Computer Software Update

• By Bob Radvanovsky, Deborah V. DiBenedetto
• Mar 01, 2006

All HME businesses are not the same. Because of product mix, insurance mix, size of the business and ownership or location, software needs can very greatly. What do you need to consider before purchasing software?

First, take into account what your product and customer mixes are and what areas you might want to grow over the next three to five years. Do you need electronic claims to the DMERCs/Medicare, Medicaid or Blue Cross Blue Shield for your state? Do you need a POS solution with the software for walk-in retail or bar coding? Do physicians in your area utilize CMS?

Always have training done by the software company.

Next, evaluate your current software and set priorities for new systems. Are there any weaknesses in your current software? What would make your job easier? What areas of your business are consistently difficult to manage? Ask employees for their input. In general, a good program should handle 80 percent of the general features on your list and all of the "must do" features. Be prepared to compromise on the remaining 20 percent.

For most HME businesses, the two areas where the most money is tied up are inventory and accounts receivable. Good HME software program should help you:

• Track inventory (minimum quantity levels trigger automatic ordering through an integrated purchase order system, serial numbers for sale and rental items, tracking lot numbers for oxygen cylinders).
• Track scheduling maintenance and depreciation on rental items.
• Send electronic claims to Medicare, Medicaid and other third-party carriers.
• Track A/R aging by patient and carrier.
• Generate a Day Sales Outstanding (DSO) report to track on average how long it takes from the date of service until claim billing, from billing until payment, and from date of service until payment.

Interview Vendors

Find out everything you can about a vendor before buying. How many active customers do they have? How stable is the company? Is it publicly or privately held? How many new systems were sold last year? How many customers did they lose last year? How many programmers are devoted full-time to development, fixing bugs and regulatory issues? Are they involved in the HME industry (involved in state and national associations)? Are they an approved consultant with VGM?

Training: HME is the most complicated billing in the health care industry. So, good training is absolutely vital to the accurate operation of any program. Is their training computer-based, DVDs, online, phone, classroom, on-site, and why? How many people do they train in each method? What training is included in the purchase price? How much is additional or onsite training? Are travel costs involved?

Train everyone who will use the system in any way. They should understand how each base file is set up and how it affects the order, claim and reporting process. Always have training done by the software company. Training only key people and relying on them to train others is like playing the gossip game. You can never purchase too much training!

Support: What is the average response time on calls to their service center? What is the ratio of support reps to customers? How many full time support people are dedicated to HME? What's the cost, how often is it billed and what does it cover (software support, bug fixes, updates)? When was the last time the cost was increased and when might it increase again? How is software updated?

Program Features: Ask, "How can this program help my business?" Ask a vendor to provide its three strongest and weakest features. Also ask for at least three references that have similar size systems and similar product mixes. These don't necessarily have to be in your area.

Outline Costs and Payment Options

Some vendors sell software in modules, so you can purchase only what you need. Others sell software bundled with a set number of users — generally the more users, the more it will cost. Some companies offer online systems that are accessed via the Internet. Upfront costs may be lower, but ongoing monthly payments add up.

To compare apples to apples, ask for proposals that contain all the software features and users needed, not with any hardware or optional costs included. You may be able to negotiate a discount if you are spending $10,000 or more. Membership in a buying group or state HME association member may also get you a discount. Also, are there fees for converting your current data from the old program?

Decide how best to pay for new software. Maybe you have the cash flow to pay cash. Credit cards are an option, but seek out low interest rates. If you have a good relationship with your local bank, financing may cost you the least. For those who do not want to tie up a line of credit, leasing can be an excellent option. It's sometimes easier to get than a bank loan, but costs more. If you purchase a significant amount of inventory from some wholesalers, they often will offer to finance a system for you at low or no interest.

Conversion and Transition

Finally, when switching software, don't forget about data conversion and transition. Understand exactly what the new vendor can (or can't) convert. Understand, too, you should run both old and new systems for a while. It can take six to seven months to get all of the billing out of your old system. Set up a schedule to add information to the new system to ensure the exchange is accurate and complete. Once you go live with your new system, don't put any new orders into your old system.

This article originally appeared in the March 2006 issue of HME Business.