Products & Technology

Beautiful Music

How software can help providers keep operations humming along.

• By David Kopf
• Feb 01, 2010

Like a well-rehearsed band, when provider operations smoothly mesh together, the resulting efficiency and productivity can be music to the HME’s ears. However, while many providers can carry a pretty good “operations tune,” the current funding environment had forced many providers to put their operations on the main stage.

With a focus on driving down costs, reinforcing margins and maintaining cash flow in an almost hostile funding and regulatory landscape, smooth operations are a critical element of HME success. And to make that happen, providers are leveraging their software systems to deliver an operations virtuoso performance. To that end, software can optimize some central elements of HME operations:

• Purchasing
• Inventory control
• Deliveries
• Repair, service and maintenance
• Rentals
• Billing

Like the sections of an orchestra, each of these elements must harmonize with the others, and software serves as the conductor to unify them into one cohesive symphony. When they do, it’s beautiful music, and it’s a tune that any provider can carry.

Purchasing and Inventory

For all the regulatory aspects of this industry, providing DME comes down to product, and how providers maintain and replenish their inventory is critical. Fortunately software can be a big help in this aspect of provider operations.

“This is primarily and inventory business,” says Spencer Kay, president of HME software company Fastrack Healthcare Systems Inc. “A major way to control costs is through controlling your inventory; being able to move it quickly, stay on top of what you have in stock.”

Controlling inventory is not only important in terms of managing overhead costs, but also in ensuring patient satisfaction, Kay says. Providers must optimize their inventory management “so that they can delivery the product quickly to the patient when they need something.”

One of the main ways software can drive cost out of the inventory process is through automation, and in that regard, the process must be automated from beginning to end. “It really starts from the purchasing aspect,” Kay says.

HME software should automatically submit electronic purchase orders to vendors when certain DME products reach a certain threshold. So, when a heavily requested product gets below a certain amount in inventory, the system automatically places an order. But why not take it one step further? “We can even indicate drop shipments, so that the product automatically ships to the customer, which is a major cost saving,” Kay says.

For example, Fastrack recently announced an alliance with a service called cpapdropship.com that lets providers on the Fastrack system use their HME software to consolidate their CPAP refill orders and have them drop shipped to each patient’s address. From that point forward, the provider simply needs to bill.

The cpapdropship.com service provides name brand CPAP masks and accessories that can be shipped same day. Providers using the service can combine different manufacturer’s masks, filters, chinstraps and chambers, as well universal 6-foot CPAP tubing in a single order. Orders are then shipped with the provider’s company information and logo on the packing slip to maintain branding.

Of course, drop shipping can make some feel nervous, given that their patients’ care quality could be at stake if it is handled improperly. (We’ve all heard and read stories about inappropriate DME being shipped to patients.) Ultimately, Kay says the key to successful drop shipping is to research prospective partners and suppliers to make sure they are committed to top-drawer patient care. This is what Fastrack did when establishing a relationship with cpapdropship.com, he adds.

“We researched this company heavily to make sure they are doing a good job,and we have clients that were using them,” he says. “They make sure everything gets shipped and do a lot of the compliance work. So they are staying on top of the patient and ensuring they get their regular shipments.”

Additionally, software systems can be used to automate sending purchase orders to vendors. “Even if you bring the product in house, you can get back an order acknowledgement and a shipping acknowledgement,” Kay explains. “And if a product is a drop shipped, we can automatically confirm that delivery has taken place … and also we can receive the invoice [from the manufacturer or distributor] automatically.”

Getting back to controlling inventory in regards to purchasing, when providers are entering orders, they should be able to see what is in stock and what DME has been allocated to other orders. If there is an emergency situation, the provider should be able to amend the allocation to address the urgent need, Kay says.

And if something needs to be purchased at the time of order entry — say, an item that the provider doesn’t normally keep in stock — HME software can provide tools to help the provider generate a purchasing requisition that can be sent to the purchasing department.

Another important aspect of controlling inventory is providing warehouse staff with the tools that can help them rapidly update inventory records while they are doing their jobs. This is where handheld devices can help, Kay says. Warehouse staff, equipped with wireless PDA-type devices can be notified electronically when an order is placed and can pick the products per the order.

“When the person in the warehouse picks the product, he or she scans it and the system verifies that they have picked the right product,” Kay says adding that this updates the inventory and ensures the warehouse has picked the correct item. Moreover, on receiving a shipment, staff can scan incoming DME, which updates the system. “Inventory is update in real-time so that the customer service person will automatically see that a wheelchair — or whatever the product might be — came in, and they can sell that product immediately, because they know it is in stock,” he says.

And, of course, a handheld device can be used to conduct physical inventory at a site. Staff can simply walk the warehouse, scanning DME (including serial numbers and lot numbers) as they go, in order to ensure the system has an accurate count of the provider’s entire inventory, as well as to highlight any discrepancies, Kay adds.

Rentals

Of course, a key aspect of HME operations is managing rental equipment, a process that some providers still manage manually. “In 2009 I still heard of HME providers that were keeping track of their rentals on file cards,” says Brian Williams, Marketing Manager of HME software company Computer Applications Unlimited.

When it comes to rental management, the key software benefit is, again, automation. Software can automate the billing and re-billing of rental equipment each monthto ensure cash-flow. This could also mean sending out new bills for weekly or even daily rentals, he notes, adding that for the most part, those latter examples, as well as daily per diems, are typically related to hospice contracts.

Like other aspects of HME software and operations, the key is to implement as much automation. However that automation can be tricky when the nuances of funding are involved. Software should be able to address the finer points of DME rental. This means that, for instance, the rental capabilities of HME software need to adhere to the various capping criteria that is associated with some DME and some payors, Williams explains.

“You want to be able to create a relationship between a specific payor and a specific rental item, he says, “so that you can account for that capping. In other words, if Medicare caps an item at 15 months, maybe Blue Cross Blue Shield caps it at 12 months, well, you don’t want to bill Blue Cross Blue Shield for three months and get denied.

“You want to be able to turn [the equipment] into a purchase, or pick it up and deliver a new rental,” Williams continues. “Software can take care of that for you automatically with a ‘service due’ report on any serialized piece of equipment that might be in the field.”

For example a provider can look at what rental service equipment is due for repair in a given geographical area, and add it to the technicians’ routes for the following week. Service and maintenance can be scheduled without anything falling through the cracks.

Providers can manage their rental equipment from a financial history perspective, as well. When a piece of DME is brought into the inventory, the provider can attach its purchase cost. As the serialized rental equipment is used, maintained, repaired, returned and rented out again, the provider will have a complete picture of that equipment, not only from a purely mechanical or operation perspective, but also in terms of its depreciation.

“This makes things a lot easier for your accounting, because it is being taken care of right in your HME software,” Williams explains. “That’s really the only way to accurately define a sales margin report; if you have those kinds of numbers available. Those sales margins reports are a huge advantage; to be able to look at a slice of time — whether it be a month or a quarter — and say, ‘Well in this product category we’re doing pretty good, but in this product category, I’m not even sure if we want to continue because it’s actually costing us month.’”

And, of course the documentation within a piece of DME’s serialized history also has other value beside financial information. For instance, the history can document when the DME was received by a patient, as well as its service history and any service notes. This can be particularly hand when a provider needs to offer documentation in order to return a product to a manufacturer for defect or warranty repair.

In another nod to the nuanced nature of the homecare business, the service history aspects of an HME software packages rental features should also record different information for different types of DME.

For example, software would have to produce an oxygen concentrator form so that the HME could log the number of hours of use, the date the last time it was serviced, and other specific elements of service that pertain just an oxygen concentrator. “So the software records that for you, and you’re not updating that data manually,” Williams says.

Delivery

Another large element of HME operations — and overhead — is delivery. Providers are constantly rolling trucks to deliver HME to patients, pick up equipment, effect repairs in the field, and distribute supplies and medical oxygen. Needless to say, the expense is monumental, and any way that providers can drive down this cost is critical.

Fortunately, software can help. Some key ways are through route planning tools that optimize delivery routes, and systems that leverage GPS to maximize driver efficiency. However, while intelligence at the back office is critical in orchestrating such an operation, it also pays to put intelligent solutions in the field, as well.

“We’re seeing a big need to perform multiple functions in the field, and equip drivers with information about their deliveries, and the ability to receive changing information during the day so they can effectively and efficiently fulfill deliveries that come in during they day, as well as routing from the start of the day,” says Mike Clark, director of operations for Definitive Homecare Solutions, which makes the CPR+ software solution for the HME industry. “So, what we’re focusing on is handheld devices, and our first product focus is using smart phone devices.”

IN this scenario, a driver takes a smart phone out into the field and uses it to access a route for the day’s delivers, patient information, mapping tools, and — most importantly — delivery tickets, right on the device, Clark says. Plus the driver can receive real-time updates to the delivery schedule, and if his or her truck is carrying the inventory, the order is automatically added to that driver’s route, and the driver can confirm deliveries as they are made. In fact, CPR+ can treat a delivery truck as an inventory location.

“You can actually do an on-hand inventory for a truck, if you want,” says Ted McGraner, director of corporate education for Definitive Homecare Solutions. “We also know that based on the barcodes that were scanned on products as the truck was being loaded what inventory is on that truck and as that inventory is being delivered the serial numbers of that equipment are being associated with patient records.”

This solution not only turns the driver into essentially a mobile warehouse, but also could drastically improve an HME’s response time for emergency and other impromptu calls. And, with a driver that can confirm delivery in the field, and the ability to confirm delivery before the driver even returns, that means a claim can then be created.

“Providers are always under pressure to lower DSO and a lot of the focus for DSO is on the billing side, but we’re basically creating a mechanism to provide the service and literally generate a bill within seconds after that,” Clark says.

“We’re also looking at this from the patient service aspect of a delivery technician,” McGraner adds. “To have that person in the field have all notes about that patient, and, because of the smart phone capability, the ability to communicate information about that patient back to the office in real time.”

For CPR+, Definitive Homecare Solutions is deploying handheld devices for delivery technicians in two ways. With a smart phone approach, essentially any webenabled smart phone, such as an iPhone or Blackberry, will let the driver connect with the office via CPR+. The other approach, which can add some more functionality, is through ruggedized handheld units with the ability to perform tasks such as barcode scanning in the field, or signature capture for receipt of DME. With the ruggedized handhelds, special software resides on the device to handle the additional functionality.

On the dispatch side, both the smart phone and the handhelds can take advantage of GPS tracking so that dispatch can see where drivers are at in their routes and field patient calls and let them know what a driver’s ETA will be.

Billing

No discussion of provider operations and software would be complete without discussing billing. Most HME software systems trace their origins to billing, and billing and the processing of claims clearly pervades nearly ever element of an HME business.

Naturally, HME software systems have aimed to automate as much of the billing process as they can, and, likewise, insurance payors are also trying to automate their billing as well. Providers and payors have come a long way since their early rehearsals.

“Electronic claims were mandated by HIPAA, but what we found real world was that everyone was sending claims to Medicare, but for everybody else they might be doing different things for different payors, because some were just hard,” says Gary Long, chief operating officer of HME software service provider Brightree. “What we’ve seen in 2009 is completing the cycle of getting those last payors on board electronically.”

As a consequence, another trend providers are seeing in billing is finally being able to chuck their 1980s-style modems in the trash. Similarly, the time-consuming process of batching detailed claims is starting to fade, which should prove to be a considerable time and money savings, especially for small- to mid-sized providers, Long says.

“Each little piece, when you stack one on top of another, is starting to make a difference,” he says. “This is helping them make fewer mistakes, but it’s a nickel here and a dime there, and there is also the labor piece. Probably the most evident benefit of billing software is labor savings.”

Now pieces of the billing cycle are being tightened up and providers are getting their remittances back, from not just Medicare, but also Medicaids and commercial payors. This represents a massive time and efficiency savings. The “old way” consisted of provider staff opening mail and manually posting payment. That said, there is still work to be done in order to gain full automation.

“There were three pieces of pain related to that in 2009,” Long says. “One, simply getting an electronic remittance from the payor back to the DME. Next, loading the remittance in the system automatically. And the third piece is matching the ERA to the original claim that was sent out so that providers can do what we call auto post.

“This has been the revolutionary type of thing that’s happened in 2009 for DMEs,” he continues. “And this is saving them — if you added it up over the year — weeks of labor; some people were doing this work every day of the week. Just within Brightree, our users have gone from zero to doing half a million of these a month in just 10 months. It’s just been dramatic.”

This article originally appeared in the February 2010 issue of HME Business.