4-page Case Study - Posted 5/26/2006
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Long-Term Care Manager Grows Its Business with Millions in Operational Savings
Nexion Health manages long-term care facilities for some 3,500 patients in 41 locations. Nexion Health was started by two veteran healthcare managers who saw an opportunity to grow their business in locations where, by consolidating business processes and financial controls, lower costs would give their company a competitive edge. Nexion executives selected Microsoft Dynamics™ GP, formerly known as Microsoft® Business Solutions–Great Plains®, as their financial management and reporting tool. This business software allowed the company to customize its financial system so that a central staff now manages the accounting and reporting aspects of the business while creating separate statements for each business unit. Company annual revenues have grown to more than U.S.$175 million, and executives credit Microsoft Dynamics GP with giving lenders the information they need to make timely management decisions and finance the company’s rapid growth.
Situation
Nexion Health manages 41 long-term care facilities primarily located in Texas, Louisiana, and Colorado. With more than 4,000 employees and annual revenue of more than U.S.$175 million, the company cares for approximately 3,500 patients.
Nexion was founded in 2000 by two veterans of the long-term care industry: Fran Kirley, President and Chief Executive Officer (CEO), and Bretton Bolt, Executive Vice President (EVP) and Chief Financial Officer (CFO). Kirley and Bolt knew Nexion Health would be competing in a difficult environment and would need to take a strategic approach to business processes and financial management. Nexion’s leaders wanted to be able to control costs more effectively and more tightly than potential competitors. Such control would give management the opportunity to grow its business profitably in geographic areas where the reimbursement rates set by legislators or healthcare regulators are low and, therefore, lower overhead costs would be a telling factor in success.
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We could not have created this system without the ability of Microsoft Dynamics to give Nexion the sophisticated accounting system and the sophisticated reporting system the founders of the company wanted. |
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Lou Spevack,
Lead Technical Consultant, RSM McGladrey |
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Long-term care facilities typically receive a significant part of their revenue from federal government contracts through programs such as Medicare and equivalent programs from state governments. The funding agencies tightly control the reimbursement rates for these contracts. In addition, service providers must be able to provide financial statements and reports that demonstrate compliance with state and federal regulations.
Nexion wanted to track its financial performance as accurately as possible. The crucial metric for long-term care facilities is “per patient day” (PPD). This daily measurement can be obtained only by computation of both fixed and operational costs for every facility in relationship to the number of patients. Having a general ledger with the flexibility to enter other units such as patient days was absolutely necessary.
Even at startup, Nexion executives wanted to maximize the advantages of a single business management solution for the entire company and all facilities. “We had the goal of keeping the quality of care our number one priority. We wanted to make sure we were providing the best care we could, without having a high cost overhead structure,” says Bolt.
The new company would expand by acquisitions and, because regulations and provider rules require each subsidiary to carry its own tax number, Nexion executives would have to operate each nursing home they acquired as a separate company with a separate general ledger.
“We have close to 55 general ledgers related to Nexion,” says Bolt. “I can run a consolidating statement in a matter of minutes using Microsoft® FRx® and Microsoft Dynamics. I’ve had other CFOs—for similar sized companies—tell me that they wait hours or even run reports overnight so they have them in the morning. We wanted to do better than that.”
Solution
As they formed their company, Nexion Health executives evaluated accounting systems from such vendors as Peachtree and Lawson, as well as industry-specific accounting and Accounts Receivable packages. Company executives decided to implement Microsoft Dynamics™ GP. “We chose [Microsoft] Dynamics because it allowed us to exercise financial control with a strong general ledger. The competing packages were based on an accounts receivable model and a less robust general ledger made it more difficult to do the kind of reporting Nexion needed,” says Bolt.
To implement Microsoft Dynamics GP, Nexion Health turned to RSM McGladrey, a Microsoft Gold Certified Partner with extensive experience in implementing Microsoft Dynamics accounting and management solutions. Nexion and RSM McGladrey worked together to create the business processes and accounting rules for the new company at the same time, explains Lou Spevack, who was the Lead Technical Consultant for RSM McGladrey. “We could not have created this system without the ability of Microsoft Dynamics to give Nexion the sophisticated accounting system and the sophisticated reporting system the founders of the company wanted,” Spevack says.
Another Microsoft Certified Partner, Virtual Care Provider, Inc. (VCPI), offers a centralized, hosted service that allows Nexion to process all billing and invoicing individually by each facility, but from a central location—a solution that produces the most efficient staffing possible.
Nexion, RSM McGladrey, and VCPI customized Microsoft Dynamics GP and Microsoft FRx to implement Nexion Health’s unique vision of how to run its business.
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Microsoft Dynamics allows VCPI to bring a quality of solution that used to be available only to Fortune 500 companies to a growing midsize-segment company. |
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Loren Claypool,
Vice President and Managing Director, VCPI |
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Loren Claypool, Vice President and Managing Director at VCPI, says, “Microsoft Dynamics allows VCPI to bring a quality of solution that used to be available only to Fortune 500 companies to a growing midsize-segment company.”
Benefits
By using its Microsoft Dynamics GP solution as a key part of its business strategy, Nexion Health can manage expenses through a centralized system. Now the company can give its top managers nearly instant access to the information they need to run the business, while providing individualized reports to satisfy regulators and lenders.
Using technology to manage costs is a key part of Nexion’s business strategy. “We have a corporate overhead of about $7 million, which is extremely low in this business. This level is achieved because we don’t have a lot of back-office financial support staff. We’re able to lower our staffing and benefit costs as a result of having efficient systems,” says Bolt. “Microsoft Dynamics GP is extremely cost-effective, and it gives us the breadth and depth of reporting and financial management we need, in a well-designed interface that our people are very comfortable with,” he says.
U.S.$1 Million Saved in Implementation
Bolt estimates that competing solutions, which might not offer the same functionality, would cost at least twice as much. “We know we’ve saved a million dollars over some of the alternative accounting and general ledger products, specifically in the development and implementation stages,” he says.
Comprehensive Reports Produced in Minutes
Microsoft Dynamics GP has allowed Nexion to quickly get needed information without spending management time sorting through data. “That’s the most significant contribution that the product has made. The data is there, we trust the system, and all of our financial partners are also able to rely on the information,” says Bolt.
Accurate and comprehensive reporting has been a key to Nexion’s success, both in managing day-to-day operations and in providing the long-term financial data needed to convince lenders to support the company’s growth-by-acquisition strategy. “We can get comprehensive reports on all the general ledgers in the entire company in a matter of minutes,” Bolt says.
The positive response from the lenders and investors that provide financing for Nexion Health is another indicator of how valuable Microsoft Dynamics GP has been, Bolt explains. “The quality of reports and financial information we’re able to give them is not something that they always see from other companies of our size. It’s just been a fantastic solution.”
Extensive Scalability to Accommodate Growth
The ability to customize Microsoft Dynamics GP is critical to Nexion’s business strategy. Nexion customized the solution to suit the way it does business and to support the company’s rapid growth.
Nexion Health can add a property, establish a database, open a set of books for that property, and start operations within one day, Spevack says. He explains, “Nexion uses the same modules, the same defaults. Managers set up the model database, apply the image of that setup to the new database, and they’re off and running. They enter the opening balances, and they can start entering transactions.” Without the customized Microsoft Dynamics GP system, the startup process might take two weeks of accounting setup, Spevack estimates.
Customization allows Nexion managers to track expenses in detail. Spevack adds, “We set up a complete, customized chart of accounts for every facility we have.”
Hosting the Microsoft Dynamics solutions in a central location makes both customization and scalability easier to manage. “A big part of the VCPI solution is helping the client turn what would otherwise be capital expenditures on technology into predictable operating expenses,” says Claypool. “With the scalability inherent in the Microsoft Dynamics solution we’re able to bring that same predictable investment to the client so that they can focus on what they do best, which is to manage their business and take care of their residents."
Microsoft Dynamics
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
For more information about Microsoft Dynamics, go to:
www.microsoft.com/dynamics
For More Information
For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
www.microsoft.com
For more information about RSM McGladrey products and services, call (800) 274-3978 or visit the Web site at:
www.rsmmcgladrey.com
For more information about Virtual Care Provider, Inc. (VCPI) products and services, call (866) 407-6377 or visit the Web site at:
www.vcpi.com
For more information about Nexion Health, Inc. products and services, call (410) 552-4800 or visit the Web site at:
www.nexion-health.com
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This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.
Microsoft, FRx, Great Plains, Microsoft Dynamics, and the Microsoft Dynamics logo are either registered trademarks or trademarks of Microsoft Corporation or FRx Software Corporation in the United States and/or other countries. FRx Software Corporation is a subsidiary of Microsoft Corporation.
