Computer software.

Periodically, Nursing Homes asks vendors of major product categories for nursing facilities to provide general purchasing guidelines to aid administrators' decision-making. For this installment, leading vendors of computer software were asked: "How should -- and should not -- nursing homes try to minimize the costs of computerization?" "What are the major lessons to be drawn from the experience of nursing homes already computerized?" "What are nursing homes' prospects for maximizing revenues with computerization?"

William Peter, President and CEO, Data Med Clinical Support Systems: "Hardware, software, training and continuing support are all costs that must be taken into account. The most important step to take initially to minimize these costs is to clearly define the needs of the organization. For example, a 90-bed home with both financial and clinical on the system may need three to six work stations, with a couple used all the time by clinical, and another couple all the time by business. A 400-bed home may need 15 work stations, while a 35-bed home may need only one for both business and clinical.

"How much customization of the software will you need? That depends on what the staff tells you; this is not something you want to decide from the top down. And the more customized you can get -- that is, the closer you can get to your current operations -- the less training time you'll need. Training on a new system can take more time than you bargained for, and is often a hidden cost.

"How much can you afford to spend? If it's, say, only $10,000, you won't be able to have a comprehensive, integrated system. So you decide what you need immediately and where you want to go from there. Typically, start with your weakest area, whether it's billing, clinical documentation or infection control, and purchase the modules you need. But ultimately your goal should be to go to a comprehensive system. A final way to minimize costs would be to lease a system, rather than purchase it outright.

"The biggest lesson is the importance of checking user references before the purchase is made. Once you've narrowed your selection of vendors down to three, ask each of them for a list of 10 customers who have used their system for at least a year. Ask the administrators and DONs what they like and don't like. This will be more than worth it in the long run.

"Another lesson is to make sure that staff is consulted on the software you buy. Imposing the decision from the top down is setting yourself up for a frustrated staff.

"Finally, nursing homes have found it helpful to purchase both financial and clinical software from the same vendor, because this makes it easier to integrate.

"Maximizing revenues can be accomplished in several ways. In case-mix states, we've seen systems pay for themselves in six months to a year simply from the higher ratings they get from state surveyors. Computers make it easier to clean up your records on a regular basis so that care plans are coordinated with resident assessments, exception reports are generated, and so forth. This sort of organization gets higher ratings and therefore higher reimbursements.

"Computers make it possible to easily generate regular reports to families using your existing documentation. Families appreciate being kept informed in this way, and word gets around.

"Finally, electronic billing is what's going to happen in the future; you may not get more money with this, but you'll get it faster."

Brook Chambery, President and CEO, Beechwood Software, Inc.: "The most important step in minimizing costs is to integrate the computer system into your entire operation. Proper use of computerization can bring about tremendous operational efficiencies. Peripheral use, or quick fixes, will only bring greater expense and heartaches. Careful planning and software design that meets management objectives are key.

"Although more time and expense may be involved upfront with this type of solution, it is not unusual to find payback periods of only a few months, especially in the patient care operations. We have verified this in our own nursing home operations, as well as that of clients.

"The major lesson to be learned from those who have computerized is that it really can work. Not only can staff accept it, but they get totally excited about it. Concerns over training and control fade away. Computerization can actually minimize training needs, fully empower staff, maximize managerial control, and enhance quality control. Software design is crucial. Anyone can write a program, but it is management experience and foresight, coupled with the proper application of technology, which lays the groundwork for successful design for the facility. Oversight by facility management is also crucial. Realistic goals must be set and the project must be directed. Policies and procedures, organizational charts, and other entrenched modes of operation may have to be revamped to use computerization effectively.

"Other than for billing and receivables monitoring, most of the payback in maximizing revenues will be indirectly related to quality assurance and management information that would not otherwise have been possible. Current information can empower management and staff, which enhances customer satisfaction and attracts further business."

Peter T. Davidson, Vice-President of Operations, Compudata Health Corporation.: "People often think they can minimize the costs of computerization by focusing on tangible up-front costs such as hardware, software and training. Unfortunately, they may not consider the significant long-term cost impact of an inadequate or poorly implemented system. Without adequate training, for example, they may lose opportunities by not taking advantage of all the system can do. For this reason, selecting a system that meets the needs of the company must be carefully balanced against the initial costs. It is also important that an adequate training plan be agreed upon between the vendor and the customer to insure that the installed system is used to its fullest capability.

"Eliminating redundancy is another important way of minimizing long-range system costs. Many facilities choose to implement different systems, causing duplicate effort and leading to a fragmented information system. Perhaps they have a nursing system from one vendor and a financial system from another, and they don't work together.

"Lessons learned from existing computerization of facilities points to the importance of matching systems with specific customer goals. Everyone wants a system that is "easy to use;" however, the nursing home business is becoming more complex, and needs software to accommodate this. This mandates that software systems have enough functionality and flexibility to handle the current and future needs of the industry.

"In addition, I think it is important that customers recognize the overall impact that an information system will have on their organization. Many times the impact on management and general information flow may be taken for granted. We have found that it helps often to have one individual on the staff serve as a resource for the entire system. This tends to produce much better results, better communication and happier customers.

"If software systems are used properly, the prospects for maximized revenues are better than they've ever been. Being able to tie in resident assessment-based information and clinical care planning with ultimate reimbursement is a powerful tool for managing a facility's revenue stream, as more and more states move to case-mix reimbursement systems. The systems also provide the ability to capture and track financial information to enable efficient preparation of detailed cost reports. Electronic billing is a powerful vehicle to improve cash flow.

"In general, properly installed and managed information systems should enable customers to run a better, more profitable business."

Scott Dooner, Director of Marketing, Benchmark Computers, Inc.: "Initial cost should not be the primary issue, because one of the biggest mistakes you can make is to buy the wrong package when you're trying to automate your entire operation. You shouldn't buy off-the-shelf software and try to make the organization conform to it. You need a firm idea of your specific needs and what it takes to meet them.

"The primary lesson facilities have learned is that you need a plan, complete with goals and deadlines to meet them. This is not something you simply delegate to someone and leave it alone. Software is a very important consideration -- more so than hardware, which has become a commodity by now -- and you have to make sure that it meets your specific needs, and that the vendor supplying it has a good track record for reliability and support.

"Revenues are maximized by minimizing human error -- for example, forgetting to bill for ancillaries. With computers, this is less likely to happen. You can also do better staffing and scheduling and avoid costly shortfalls. You can make more accurate and timely management decisions and, where electronic billing is available, enhance your cash flow. Systems that can do this will justify their expense in short order."

Todd Spence, President, Management-Data, Inc. (MDI): "Your biggest savings come from installing a system that is practical and logical for your particular facility. If the staff doesn't use all the system's functions, dollars are going to be wasted. A system that isn't cost effective forces many facilities to go through the same acquisition process twice -- and that's the most expensive mistake made in this business. In fact, the bulk of our business comes from facilities that have tried, unsuccessfully, to implement other clinical and financial packages.

"Look for a vendor that will get involved in the conversion and implementation process beyond occasional phone contact. Part of the problem today is that bookkeepers and nurses have responsibilities they're not fully trained for. Without support and training, your chances of success are minimal. The vendors are the ones who know how to do this.

"Although vendors are pretty upfront about the work involved, facilities don't always comprehend this. The most time-consuming task in implementing a new software system is making sure all the facility's data (residents, employees, etc.) is entered and correct. All of this newly entered information must be verified prior to generating resident statements or checks. Employee earnings for the month, quarter and year must be entered into the system prior to the first payroll. So there is about a two-week window, between the time the software is installed and the first payroll checks are to be processed, in which this information must be verified. If it's not correct before the checks are generated, the facility will have a crisis on their hands. On the clinical side, a facility has 30 days to assemble and print physician orders, medication sheets and so forth. This further emphasizes the need for comprehensive vendor involvement in the conversion process.

"As for lessons to be drawn, there are many positive ones. Facilities have learned the benefits of organizing their information -- for example, rather than going chart-by-chart to get information about decubitus patients, they can get a computer-generated report. In bookkeeping an employee who has never generated financial statements before becomes quite comfortable computing them. Facilities have also learned the importance of finding a vendor with whom they can work well for years to come. Also, purchasing all components from one vendor is a necessity to fully integrate the system. Bridging programs covering multiple vendor products are available, but they're cumbersome.

"To maximize revenues these days, accessing financial information, capturing central supply data, controlling cash flow, monthly projections and monitoring nursing wages and hours are critical. Although at one time the volumes of Part A, Part B and enteral charges were negligible, many homes today are looking at these as profit centers. Computers are ideal for tracking these processes."