Document imaging is no ‘paper’ tiger

Wednesday, April 30, 2003

According to the growing number of HME providers converting their operations from paper to cyberspace, there are two big steps in the process. The first big step is working up the courage to do it. The other is a big sigh of relief once it’s done.
In fact, several providers say their only regret for going electronic is that they didn’t do it sooner.

While it may be premature to call the shift away from paper a revolution or even a trend, industry observers say provider interest in document imaging and electronic documents is definitely piquing. And though his initial guess that 20% of MED Group’s membership is scanning documents is “probably high,” Jeff Woodham, senior vice president of operations is certain that the members are converting at a steady rate.

“There is a lot more interest than there was three years ago,” Woodham said about the Lubbock, Texas-based provider group. “HIPAA and paper handling issues are the main reasons behind it.”

Both reasons make sense, sources say, but perhaps the biggest reason why providers should look at document imaging is its potential for saving money. Based on what system users say, scanning paper into an electronic format eliminates a ton of waste, mostly time spent hunting down files. When you stop to think about it, lost time adds up fast, said Spencer Kay, president of Plainview, N.Y.-based Fastrack Healthcare Systems.

“This system automatically increases productivity because people won’t be constantly getting up from their workstations to retrieve files,” Kay said. “This isn’t counting the times when people can’t find misplaced files or if they run into a co-worker who wants to engage in some water cooler talk.”

Concrete savings figures aren’t widely available across the provider spectrum for various reasons. This is because the concept is still in its early stages at many companies – less than a year in most cases. Another reason is that company decision-makers say they didn’t simply need proof that it would save money.

Still, some hard numbers do exist and they speak volumes about the difference a document imaging system can make in a company. Healthcare accountant Wallace Weeks – who recently underwent a paperless conversion in his own Melbourne, Fla. office – applied an activity-based costing matrix to one of his HME clients and the study yielded some impressive results.

For instance, Weeks determined that office automation saved his client approximately $80,500 in the first year alone. Contributing to that total: $26,100 for reduced storage, document filing and document retrieval; $13,000 in reduced paper and printing associated with outbound faxing; $11,000 on inbound fax costs by eliminating time spent routing faxes and storing paper; $23,900 from eliminating paper forms; and $6,600 by increasing electronic claims submission.

By contrast, the company invested approximately $24,000 in the system, including $7,300 on scanning equipment; $5,600 on a fax server to keep from printing faxes; $400 on simple internal software development; $2,500 on internal labor for installation of equipment and software; and, $8,000 in consulting fees.

The upshot, Weeks said, is that the conversion produced a return-on-investment of 338% and increased the company’s bottom line by nearly 1%.

“ This company is larger than average, so both their investment and their savings are larger than the average company would have,” Weeks said. “Nevertheless, it may give you insight into what can be done.”

Other savings figures are more modest. MED group collaborated with local document management firm VP Imaging to determine that an average company handles more than 200,000 documents a year and that it costs an estimated $15,000 a year to refile and retrieve documents from a paper file system. VP Imaging also calculated that it costs nearly $11,000 in labor costs to file paper documents, and that each employee spends 30 minutes per day waiting for paper files, which adds up to $30,000 a year.

While these figures didn’t come from the HME industry per se, they illustrate how heavily paper weighs on business operations, Woodham said.

Taking the e-plunge

Billings, Mont.-based Computers Unlimited started offering scanner systems to the compressed gas distribution industry and now HME providers are starting to embrace the concept as well, said manager David Schaer.

Fastrack, which introduced its Windows-based document imaging software a year and a half ago, also reports brisk sales from HME providers.

“Response has been fabulous,” Kay said. “This is by far the best received of our products. Providers are dramatically increasing their productivity. They’re realizing how overstaffed they are.”

The University of Michigan helped Fastrack develop the program, which was patterned after a “typical” HME provider’s paper filing system, said U-M Senior System Analyst Dick Raymond.

“We wanted to create something that would look like their paper charts,” Raymond said. “So we included file tabs and gave the user the ability to define what those tabs are. So all they have to do is click on an icon and the documents they want will appear.”

CU’s program also has features that are especially designed for HME. For instance, it allows the viewer to look at multiple documents within a patient file on screen simultaneously.

Most importantly though, Schaer emphasized that providers need to make sure that the document imaging program integrates with the company’s core system.

“Scanning is just the first part of the process,” he said. “You also need integration so that you can retrieve the document.”

On the surface, it looks like an easy switch to make. However, there are many considerations that need to be made before taking the paperless plunge – most notably, mental preparedness, Weeks said.

“It’s not a simple transition, especially if it’s done right,” he said. “You can’t say ‘OK, we’re paperless now.’ It’s not that easy.”

To give providers a basic idea of what the conversion process entails, Woodham put together a walk-through that includes some of the key questions and considerations that need to be made before committing to it.

First, multiple-branch providers need to determine whether the scanning will be done centrally or at each site, he said.

“This will have a huge impact, because it will cost more if you want to scan at each branch,” Woodham said. “Faxing documents to a central location is fine for low-volume branches, but those sites doing multiple hundreds of transactions will need an on-site scanner.”

Next comes the decision whether to only scan new documents or if “backlog” documents need to be scanned as well. Woodham recommends starting with new documents and scanning existing ones only if absolutely necessary.

“Backlog scanning requires a lot more resources,” he said. “And most will find that it’s a lot of work they didn’t need to do. Scan the ones that are causing you pain today.”

Shop around for scanners, Woodham said, and don’t settle for a cheap one. If the company is handling 500 pieces of paper a day, a heavy-duty machine is necessary. And given the importance of every character in HME documentation, providers should buy a scanner that reads through colors, textures, fonts and tones.

Document imaging also requires staff to perform new tasks, so it’s important to assign the right people to the scanning and indexing functions, Woodham said.

“Providers need to assess which staff they can allocate to it,” he said. “For indexing, determine how many [fields] you need, such as patient name, scope of service, date of service and date of scan.”

After conducting these assessments, the provider should be ready to talk to a vendor, he said.

AHP’s ‘slick’ system

VP Imaging’s estimation of 200,000 documents handled per year is more like a monthly amount for an HME behemoth like American Home Patient. The Brentwood, Tenn.-based national chain has introduced document imaging at its 25 billing centers, which collectively are scanning 250,000 documents a month.

Savings totals haven’t been tabulated, but evidence of cost reduction is obvious, said Doug Gouy, vice president of reimbursement.

“For one thing it is taking fewer people for this process so we’re getting savings from personnel reductions,” he said. “We’ve reduced 15 full-time positions so far and by the time it’s completely implemented, it will probably be more like 20.”

Not only has the company saved on payroll, but tangible cost savings are being realized in other areas as well, Guoy said.

“An internal compliance function is helping to reduce the amount of traveling we do,” he said. “Where we once had to physically travel to each site for a Medicare compliance audit, we can now retrieve the documents electronically.”

Having secondary bills on the system has also yielded substantial cost savings, Gouy said, because it eliminates sorting and handling activity. Considering that billing center employees handle nearly six pieces of paper per transaction, it makes a major difference, he said.

Bank transactions are also being done electronically, saving time and postage.

“It usually takes three or four days to mail – some centers are paying up to $8 a day for packages,” Guoy said. “We can now post contents the next morning.”

For a company of AHP’s size, it made sense to start the document imaging initiative at the billing center level, Guoy said. Each center has a local scanning station, which feeds data into the central system at Brentwood. Eventually, he said the company hopes to implement it at its branches across the U.S.

“This is really a slick system,” he said. “It has paid for itself in 18 months.”

Providers purging pulp

Although they haven’t quantified the savings generated by converting to electronic documentation, small and mid-sized providers report that they nevertheless have benefited. Velma Goertzen, general manager for Hutchison, Kansas-based Med-E-Quip, offered a typical response: “We haven’t gauged any cost savings yet because we’re still in the initial stages. But we know we’ve saved a lot of time that was spent looking for documents and that we have been more productive overall.”

Providers have followed different paths to electronic conversion, however. For Med-E-Quip, HIPAA privacy regulations were a prime motivator.

“We got to thinking about how paper records just aren’t very secure – too many people have access to them,” Goertzen said.

Peter Falkson, president and CEO of Canton, Mass.-based Trusted Life Care says he started document imaging “for selfish purposes.” Because the company is opening new offices on Cape Cod and in northern Massachusetts, scanning documents allows for information sharing across locations, he said.

The paperless option presented itself as an opportunity when Greensboro, N.C.-based Advanced Homecare moved into a new building, said Kim Brummet, vice president of contracting and reimbursement.

“When we got to the new location, we didn’t want people digging for paper,” she said. “It was a natural starting point.”

Once the provider has made their decisions, they set about implementing it in various ways.

“We debated whether to do it all at once or phase it in,” Goertzen said. “We were going to phase it in but changed that plan because everyone saw the value of having electronic documents for existing patients, too.”

Still, tackling the entire paper pile at once presented challenges for the company – namely, that it constipated information flow.

“Before you start scanning, make very sure you understand your current paper process,” Goertzen said. “We created a bottleneck for ourselves. Scanning documents goes very fast, but indexing is time consuming.”

To break the logjam, the company split the workload a little differently among staff members, with four people in billing assigned to do indexing for part of the day instead of just one dedicated person doing it all day.

Trusted Life Care jumped into scanning headfirst, but Falkson said it had the advantage of being a new company.

“We wanted to start with a new culture,” he said. “It is a way for us to be the most efficient provider out there. With competitive bidding looming, we need to be ready.”

Conversely, Advanced eased into it, Brummet said, starting with Medicare EOMBs.

“The goal was to have access to data,” she said. “After that we went to charts. We’re constantly looking at what else we can scan.”

Paperless utopia?

Starting a document imaging system doesn’t actually spell the end of paper documents. Instead, it means having the freedom to remove paper from the premises – usually to a remote storage site. Providers cited audits as a chief reason why they still keep hard copies.

But will document management technology ever reach a point where no hard copies will be generated and that all medical documents will originate in cyberspace? Probably not, say those who know.

“It’s not like we couldn’t do it now to some degree,” U-M’s Raymond said. “PDA devices have documents where therapists can fill in the fields and download. We’re working with Fastrack on electronic CMNs. But paper has to be signed. And patients like to have paper in their hands.”

Indeed, eliminating the need for paper would be “utopia,” MED Group’s Woodham said. Still, he doesn’t think the industry will ever embrace the concept, though.

“I don’t think the different entities in reimbursement and compliance will ever go along with it,” he said. HME

The cost of paper
Here’s how Lubbock, Texas-based VP Imaging assessed the costs incurred in the paper chase for a typical company:

Total number of pages handled per year: 200,000

Number of file cabinets: 20

Number of people in office that access files: 25

Labor cost to file documents into a paper file system: $10,750 per year

Cost to refile and retrieve documents: $15,157 per year

Cost of waiting for paper documents: $31,250 per year

Cost of misplaced documents: $30,234 per year

Cost to replace lost documents: $60,000 per year

Office space cost: $38,400 per year

Cost per file cabinet: $7,000 per year