Selecting and Implementing the Proper HME Software Program

This is the third and final part of a series on how to select and implement the proper HME software program for your business. In Part one in the March 2004 issue, we covered reasons that companies were looking for new HME software, what basic features a good HME software program should provide and we asked you to develop a list of features that you believe are important for your business. In Part two in the Sept. 2004 issue, we looked at who you are and what factors makes your HME software program better than your competitors program.

In this article, we will explore the question: What does it cost? We also will take a look at data conversion and lastly, the implementation of the system.

What does it cost?

There are many things that go into the cost of a system. Are you purchasing just software? Are you adding additional training? What about adding new hardware? Customers want to know how much the software will cost. Some software vendors sell their software in different modules, so that you have to purchase only what you need. If you do that, then you are not paying for modules that you never use. Other companies sell their software bundled with a set number of users, the more users you purchase, the more the software will cost. Some companies offer to sell you their software and some will lease or rent it to you by accessing the software over the Internet. This usually means lower upfront costs, but with a monthly payment that never ends, you will find that you pay significantly more than if you purchased the software outright.

When you ask what it costs, you need to make sure that when you get quotes or proposals from different vendors that you compare apples to apples. Make sure that the proposals contain all of the software features you are looking for and make sure the vendor has proposed the proper number of simultaneous users to meet your needs. If one vendor quotes software only, while another quotes a package deal that includes hardware, software and training, make sure that you get a software-only quote from the latter vendor, even if you end up purchasing the package deal. Make sure they contain the same quantity of training. If the trainer is coming to your facility or town to train, you need to ask who covers the trainer's travel expenses—you or the software vendor. If you are paying for travel expenses, you need to see what that includes: transportation (airfare or mileage), car rental, hotel and meals. If you are traveling to a vendor's training facility, you need to see if they cover any of the transportation, hotel or meal costs. Be careful because some software vendors are located in cities that may be expensive to travel to or from. Make sure that you include all of these travel expenses. Lastly, make sure that you include annual charges for support and any other optional services that you might need like Medicare Allowables, ICD-9 Codes, UPIN numbers, OCNA numbers and inventory databases. Don't forget to include any fees for converting data from your old computer software program. Find out if you are required to have Internet access via dial up, DSL or cable modem. You may have to have a dedicated phone line for transmitting claims to Medicare or Medicaid. Don't forget to consider the following costs: hardware, software, training, travel expenses, support, Internet access and phone line charges.

Some software vendors are like Carmax or the Saturn dealer. The price on the window is their price and there is no negotiating. But other vendors sometimes offer discounts. Typically, if you are purchasing under $5,000 there will be little or no discount. If you are spending $10,000 or more on software and training (no hardware included), you can sometimes negotiate a 10 percent discount. If you are a member of VGM, The Med Group, AAHomecare or some state HME association, you may have an automatic discount, so don't forget to ask. If you get a discount from being the member of an organization, do not expect to get the other discount too.

Lastly, you need to decide how you are going to pay for your new software system. There are at least five options and each of them has pluses and minuses.

  • Method #1 Cash

  • This method is accepted by everyone; depending on your cash flow and financial strength, this may work for you or it can put a hit on your cash for a months depending on the size of your purchase. Sometimes vendors will take say 50 percent down, 25 percent at training and the balance 30 days later. To get terms like this, you will need to have a good credit history. Don't expect companies to give you terms if you don't pay your bills on time.
  • Method #2 Credit Card

  • Sometimes, when you don't have a lot of extra cash but you have credit cards with low interest rates, you can charge your purchase.
  • Method #3 Bank Loan.

  • If you have a good relationship with your local bank, this is a good option. Other than paying cash, this is normally the financing method that will cost you the least.
  • Method #4 Leasing.

  • For those who do not want to tie up their bank lines of credit with software and hardware purchases, leasing can be an excellent option. You can usually get in with one or two up front payments. Leasing does cost more than a local bank loan, but sometimes it is easier to get. VGM Financial is one of the best at doing leases to HME businesses. They understand that if you pay your bills net 60 to 90, you are not a bad credit risk but instead you are just a normal HME business.
  • Method #5 Wholesaler Financing.

  • This is something that is sometimes offered by companies who are drug wholesalers as well as HME product wholesales. If you purchase a significant amount of your inventory from some of these wholesalers, sometimes they will offer to finance a system for you at low or no interest.

There are a couple of other major issues that you need to consider when switching from one computer system to another.

Data Conversion

The first is the conversion of the data from your old system to your new one. The things to consider when you are trying to decide if you should convert data or enter it from scratch include the following: What can your new software vendor convert? Some can't convert anything. Some can convert the important base data files like doctors, carriers, patients, items and serial numbers. Other can convert all that plus refills / recurring rentals, open claims and accounts receivable. This option normally gets you up and running faster. If you are not confident that the data in your present system is good clean data, then it might be better to just re-key all your data from scratch. The old computer adage of GIGO?Garbage In, Garbage Out really holds true if you don't have good data on your old system. One advantage of re-keying your data from scratch is that you will know the system much better than if you convert the data. If you asked me for a recommendation, I would say re-key your data from scratch, it takes longer but you will probably be happier in the long run.

Transitions

If you have been having problems with your old system, you might create new problems on your new system by being in a rush. Set up a schedule to get your doctors and carriers added to the system, then when you go to add patients the doctors and carriers are already there to select. Many systems can add these on the fly, but the process of adding patients seems much easier if all the related data files are already there. Next comes adding vendors, inventory and finally, serialized inventory. Now you are ready to start using your new system.

Don't expect to install your new system on the first of the month and never use your old system again. For most businesses it takes about six to seven months to get everything working on the new system. When at all possible, it is best to have your first live date on a new system on the first of the month. If not, you want a clean cut off date. Once you go live with your new system, don't put any new orders into your old system. That way you know which dates of service are found on each system. You will need to go into both your old system and your new system to post payments, so having a clean cut off date makes this process very easy. If a claim is for a date before you went live on your new system, then enter that payment in your old system. If the claim is for a data of service since you went live on your new system, then the payment goes into the new system. The next step will be to run a list from your old system each day on of recurring rentals and refills for your patients with supply orders. Transfer those orders to your new system. By the end of the first month, you have moved the vast majority of your ongoing business to your new system. All that is left on your old system is:

  • Recurring rentals somewhere in the maintenance cycle. It takes up to seven months to get all of these out of the old system and onto your new system. Each day ask for a list of recurring rentals and slowly these items that are in maintenance will show up and can be moved to the new system.
  • Re-billings to primary carriers when claims are denied.
  • Secondary and tertiary insurance billing.
  • Patient balances.

After about seven months, you should have almost all of your insurance billed from your old system. At that point all that may be left is a patient balance. You can either write off these amounts or transfer them as a balance forward from your old system to your new system.

This article originally appeared in the October 2004 issue of HME Business.

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