Reimbursement: Keep Your Equipment Where it Belongs
Even though your business is home medical equipment, you know you are doing well if you rarely see that equipment. Nothing is more troubling to an HME provider--particularly if he's a small business owner--than seeing a warehouse full of equipment. That's because your equipment can only make money for you if it's out in patients' homes where it belongs providing reliable service day in and day out. Equipment that sits in your warehouse is a wasted asset, a drain on your profitability that few providers can afford in these days of increased Medicare cutbacks.
Of course, nearly every employee in your company bears a portion of the responsibility for keeping your equipment out of your warehouse and in patients' homes where it belongs. Your sales and marketing personnel must cultivate relationships with referral sources and potential customers to keep new business continually coming in the front door. Your purchasing department must choose dependable, proven equipment that you know you can rely on for many years. Equally as important, your repair and maintenance procedures must ensure that your equipment gets repaired quickly and correctly the first time so it can get back out into service as fast as possible.
Even before the Medicare Modernization Act hit President Bush's desk, HME providers nationwide were looking for new ways to improve efficiency and cut costs. The specter of Medicare rate freezes, cuts and competitive bidding has made that drive just that much stronger.
Yet when looking for ways to save, many HME providers overlook their repair and maintenance operations as an area for potential savings. In this article, we will evaluate the reasons why efficient repair procedures are so important to your bottom line and share some money-saving repair tips.
The money you are spending on equipment repair and maintenance is just part of the cost of doing business, right? Wrong. Although there is no getting around the need for regular equipment repair and maintenance, it doesn't have to cost so much. Nearly any provider, no matter how small or large, can find ways to save money in their repair operations without jeopardizing the reliability of their equipment, all while improving equipment turnaround times.
The benefits of reevaluating your repair operations are many. How many of your service calls could be avoided, particularly those costly late-night visits by on-call personnel if your equipment worked properly more of the time? Could you get better use out of your warehouse space by outsourcing certain repair needs? Could personnel be reallocated to other revenue-generating tasks if they were spending less time repairing equipment? How much money are you spending on replacement parts and supplies for your repair operations that could be put to use elsewhere to grow your business?
You are in the business of providing home medical equipment, not repairing it, right? So if you feel that the repair and maintenance of your equipment is eating up a disproportionate amount of your company's time and money, it may be time to reevaluate your procedures and make some changes.
Money-Saving Repair Tips
Here are a few tips for reducing costs and improving efficiency that you can put to use in your repair and maintenance operations:
Perform regular preventative maintenance.
If maintained properly, an oxygen concentrator can run 70,000 hours and beyond, but very few do. That's because too often the regular maintenance concentrators need isn't done until the unit starts to perform poorly or stops working altogether. You may never need to make a service call for a faulty unit again if you follow the preventative maintenance recommendations of the manufacturer and give your equipment a good overall cleaning inside and out and a complete filter change at least once a year.
Keep good maintenance records.
Regular preventative maintenance requires having complete records of all maintenance and repairs done on your equipment. Keep a log of each unit you own and record all filter changes, repairs, compressor rebuilds or other work performed on the machine. Devise a system that will remind you when each unit needs preventative maintenance and stick to it.
Have sieve beds remanufactured instead of buying new.
At more than $100 a set, replacing sieve beds on concentrators can make up a costly portion of your repair expenses. Having your sieve beds remanufactured instead of buying new ones can save you 40 percent or more without sacrificing equipment performance. Be sure to find a company that tests your sieve beds on an actual concentrator before returning them to you, and ask about their failure rates to be sure you are getting like-new quality.
Send compressors out for rebuilding.
Imagine how quickly you could get your equipment back out into service if you had rebuilt compressors sitting on the shelf that you could simply switch out. Your concentrators don't need to sit there waiting for the compressor to be rebuilt. Using an outside compressor rebuild service can save you considerable time and expense and help you ensure that there is always a rebuilt compressor ready to go. Just like remanufactured sieve beds, be sure the company you are using is testing your compressors on a concentrator before returning them to you. Even if you choose to rebuild your own compressors, be sure to always have a few extra waiting on the shelf to avoid unnecessary delays.
Consider purchasing reconditioned concentrators.
About 90 percent of all concentrator failures can be traced to the sieve beds, compressor or valves. If a concentrator is reconditioned with new sieve beds, a rebuilt compressor, rebuilt valves, new filters and a thorough cleaning, it can deliver like-new performance even if it doesn't have that like-new look. Typically, purchasing a reconditioned concentrator will save you about 50 percent and most come with a one-year warranty.
To Outsource or Not to Outsource
If you are looking to save money in your repair operations, it's important to at least consider whether you can achieve savings by outsourcing all or some of your repair and maintenance to an outside repair facility. Making this decision requires a careful evaluation of all of the costs associated with your repair and maintenance and weighing those costs against estimates from a few proven, dependable HME repair facilities. Some of the factors to consider include:
How much are you spending on salaries and benefits for your repair personnel? Could you avoid new hires or shift personnel to other revenue-generating tasks by outsourcing repair?
Turnover is generally high among repair technicians, which means training time and expense is a regular part of any in-house HME repair department. How much time and money are you spending on keeping up your current technicians? skills and training new ones?
Depending on the size of your company, your repair and maintenance operations could take up a substantial portion of your warehouse space. How much do you spend on rent for that space, and how could that space be otherwise used if your repair operations were outsourced?
To keep your repair operations running quickly and efficiently, you must maintain an adequate parts inventory for all of your makes and models of equipment. An insufficient parts inventory only adds to the length of time your equipment is out of service while it waits for the right parts to come in. Keeping that additional inventory can be expensive and takes up space. How often are your equipment repairs delayed because of insufficient parts inventory, and how much are you spending to keep that inventory? How do those costs compare to the costs of outsourcing your equipment repair?
Nearly any provider, no matter how small or large, can find ways to save money in their repair operations without jeopardizing the reliability of their equipment, all while improving equipment turnaround times.
If you have considered all of these factors and have decided to outsource a good portion of your equipment repair, you should ideally look for a local company that will pick up and deliver your equipment and that has a good track record of quality workmanship. Ask for references and check them. You won't achieve the cost or time savings you are looking for if you have to continually send back equipment because of shoddy repair work.
If you opt to outsource only a portion of your repair--such as compressor rebuilds or sieve bed remanufacturing--or if you are unable to find a reliable repair center in your area, choose someone farther away, making sure that both you and them have the proper supplies to ship your equipment back and forth safely. Any HME provider who has dealt with unreliable repairs before will tell you that the quality of the workmanship is much more important that the proximity of the repair center.
Make sure that the repair facility you select uses the cost-containing strategies outlined above, especially keeping a regular preventative maintenance schedule and detailed records of work completed on your equipment.
Is Your Equipment Where It Belongs?
In order to compete in the HME industry today, all of your departments need to work together to keep equipment out of the warehouse and in your patients' homes where it belongs.
Your repair personnel play a critical role in this effort. Efficiency in your repair and maintenance procedures is essential to maintaining your company's success in the future. Nearly every HME provider--no matter how small or large--can take steps to improve efficiency and cut costs in their repair operations, and that's money that goes straight to your bottom line.
This article originally appeared in the July 2004 issue of HME Business.