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Select the LTC software application that best meets your needs

SO, YOU NEED A NEW SOFTWARE SYSTEM for your long term care facility(ies). With so many software systems in the market advertising that they are the best, most comprehensive system for LTC, how do you find the one that best fits your organization? Follow this 10-step proven method used by banking, manufacturing, and other, automated, industries for selecting the software system that best meets the needs of your organization.

Establish expectations

When selecting a software system, people think that all LTC systems are the same and that processes and procedures will change based on the system purchased. These misconceptions, and others, often defeat the selection process before it gets started.

First, there are great differences among the various vendors and systems. Some systems are better at billing functions than clinical, whereas others are state-of-the-art clinical systems with a small billing module attached. What works for one facility will not necessarily meet the needs of other facilities.

Second, the system should automate your processes and procedures, not require you to change your business practices to accommodate the system. Systems that require an organization to make changes to operations are outdated, inflexible, and may prove to be burdensome when faced with new regulatory requirements.

Also, do not expect to purchase a "plug-and-play system. In other words, you cannot simply purchase, install, and begin to immediately use a LTC system. Expect to spend many months implementing a system during which time the chart of accounts will have to be set up in the general ledger, business entities will have to be established in the billing system, care plans will be modified and defined for your specific facility, and many other functions completed.

Expect to have one dedicated person for systems implementation per "module" (such as clinical, billing, accounts payable, general ledger, fixed assets, materials management, and human resources) for approximately two to three months. The work on their implementations may be conducted either concurrently or it may be staggered, but to achieve success with the new system the staff must be removed from other areas of work and dedicated to this project. A project manager also will be needed during the implementation phase to manage all of the components of the implementation, such as tracking budgets, timelines, linked tasks, staffing, and other requirements of implementation.

Determine goals. Before embarking on any of the other steps, the executive leadership of the organization should determine the business goals for any new systems purchased. Maybe the goals are a fully integrated system, a more effective and efficient organization, automated staff scheduling, automated interdisciplinary notes, an Intranet-based system, improved quality and risk reporting, or utilization review. The goals may include predicting the cost of treating potential residents or providing better executive reporting. Whatever the goals of your organization for its information systems, have them clearly defined and in written form so that they are not lost or misinterpreted as the organization moves through the process of selecting software.

Upgrade and update. Unless the hardware within your organization such as workstations, local and wide area networks, and communications have been updated recently, expect to update or replace hardware that is more than three years old. Massive changes in the computing ability of hardware will make systems three years old or older obsolete and unusable in a new systems environment. Even with some of the newer workstations or networks, it may be necessary to increase memory, disk space, or other capacities to meet the needs of more robust systems. If there is to be a significant increase in the number of system users or if an Intranet is to be introduced, the wiring will have to be updated as well.

Complete needs assessment

A complete current evaluation of the needs and requirements of each facility and each department within your organization must occur before selecting any software application. The assessments should include organizational structure and business practices. Determinations for operational changes (centralized versus decentralized billing, for example) and procedural changes should be made and implementation of these changes begun. The system selected will only automate your processes and procedures, so if current processes are inefficient or ineffective, they must be changed before implementing a new system.

Once you have clearly defined goals and understand the needs of your staff, evaluate the ability of your current system(s) for meeting those goals. Are you using the most current version of the software provided by your vendor or have system upgrades not been installed because of shortages in Information Technology (IT) staff or hardware deficiencies? Does the current system meet the majority of your goals but require redundant data entry because of a lack of integration or interfacing? Are your staff members using the full software package or is much of it unused because of incomplete or inadequate implementation, turnover, or lack of training? Does your current vendor provide the level of technical support required by your organization? If your current vendor provides the functional requirements and technical support you require, then updating hardware, interfacing systems, or training staff is a much more cost-efficient and quicker method of obtaining your goals than purchasing a new system. If there are major deficiencies with your current system, then there is a high likelihood that your organization needs a new system.

Strategic planning 

Just as you have a strategic plan for business operations, so do you need a strategic plan for your information systems. An IT Strategic Plan should include an overall design for an enterprise-wide information system, which encompasses the functions for all operations, and serve as a guide for all IT initiatives. Included in the plan should be the following:

* IT objectives and approach

* IT goals and requirements

* IT Infrastructure

* Proposed IT strategy

* IT staffing requirements (implementation and maintenance)

* New management functions

* IT investment requirements and return on investment (ROI)

* Steps for moving forward to implementation

* Identification of potential vendors

Frequently, organizations choose vendors because they have seen them at a trade show, because another organization they know uses a particular vendor, because one of the managers prefers a certain vendor, or because of other non-measurable selection methods. To choose wisely, an organization must view all potential vendors objectively. Identify all of the potential vendors available to you. To assist in this, LTC vendors are identified, along with their major functional capabilities, in the Table. (Note: The editors agreed that the reader would best be served by viewing this table on our website, [less than]www.cltcmag.com[greater than] because of the size and scope of the table.)

A small organization or stand-alone facility should be able to select a single vendor to provide an enterprise-wide solution. However, if your organization is large or you have multiple facilities, limitations in the general accounting and human resource capabilities of most LTC systems will seriously impair your organization and you may be best served by utilizing a best-of-breed approach. This approach would allow you select the vendor who best meets the needs of each independent functional area, e.g., clinical, billing/accounts receivable, general financials, and human resources, and then interface these applications to work together as if they were one. There are many industry standards to allow for easy and almost seamless interfaces between systems such as HL-7 (Health Informatics Standards-Level Seven) or ODBC (Open Database Connectivity). Health Informatics Standards (HL-7) provides a method for the electronic interchange of disparate clinical, financial, and administrative information among health c are oriented computer systems; e.g. hospital information systems, clinical, laboratory, or pharmacy systems. ODBC is used with very large databases, for applications processing a large volume of daily transactions, and for applications having large number of users. Examples include WalMart (5 terabyte database), MicroBilt (2.5 gigabytes per day) and Xerox PeopleNet (15-20,000 users). If the vendor meets HL-7, ODBC and other compliance standards, interfacing these applications to work together in a seamless fashion is relatively easy to accomplish.

The best-of-breed approach also allows you to expand beyond the traditional LTC vendors to meet the general accounting and human resource systems needs of your organization. The majority of LTC enterprise-wide packages experience great difficulty in completing multi-company accounting with separate and rolled-up reporting and their human resources modules are usually limited to payroll only. Many organizations would be better served if the search for systems were expanded to include accounting vendors as well as to vendors of human resources systems.

Request for proposal (information)

There are two ways to approach this step. One is the shorter version, called a Request for information (RFI). The second is the more detailed Request for Proposal (REP). Unless your organization plans to use the document as an attachment to a contractual agreement, the RFI is of sufficient detail to assist your organization in selecting the best system. Either approach begins with compiling the information gathered during the goal-setting and needs-assessment steps identified above and creating a detailed requirements document. This document should be designed on a line-item basis with a numerical grading format for quantitative and qualitative measurement of the vendors.

The RFP/RFI also obtains information on system design, platforms, hardware specifications, system support, operating systems, references, and costs. If you are developing a full REP, other items will need to be included such as financial statements from the vendors and a written guarantee as to the accuracy of the information.

Once all of the RFI results have been compiled and analyzed, you will easily be able to identify the top vendors using either an enterprise-wide system or best-of-breed approach. At that time software demonstrations can be established.

Behold the software in action

Establish scheduled demonstrations with the top four or five software vendors (if using a best-of-breed approach, make it the top three or four vendors in each major category) at a time when the majority of your key staff can attend.

Staff buy-in on the software you choose is critical to your overall success. Obtain staff buy-in by having staff members involved in the selection process. Second, staff members should grade the vendors during the software demonstrations to assist in making final selections. Make sure the staff knows that the results of the grading will be used to determine the vendor you choose.

Due diligence 

Most organizations will complete vendor reference checks before selecting a system, but few review vendor financial statements to determine company viability or perform any type of cost and ROI analysis. When we initially reviewed LTC systems in 1993, there were 125 vendors. Currently there are about 41 comprehensive LTC systems available in the market. Some LTC vendors have been in business for less than two years and others have very few installations of their product after more than 10 years in business, so viability and experience of the vendor can easily become an issue.

The financial statements will give you an inside perspective on a potential vendor, revealing their revenues from sales, their current costs, debts, profits and losses, and other key factors of the company. If a vendor has a heavy debt load or has costs greater than sales, the vendor may be susceptible to take-over or bankruptcy. if, however, a vendor has a high profit, or even a small profit maintained over a period of several years, then that company stands a much better chance to be in existence for the expected life of the product.

Examine the financial statements to see what impact Y2K and PPS had on the development costs and look at the company's retained earning to see if the company could financially weather another major regulatory change imposed by HCFA. Salary, wage, and benefit costs for the vendor can provide you with indications of staffing levels for system implementation, training, and support the product once you have purchased the system, and for future programming and development of the product. You will also want to look at the costs to purchase any new system and complete a return on investment analysis from the perspective of your own organization.

If choosing the best system available, you should be able to improve efficiencies within your organization by eliminating redundant data entry or increase your revenues by improved billing information and capabilities to pay for the system within a five-year period.

It is also important to complete a cost analysis to include not only initial purchase costs but also the costs for installation, implementation, training, and ongoing vendor product support. Develop a form with areas for all of the costs so you will not be surprised with unexpected costs. For prices to appear more reasonable, the vendors frequently separate costs for the MDS, Care Planning, Submission, and other key clinical areas into different modules, all with their own separate price. So, while the MDS system can be advertised for $9,995, the total cost of all of the clinical modules could be around $35,000. In addition, you can add about $10,000 to $15,000 in implementation and training costs to the contract and an annual support cost of about 20-30 percent of the total purchase cost of the software. There are usually additional charges for database licensing fees, which can vary from several hundred to several thousand dollars depending on the database used, e.g., SQL, Oracle, Progress or PIC.

The results of the software demonstration grading forms, reference checks, financial results, and system costs should be compiled to obtain the top two vendors (or top vendors in each category when using a best-of-breed approach). Schedule a site visit for each of the top vendors where your staff will see the system in use at a facility similar to yours, ask questions of their counterparts, etc. Based on the site visits and other key factors, the final purchasing decision(s) can be made.

Contracting

Each organization has its own methods for contracting; however, for software vendor contracting, be sure to:

* have rights to the software source code in the event that the vendor goes out of business, stops supporting the software, or otherwise defaults on its obligations. At a very minimum, have the vendor place the source code in an escrow account.

* hold back at least 25 percent of the software costs until at least 90 days after the system goes live to ensure that it is working properly.

* have the vendor provide a project implementation plan and identify all of the key components involved so that you may schedule staff accordingly.

* have the ability to obtain a full refund in the event that the vendor is unable to deliver the product as promised, whether the issues are regulatory, technical support, functional capability, or other components that have been purchased. In the event that work under development by a vendor is being purchased, have the vendor identify deliverable dates for the work that they will be contractually obligated to meet.

Prepare for at least a two-phased training process. The most knowledgeable user within your organization will retain only 75 percent of the information learned in the one-step training approach used by most organizations. Plan to have either in-house training developed for the secondary training or contract with the vendor for additional training.

Mary Ellen Topper is vice president, Operations, at Morrison Informatics.