In responding to our fascinating podcast on cloud computing, several listeners/readers asked about one key component: cost. In our cast, we talked about a 5-user cloud computing model costing as much as $1,000 per month in fees. Of course, $1,000 per month translates into $12,000 per year which would seem to negate the cost savings of eliminating server and upfront software costs. A more traditional networked setup can run as much as $25,000 to get off the ground. This doesn’t include the cost of training or the cost to convert from an old practice management system.
Here, in this post, we try to tackle the issue of cost and suggest some ways you can keep the costs of your practice accounting application down. After all, these systems, while used constantly in your practice, are primarily in existence to gather data and process it for you. Any true value in your system comes with what you do with that data.
Here’s what we suggest to keep those costs under control:
Understand the difference between total and concurrent users (cloud computing)
In your office, you may have 5 people that will use the practice management system at one point or another during the day. You may have 2 business staff, 2 clinicians and you that will log in at some point or another. That is the total users. But, the chances of all 5 people being online at the same time are very small. For example, during the day, you might have one business staff person logged in and one clinician logged in. The other business staff person is visiting with patients and marketing, the other clinician is focused on organizing the operatories and ensuring good patient flow and you are busy seeing patients and talking to parents. At the end of the day, you may log in to check on how things went that day, but the clinician who was logged in has now logged out because she is done for the day. So, there are 2 users logged in through the day. In other words, there are 2 concurrent users. Most software vendors will charge you based on concurrent users, not total users so keep in mind that the concurrent number is usually substantially lower than the total. That will certainly keep your monthly costs lower. If you have a practice generating revenue from $200,000 - $650,000 annually and you have more than 2 concurrent users, ask yourself if you need to have that many
Use your trial period wisely
A good software vendor is more than happy to send out a trainer to show you how to find the login button and do everything else within their application. As the hours of training –not to mention travel and lodging for the trainer-- add up, that cost can become substantial – this is in addition to the cost quoted in the podcast. Those same good software vendors will allow you a free trial period to examine their software (if they don’t it’s probably a good idea to ask for one). Before starting the trial period, take a couple of minutes to make a list of the basic processes for which your office uses your practice management software. Here’s a list to get you started (your practice may have additional needs):
Enter payments
Enter a contract (including splitting insurance/patient portions and setting up billing)
Enter adjustments to the contract (including discounts and adjusting billing arrangements)
Enter/edit an appointment
Enter an autodraft or electronic payment
Set up insurance including entering EOB’s, filing claims, entering insurance payments and making adjustments
Set up a patient with multiple insurance coverages
Generate information useful to your practice
With that list and the trial period, put the software through its paces to make sure you know how to do all of these things. Software systems are becoming more and more intuitive and user friendly and you probably are able to figure out a lot of the processes on your own. Since you are reading this blog about the topic, I know that you’ll be able to do this with relative ease. Use this testing time to winnow down your question list to discuss with the software company via some conferencing system like Skype or GoToMeeting.
Control conversion costs
If you are making a change from another computer system to a new one, this is an area where costs can absolutely skyrocket. We’re going to be doing a follow up podcast soon on this, but for now, consider this: you may have a lot of current and legacy data in the system. Having your software company handle the conversion at a flat or hourly rate can and will be pricey. The reason is that those folks normally need to involve a programmer (or three) to analyze your data, filter out bad information, organize the data and import it into their software database. A good vendor will do this on a test basis first and then on a live basis. If there are errors at any point, another conversion will need to be written and run.
You can cut this cost significantly with a few do-it-yourself solutions:
- Archive data for patients no longer in treatment. Certainly, you’ll want to keep their records, but given the fact that you won’t hear from most of them, there’s probably not a need to transfer them to the new system. The fewer patients transferred, the less time cost and potential for errors involved.
- Enter some data yourself. You may elect to have the software vendor transfer demographic data (a relatively easy thing to do) and enter the patient financial information yourself (something that can be complex depending on how your old system computed balances and insurance/patient portions). Or you may decide to do both yourself. Obviously, whatever you decide to do on your own (or by paying someone in your office at their normal hourly rate plus a small bonus) will almost certainly be decidedly cheaper than having an outside service do it. You also have much more control over the process.
- Consider transferring patient balances instead of all financial transactions. Of the hundreds of conversions we’ve done, this is where things got the most dicey. When you transfer patient transactions, the potential exists for bad data or a miscalculation to throw balances way off. This causes extra time and cost for the conversion, or, if something is missed during the conversion process, an unpleasant experience with any patients whose balances have mysteriously changed. If you simply transfer the balance, you can confirm the balance due at the time of conversion, quickly check it after conversion and you are all set. The transaction history for these patients will simply be in an archived file that you can refer to if necessary in the future.
Take advantage of hardware opportunities
A cloud computing system is really as simple as having a computer with an internet connection. If all you need your computer to do is to connect the internet and maybe print, you can take a look at lower cost netbooks in the place of more hardware-intense computers that may be required in another setting. At a savings of $200-$400 per computer, than can add up as your office(s) get more and more connected.
A traditional networked system may also offer savings opportunities, especially if you have relatively few transactions in a given hour. You may not need a blazing fast server with top of the line desktops. Since you are not calibrating the flight pattern for the space shuttle, your needs may only require a middle of the line set of hardware.
Of course, if you have any questions or comments, please contact us by clicking here. We’d love to hear from you.
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