Consultant: Harness technology to boost efficiency, profits
ATLANTA - Providers should steal a page from manufacturers when it comes to driving out cost from their business operations, according to Wallace Weeks.
Manufacturers have been able to cut the price of oxygen concentrators, for example, from $900 to $500 since 1997, despite an inflation rate of 3%, pointed out Weeks, president of the Weeks Group in Melbourne, Fla. How? Technology.
Providers who harness technology like GPS systems can drive down labor costs, their second largest expense, and add up to 6% to their bottom line, he said.
Weeks provided this food for thought in October during a session at Medtrade called "Cutting Costs with Technology."
"There'll be a time when [providers] won't be able to go to manufacturers and have them support [their] reimbursement cuts fast enough," said Weeks, referring to the Medicare Modernization Act.
Technologies that providers can leverage to drive down labor costs include faxing, GPS systems, electronic claims submission/electronic remittance and document imaging, Weeks said.
Several providers who attended the session shared stories of how GPS systems used to manage delivery trucks increased profitability. On average, providers can save $5,500 per truck per year by using the technology, Weeks said.
"GPS cuts down the number of miles driven by 10%," he said.
Document imaging is the "biggest opportunity there is to save money," Weeks said, but the technology is more costly.
Before they decide a technology is worth investing in, providers should conduct a three-part test, Weeks said. A technology that passes the test "makes it easier to do business with" the provider, provides a "superior solution" and "increases throughput or quality in the business process," he said.
According to Weeks:
The cost of faxing a document is $2.07, on average
The cost of filing a paper claim is $3.45, on average
There are some 50,000 pages of documents to process per $1 million in revenue.