and successful providers have already embraced technology and are building their business around it.

Kent Barnes, director of marketing at TeamDME!, Nashville, Tenn: To bid low, providers will need to truly understand their cost of doing business. It is imperative that provider software be able to report the financial standing of the business and take into account all operating costs. Providers must streamline all business practices and reduce bottlenecks. The only way to do that is to use software that can automate the process and alert providers of possible problems. It will also be crucial for providers' claims to be billed and paid quickly, with as few denials as possible.

K. Mark Blount, vice president of marketing, Brightree Inc, Duluth, Ga: For providers to prepare a smart bid that will allow them to serve customers effectively while remaining profitable, they must have accurate data. If they are tracking this information, it is typically located in their billing/inventory software system. The first area where data will be invaluable is pricing. Providers should run reports from their software to gather the following: 1) the cost of the inventory products; (2) the current billing price; and (3) the amount that is reimbursed on these products. This data can be used to calculate the average cost of product and payment received. The provider should also account for overhead costs and projected profit to generate an accurate bid price.

Another important consideration to the competitive bid process is capacity. To estimate projected capacity, providers can extrapolate based on actual data from their software (such as number of patients serviced, number of those who are on Medicare, number of products in the category serviced, and how many of these products were for Medicare patients) along with staff/workforce numbers. Once current capacity is derived, the provider will be able to identify projected growth and then develop the path for handling that growth, if awarded the contract.

The biggest issue we hear from DME companies using other software products is that the accurate tracking of cost and inventory data is "challenging" in their current software. The top reasons cited include: (1) too hard to use the inventory module; (2) the data long ago became inaccurate and providers don't have the knowledge/training to fix the data; and (3) they have not developed policies and workflow to update this information in their system as they sell items.

The bottom line today is that many providers are not effectively tracking their inventory, capacity, or average costs; and this will become problematic for them if competitive bidding continues to roll out.

Brian Williams, director of sales and marketing for Computer Applications Unlimited (CAU) Inc: HME software should allow providers to easily trend sales margins for the affected product categories to confidently submit workable bids (or not). Providers can use powerful business analysis reporting to determine their optimum payor mix, strategic product mix, how the company can become more efficient, and, ultimately, which direction the company needs to go.

HME Today: What are the most common misconceptions among providers who are looking to add or upgrade software?

Apter: One of the most difficult misconceptions concerns cost and implementation. A typical objection to introducing a new solution into existing processes is that the cost of the solution cannot be justified. However, when you analyze the operational expense of running a provider office, the picture becomes quite clear. Running an inefficient, outdated manual process costs you exponentially more than a software solution that automates the process.

Implementation can be a hassle given the number of agendas that are on provider plates right now. However, most software vendors like ourselves have made a science of making the process seamless with day-to-day operations—and in some cases it is just like flipping a light switch.

Barnes: One misconception is that finding the right software package is going to solve all business problems. Software sales representatives have a tendency to tell potential clients that they can solve all of their problems, when they really do not understand all of the complexities or the way a provider may be doing business. Many times, providers have not really taken the time to evaluate their business requirements. Providers should talk to their staff and listen to their wants and needs, to find out what is required to make their jobs easier and more productive.

Another common misconception is assuming that your staff is computer literate, and thinking that they will not need training on different aspects of how the new program works. Ensure that your team is trained properly even if it is an extra expense and requires additional time. Trying to use a new program the way you think it should work may cause a greater loss of time and money.

Blount: First and foremost: Software only comes on a CD-ROM inside a jewel case covered with shrink-wrap. Incorrect. More and more business-class software companies are delivering cutting-edge software solutions "as a service" via secure Internet connectivity with customer support and upgrades included.

One of the biggest benefits of this type of solution, typically called "ASP," "on-demand," or "software as a service" (SaaS), is that users only need a computer with Internet connectivity to use all of the functionality, anywhere, 24-7. No downloads, no servers, no networking issues, no data backups, no disaster recovery to worry about. This is the predominate platform of today and tomorrow, because it takes full advantage of the Internet and the mobile computing movement that is all around us. This paradigm shift is occurring in all industries, and HME is no exception. HME providers are enjoying the same economies of scale and productivity gains as financial, travel, and other industries saw in the late 1990s.

Second misconception: You have to buy software. False. Yesterday's model was all about software with a large upfront price tag, indefinite maintenance and support fees, and additional charges for upgrades. When coupled with required hardware and an IT person to manage everything, this suddenly became a huge expense. ASP/on-demand/SaaS products are different as you license the product monthly. It's a service, not a purchase. And everything an HME owner needs is typically included in the monthly fee—such as upgrades, updates, support, backups, a centralized electronic claims platform, price table updates, and more.

Last misconception: Getting three vendor references is enough to ensure I've done my homework. Wrong. Ask each software vendor for 10 customer references and at least 20 printed testimonials (including contact names and company names). You may not call all of them, but see how the vendor reacts to your request. See if they can actually come up with 10 satisfied customers they are willing to have you talk with.

Don't waste your time asking for three. Remember that everyone has a few loyal friends. Take the time to make calls. Create a scoreboard for each product based on the criteria that are most important to you, such as features, uptime, customer support, training, frequency of new releases, ease of use, and mobile computing. You'll be glad you did.

Williams: I once wrote an article describing how I was transformed, kicking and screaming, from a completely manual 1980s radio program/music director into an avid computer user. Software saved me countless hours, made our 50,000 FM watt station sound better, and resulted in increased ratings/market share.

The point is that I'd been successfully rotating music with index cards long before computers, and I didn't want to change. We've helped some HME providers with the same transformation. We love hearing from our clients who sound so much happier!

From another perspective, the CEO of a fairly large HME provider once told me that changing software was similar to having a fire. Although his staff was using outdated software, he didn't want to disrupt the current flow. He knew we offered better software, but no amount of savings and ROI data would change his mind.

New or upgraded software will never equal a silver bullet; only the right people implementing new or upgraded software makes the difference. Those companies tell tremendous success stories.

HME Today: What are the biggest benefits of adopting and using excellent software?

Apter: The key word in this question is "excellent." All software packages provide some form of solution to problems that providers are dealing with. However, some create as many problems as they solve. Excellent software packages are designed for easy implementation and quick adaptation by provider staff, and have a strong service and support function behind their solution.

The biggest benefits to providers are reduced human resource expense, with the ability to reclaim and reallocate personnel to other necessary tasks after old processes have been automated or eliminated by technology. In addition, cash flow is positively increased by providing a shorter days sales outstanding (DSO) and eliminating payment delays from government and commercial payors. Each provider benefits in numerous ways, some more significant than others, but the overall picture is that all providers need technology to survive in the upcoming environment.

Barnes: Using excellent software gives you a better way to integrate all of your business processes such as accounting with sales, customer service, inventory, and purchasing. Many providers just think of their software as billing, but it should do much more than that. Using excellent software will enable you to work faster on everyday tasks and identify and solve complex challenges that are faced daily with accreditation and government regulations.

Blount: Having an excellent business management solution is critical to improving workflow efficiencies, reducing DSO, and increasing profit margins. Today in HME, "excellent software" translates to Internet-hosted solutions (typically called ASP) where providers focus on patient care and increasing referrals as opposed to managing all the hassles and complexities associated with maintaining a system in-house. ASP solutions increase providers' productivity and savings because the ASP manages all of the technology centrally—including physical/electronic security, data backups, branch networking, price tables, electronic claims transmissions, and updates.

HMEs own their data and can download it at anytime, but the ASP manages it within HIPAA guidelines. The ASP model also streamlines technical support because the Internet eliminates technological compatibility issues and allows the ASP's support technicians to troubleshoot from within the user's system, improving resolution time.

ASP solutions not only provide anytime/anywhere access to mission-critical information, but also serve as centralized ecosystems. These ecosystems enable collaboration between geographically diverse workforces and external applications/services for mobile business management, e-commerce, seamless outsourced billing, and automated transmission of electronic claims (eliminating the onus on billers to manually batch claims files and transmit via dial-up modems).

The biggest plus of ASP is the platform. A pure Internet backbone means there is a single technical and business connection to communicate with outside parties. This opens up a multitude of possibilities and allows for a virtual HME ecosystem of valuable services. On a similar front, ASP companies regularly implement one change or make one call that benefits all unique companies on their platform. That's like an ASP providing one central real-time FTP connection to Medicare instead of providing one modem connection for each of their 1,000 customers. The economies of scale are astronomical for ASPs. You can see the true power of the Internet from this one simple example.

In 2007, 60% of providers who changed systems moved to an ASP solution. Most admit that they are reinvigorated because they can now focus their energies on patient care and increasing their referral base instead of wrangling with stand-alone billing/inventory systems. Given the ASP trend, it's no surprise that older systems are trying to retrofit their DOS/Windows-based programs with Internet functionality to play in this new market. However, HMEs should beware that true ASP solutions, by definition, must be 100% browser-based to reap the benefits. For instance, retrofitted systems typically require a download on every PC before accessing data via the Internet, which can decrease speed and security while increasing technology headaches.

Williams: In HME, software—whether you define it as client/server-based, as Web-based, or even as an online billing service—is a tool that helps providers get paid faster and keeps costs down. That sounds simple, but we all know how complex this industry has become. That's why only mature, user-friendly HME software can help providers to attain those two goals.

From incontinence to sleep, mobility to retail, or diabetes to oxygen, providers need certain criteria to bill the accurate parties the accurate amounts. As payors change those criteria, providers need to trust that their software vendor will properly update their systems.

Providers must determine how long it takes employees to manually submit bills, post payments, perform a physical inventory, process an ABN, convert enteral nutrition to Medicare billing units, and add payor contracted pricing, etc. Armed with that data, providers can easily determine their own biggest benefits of ending manual tasks and allowing employees to use excellent software to perform those tasks.