Software in Hard Times

Government entities hammered homecare companies with unprecedented audit pressure in 2011, a trend that forced providers to improve business processes in the form of more and better software. Mickey Letson felt the market forces firsthand in the form of raw sales numbers—flat for most of the year, with a significant uptick at the end.

As a veteran of more than two decades in the technology world, Letson, the CEO of Dream Software in Southaven, Miss., attributes the late-year market swing to a growing awareness among providers that the challenges are here to stay.

“Everyone began to realize that competitive bidding was real,” Letson said. “It is not going away, and government is going to continue to push it through. Medicare is looking for continued cuts, and auditing pressure is going to continue. Providers decided that they needed to make a change.”

Shrinking Reimbursement Drives Market

Lawrenceville, Ga.-based Brightree LLC added more than 500 providers to its customer base in 2011, and Chris Watson, chief marketing officer, agrees that shrinking reimbursement is the biggest reason.

“The cost of doing business is going up due to audits and other factors,” Watson said. “While providers are looking at competitive bidding driving a 25 percent reimbursement reduction in key products, they can also count on gaining back most of this just through the efficiencies enabled by Brightree.”

Watson believes that survival in today’s market demands a move away from manual systems, inefficient processes and poor reporting capabilities.

“While many providers will deal with implementing the competitive bidding program in 2013, they will also have to cope with ICD-10, which is an expansion to tens of thousands of additional diagnosis codes,” Watson warned. “With a modern SaaS-based software platform such as Brightree, providers will at least know the technology side of that challenge is handled for them.”

Many HME companies that operate on outdated billing systems think they can wait to move to a modern business management platform. In today’s market, Watson maintains that making the “all-in” commitment should not be delayed.

“The window of opportunity to adjust to new market realities is closing,” she said. “Providers need to decide now if they can effectively contract with the government and health care partners and continue to operate in a market defined by significant reimbursement reductions in 2013. There is opportunity from more patients needing care, but reimbursements per product are declining. There is new math in the HME market. Now is the time for bold strategic moves, and having the right software is a critical step.”

New Math for Tough Times

Part of the new market math includes collecting copayments, a time-worn tradition in other facets of medicine, but still not ingrained in the homecare world. Kevin Winkley, president, Strategic AR, points out that these relatively small payments add up, and should not be overlooked.

A focus on automation, integration, patient billings and collections led to a “good” year for Winkley’s Overland Park, Kansas-based company, and he hopes to maintain momentum by focusing on the details of the market.

“The whole concept of collecting copays and patient payments was not that important in the past,” he says. “Providers could make enough money on Medicare and insurance and did not want to lose clients. That has been turned upside down, and margins are shrinking. In today’s market, providers must be more efficient from a patient billing perspective, and have an effective way to collect copayments.”

Choosing DME-Specific Software 

Coming off a “very good” year, Gregg Timmons, president and CEO, MedAct Software, believes providers will continue to move toward DME-specific software. From his McKinney, Texas-based operations, Timmons has seen a significant increase in DME providers leaving subscription-based DME software setups for ownership-based models.

“This model delivers better flexibility, customization and lower total cost of ownership,” he said. “Whether these DME providers run their purchased software in the cloud or onsite, the cost and flexibility advantages are enormous and deliver measurable business benefits over software rental models that continue to increase in cost.”

Timmons defines value as delivering measurable business efficiencies and savings at the “best total cost of ownership.” He maintains that streamlined claims processing can dramatically reduce transaction costs over traditional clearinghouse options.

Bold claims are common in the crowded software field, and Timmons cautions customers to ask the right questions before making any investment.

“Can the vendor demonstrate, in your current workflow, where their software can save you time and money?” Timmons asked. “Can they quantify these savings and provide a documented economic benefit assessment broken down by workflow? Conversations and demonstrations are interesting, but where’s the beef?”

Avoiding “technology for technology’s sake” is another hurdle to navigate, with software companies putting in “cool” features that have little or no impact on efficiencies or market competitiveness.

“It’s the traditional software battle where company X has 45 features and company Y has 52 features,” Timmons said. “Company Y wins, right? Wrong. Technology advancements and features need to demonstrate clear and quantifiable business benefits.”

Systems that Demand Accuracy

Solving problems at the beginning of the billing process is one way to avoid headaches down the road.

“Our system will not let you bill unless you indicate you have your proof of delivery document signed,” said Jay Williams at Spartanburg, S.C.-based software company QS/1.

As a 20-year veteran of the HME sector, Williams has seen the evolution of the software market, with providers relying on quick document access more than ever. QS/1 provides document imaging for electronic retrieval, but also interfaces with software companies MedFORCE and RemitData in certain cases.

The cooperation among competitors is another sign of a market that can accommodate partnerships depending on the particular needs of companies.

“We capture signatures electronically in the store and in the field, and apply that to the documents,” Williams added. “That makes it easier in case of audits.”

Cut Staff or Save Staff?

The right software should allow providers to accomplish more without the need to add extra employees. Cutting staff may also be an option, but switching existing employees to market-expanding tasks can boost business.

Spencer Kay, president, Fastrack Healthcare Systems, Plainview, N.Y., helped a customer last year who had intended to cut employees, but instead kept staffing levels steady while boosting the bottom line. “His revenue had gone up 30 percent with the same number of people,” Kay said. “In a sense, the system did make him more productive in that he did not have to hire new people. It’s often not a question of eliminating employees, but instead putting them in places where they can be more productive. In some cases, people switch from billing to marketing calls.”

In 2011, Fastrack experienced substantial revenue increases beyond 2010, thanks to many companies looking to do more with less—or more with existing employees.

“Companies that had custom systems also realized that it was too difficult to maintain the systems, especially with the new 50/10 requirements (new requirements on how to transmit claims as of January 1 from the old 40/10) and with the upcoming ICD-10 codes,”  Kay explained. “The combination of all these changes made a lot of those kinds of companies concerned with how they were going to maintain their in-house systems.”

Ultimately, the familiar concerns about competitive bidding drove providers to seek technology in an effort to decrease operating costs and increase productivity.

“In this market, you can’t continue to do business the same old way,” Kay said. “You need a true enterprise system that takes advantage of technology, and we saw a lot of companies coming to us for that exact reason.

“You need to do more with the same or fewer people,” Kay continued. “You can’t control the reimbursement rate, but you can control operating costs, and also become more competitive in the market. You can win new contracts and show managed care organizations why they should choose you over their competitors.” 

Experts Weigh In

Mickey Letson
Dream Software
“Medicare is looking for continued cuts, and auditing pressure is going to continue. Providers decided that they needed to make a change.”

Chris Watson
Brightree
“Now is the time for bold strategic moves, and having the right software is a critical step.”

Gregg Timmons
MedAct Software
“Technology advancements and features need to demonstrate clear and quantifiable business benefits.”

Kevin Winkley
Strategic AR
“In today’s market, providers must be more efficient from a patient billing perspective, and have an effective way to collect copayments.”

Jay Williams
QS/1
“We capture signatures electronically in the store and in the field, and apply that to the documents. That makes it easier in case of audits.”

Spencer Kay
Fastrack Healthcare Systems
“You need a true enterprise system that takes advantage of technology, and we saw a lot of companies coming to us for that exact reason.