Rx for Healthcare Clients: Niche Software

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Accounting packages are addressing the medical sector’s need for better business planning tools.

by Richard McCausland

Generating more commotion than an “ER” season finale, the healthcare arena is luring middle-market accounting software vendors and their channel partners into alliances with third-party medical management development houses.

Partner Insights

Up for grabs are more than 1.1 million healthcare practices in the U.S. alone, according to Census Bureau data. The overwhelming bulk of these practices (which don’t include hospitals and HMO clinics) have fewer than a hundred employees.

Accounting software publishers are most definitely interested:

● Intuit in May launched QuickBooks Healthcare Edition, featuring a customized chart of accounts, a healthcare-specific Navigator, more than ten specialized reports, and modified tools for employee time-tracking, budgeting, and forecasting. Longer-term plans call for integration with leading medical management software packages.

● Reseller Aston Business Solutions North America has entered a strategic alliance with Healthcare Automation to integrate the latter’s HomecareNet package for home health and hospice organizations with the Microsoft Business Solutions Great Plains Edition suite of financial, payroll, and human resource applications.

● As part of a “Solutions for Your Industry” initiative, Irvine, Calif.-based Epicor Software plans to bring out a specialized healthcare package. The initiative is an outgrowth of the vendor’s Internet Component Environment framework, which allows customers and business partners to develop industry- and company-specific features and applications, including those sought by healthcare organizations.

Bruce Downs, a Birmingham, Ala.-based CPA and Intuit Professional Advisor with several healthcare clients, observes, “Almost everybody [among healthcare practices] has billing software because they have to file so many insurance claims. They spend a good bit of money on that software,” he notes, implying they’re not about to scrap it. Still, these practices also have hefty revenue sharing and financial reporting requirements.

He recommends that accounting software houses develop integrations with the major medical billing packages. “That would be a selling point, without question,” says Downs.

Increasingly, it’s urgent that healthcare professionals make prudent business decisions as issues arise. Managed care is capping what they can charge; nursing shortages are driving up salaries in many areas; staying in compliance with complex regulations such as the Health Insurance Portability and Accountability Act of 1996 is time-consuming and expensive. “For more and more doctors who didn’t really have to care about the bottom line before, the No. 1 issue today is profitability,” which all too readily can distract them from their primary mission as care givers, says QuickBooks Healthcare Edition product manager Vicki Morris.

For doctors to remain focused on that mission, “Healthcare needs better business planning and budgeting,” adds Morris. Software developers are meeting that challenge.

Specialty Specific

QuickBooks Premier: Healthcare Edition 2003 is targeted at practices with up to 20 employees. The Enterprise Solutions version is built for practices with 20 to 250 employees.

Both versions feature six pre-defined practice starter files and respective charts of accounts. “To be right for a healthcare practitioner means to be right for their specialty,” comments Morris. Although there are 40-plus specialties within healthcare, “From an accounting perspective, there are only six meaningful variations,” she says. These include physician-based practices, dentists, veterinarians, optometrists, chiropractors, and mental health practitioners.

These are “extremely different” practice areas, explains Morris. A dentist may provide cost estimates, for example, whereas a mental health professional is likely to see patients for sessions of a clearly defined duration. Or an optometrist might need a retail/point-of-sale module to keep track of frame and lens sales, whereas an M.D. might have no such requirement.

The specialty-specific systems set-up and chart of accounts are meant to give the healthcare professional a “jumpstart” at getting up and running. The same goes for the specialized Help content, the customized Navigator for one-click access to most-used activities, a sample doctor file, and prepackaged reports.

These reports allow the user to view profitability or expenses by doctor, office, or types of procedures performed; to view procedures and services billed; and to view charges paid. These capabilities deliberately dovetail with Intuit’s own findings that “nine out of 10 doctor/owners say business planning is one of the most important things they want,” notes Morris. With Healthcare Edition, “The doctor/owner becomes more in control of the financial aspects of their business.” After all, “If you haven’t collected the data, how can you make good business decisions?” she asks.

From surveying healthcare pros, Intuit discovered that, “They wanted us to make the back-office piece more efficient so they can do journal entry at the end of the day,” reports Morris. What they didn’t want was for Intuit to develop its own medical management package to handle insurance billing. Rather, “they wanted us to embrace their particular [billing] package.”

That’s why Intuit is encouraging its Developer Network to create integrations with some of the leading medical management offerings within the various specialty practices. A campaign is under way to identify these top-selling packages.

QuickBooks Premier: Healthcare Edition, priced at $499.95 ($379.95 for upgraders), can accommodate up to five concurrent users. The Enterprise version, priced at $3,500, provides as many as ten users with simultaneous access, enhanced reporting functionality and user support, and the QuickBooks Employee Organizer with HR regulations update service.

Pedro Point Veterinary Clinic in Pacifica, Calif., a QuickBooks user since 1997, beta-tested the new Healthcare Edition. For Dr. Richard Smith, there was a noticeable improvement. “Before it was strictly a numbers piece of software, whereas now there’s a range of activities you can do. You can run your whole practice on this software,” he says.

For one thing, using the vet-specific set-up and chart of accounts, he’s better able to track new clients. “We’re not like a dentist who has a packed book,” with appointments scheduled three or four months out, Smith explains. “People call in daily to book for that day.” It’s also easy to create invoices and statements that feature the clinic’s logo.

Since clinic transactions are cash only, Smith has no need for the sophisticated insurance billing capabilities of dedicated medical management packages. As a result, by using Healthcare Edition, “You can do 95 percent of what [those dedicated management packages] do”-which in his case is plenty.

QuickBooks rival Peachtree counts a “significant number” of healthcare organizations among its installed base, according to product management vice president Jim Portner. For now, however, there are no plans to launch a Peachtree for Healthcare edition.

Portner explains, “The Best vertical strategy is based on a customer for life. For us to build a customized solution on the Peachtree side, we would want to have an upward migration path in place,” as exists between Peachtree for Nonprofits and MIP, and between Peachtree Accountants’ Edition and CPASoftware, and between Peachtree for Distributors and Manufacturers and MAS 90/200/500.

In any event, he suggests that Peachtree Premium Accounting already is comparable to QuickBooks Healthcare Edition in that the latter’s customization is “just a function of the chart of accounts.” Portner notes Peachtree comes with 75 sample charts of accounts, including ones for physician-based practices, nursing homes, veterinarians, and dentists. And with Premium’s integrated Crystal Reports functionality, “you can create any kind of report you want.”

The potential also exists for healthcare-specific add-ons. “There’s a great vertical opportunity here,” says Portner. “There are a lot of great applications in the marketplace that can be integrated with our products, and we’re also looking at [those kinds of partnering arrangements].”

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