NCB Turns Technology into Front-Burner Issue

LAS VEGAS (May 7, 2007)–Industry experts say the launch of national competitive bidding means the latest technology for running their businesses must also be a front-burner issue for providers.

“With competitive bidding, you have to operate at your top efficiency,” said Sarah Hanna, vice president of ECS Billing & Consulting, Tiffin, Ohio. Both to determine their bid and stay profitable if they win, Hanna said, providers must be able to analyze the cost of every aspect of their businesses–from getting products to patients to billing and working denials.

“Technology is of utmost importance because, ultimately, it makes you become more efficient,” she said.

Miriam Lieber, president of Lieber Consulting, Sherman Oaks, Calif., added that, with competitive bidding, CMS is asking for providers’ revenue by Medicare, by product, and for revenue outside of Medicare–all reported on a quarterly basis. With software that tracks such data automatically, a provider can simply generate a report, but “how am I going to do that if I’m not automated?” she questioned.

Both industry consultants and technology providers alike noted that many of the technological solutions HME providers are only beginning to consider are standard practice in other industries. So what’s kept providers from embracing them?

Bently Goodwin, CEO of Memphis, Tenn.-based RemitData, thinks one reason is “there’s just a lot more money” in other health care segments. But he said it’s also because–at least until now–most HME providers haven’t had to.

“There are certainly those providers out there that do embrace technology in this industry, but as a whole I think they’ve failed to do it … simply because, up until now, the margins have been acceptable and they could get by without doing it,” Goodwin said. “They have not seen up until now the competitive forces that are much stronger in other industries.”

Goodwin said providers need to look at payroll costs and how to reduce them through productivity gains, which can be achieved by automating certain procedures. For example, he said, tweaking existing software or getting updated software can cut down the time to get claims out by 30 percent; going paperless can reduce the time spent finding and viewing documents by 50 percent; and routing delivery drivers more efficiently can result in 15 to 20 percent more deliveries per month per rep.

“That’s where the savings are going to come,” Goodwin said. “For most DMEs after cost of goods sold, payroll cost is their single-biggest line item, and that’s where there are opportunities to save and get their margins smaller.”

John Festa, president and CEO of Atlanta-based CareCentric, gave a similar assessment.

“There isn’t a lot of margin between the manufacturer down to the DME,” Festa said. “It’s on better process improvement where he’s getting more cash faster and higher collection rates based on what he’s allowed to get by more efficient operations. There’s a lot more to be garnered there than worrying about another 5 percent on the equipment side.”

Providers who haven’t looked at technology solutions “have no choice now,” said Nancy Burma, president of Minneapolis-based Alternative Billing Solutions, acquired by CareCentric last year. “While the focus has been on patient care, in order to survive [providers] have to look at better ways of doing their compliance programs, their accreditation, their billing, their collection. It’s demanded now.”

If this year’s Medtrade Spring was any indication, providers are coming to that realization.

“If there was a buzz word for this year, I’d say it was technology,” Mike Mallaro, CFO for Waterloo, Iowa-based VGM, said at the Las Vegas show. “There’s lots of interest in technology, whether it be online training, GPS, more efficient billing, automatic follow-up systems–anything that could help [providers] take costs out of running their businesses.”

According to Lieber, it may ultimately be a matter of sink or swim.

“It’s imperative and essential that every provider be automated in order just to maintain any level of efficiency whatsoever,” she said, “but also simply to stay afloat in our environment.”