The Healthcare Bar Coding Opportunity

The healthcare market is a lucrative one. However, it’s also notoriously difficult to break into. During a recent conversation with integrator Mid-America Business Systems (MABS), partners Jim Scheid and Mark Snow made it clear that to do business in healthcare requires a VAR to accept some brutal realities. For instance, there’s no one clear decision maker at hospitals (often it’s a group of people that varies depending on the project). Sales cycles can last a year or more. Payments can take as long as 90 days to arrive. For these reasons and more, Scheid and Snow explain that healthcare is a difficult vertical for VARs to dabble in. “Because the nature of healthcare is so different, it takes a special commitment to sell into the vertical,” says Scheid, who continues by adding that many of his competitors have decided to move to verticals with quicker sales turnarounds.

However, if you’re committed to the vertical, the opportunities (and rewards) can be great. MABS is one integrator committed to the healthcare vertical. Over the past few years, the integrator has uncovered a number of revenue-growing opportunities that help the company continue to grow. While these opportunities might not be available to VARs unfamiliar to healthcare, those with a foot in the door are in prime position to capitalize and potentially increase their sales.

Sell Turnkey Solutions To Hospitals
Years ago (and still today, in some cases), hospitals used machines called imprinters, addressographs, or plastic card systems to stamp patient information on hospital documents. The machine, which received data from the hospital’s information system, would emboss a card (similar to a credit card) with patient information. A form would then be placed over the card, and then an ink roller would be rolled over the form. The resulting impression of text was often messy and illegible. Most of today’s hospitals have migrated to more current methods of printing patient information, often using bar code labels. However, hospitals still might not be using today’s technology to its limits. That’s where MABS comes in.

MABS has created a stand-alone bar-coding solution, which it calls Patient ID XPress. The solution components include a customized barcode printer and a barcode scanner. The Patient ID XPress system gets information from the hospital system and then generates patient wristbands or barcode labels that can be used for a variety of healthcare applications.

The solution MABS created is attractive to hospitals for a number of reasons. In the event a hospital was still using a plastic card system, the results from Patient ID XPress would be clear legible labels and wristbands. If the hospital was using laser printers (often a first step hospitals take to bar coding) to generate labels, the direct thermal print method of the MABS solution is more cost-effective. Also, as a stand-alone solution, Patient ID XPress is not connected to the hospital’s network. Because the firmware and software to create the labels is on the device itself, should the hospital information system go down, staff can still generate labels without altering their workflow. Snow explains that this isn’t the case with other systems used to print patient labels.

Custom Programming Leads To Stand-Alone Printer Sales
To create its Patient ID XPress solution, MABS worked for a year to develop the software and updated firmware that resides on the TSC Auto ID Technology printers and Datalogic scanners it uses. While the software has core functionality regardless of the customer, Snow says every hospital has different requirements (ranging from the layout of the label to the way data is accessed from the information system), making every install unique.

Snow says hospitals are very receptive to the solution due to the stand-alone nature of it. “With the complexity of healthcare systems today, hospitals don’t want to waste time thinking about something as mundane as labels,” he says. “Because our solution requires no hospital IT intervention to implement, it’s easy for them to say yes.” To further improve the odds of making the purchase, MABS mandates customers pilot the solution for a week or more. While it takes the integrator a couple days to set up the free pilot system, having a live trial often sells the hospital staff on the benefits of the new solution.

Once a hospital is generating bar codes for patients, a host of other potential solutions and opportunities is created. Most solutions are built around the concept of positive patient identification. Put simply, hospitals today are compelled to do everything within their power to ensure patients are getting the correct care. Government mandates, potential lawsuits, and bad press all contribute.

Other opportunities include the revenue that comes from supplies. Not surprisingly, a dozen printers throughout a hospital can use a lot of media in the course of a year. In fact, Scheid says 35% of MABS’ income results from the sale of media. “We have a customer who bought printers from us six years ago,” says Scheid. “While we haven’t sold them additional printers, we’ve been selling them media every month.” Depending on the size of the hospital’s supply room, orders can come as often as weekly, monthly, or quarterly. In fact, Scheid says MABS has one customer that orders supplies every few days.

Finally, there’s the opportunity of maintenance. “No matter whose printer it is, they eventually need a printhead or something replaced,” says Snow. In 2008, 25% of the VAR’s revenue came from maintenance contracts.

Combining sales of new Patient ID XPress systems (the integrator is expanding this effort by signing up VARs of its own), supplies, and maintenance, MABS is again on pace to achieve 15% revenue growth in 2009. What begins as a bar-coded patient creates enough opportunities for those VARs committed to the healthcare vertical.