Products & Technology
The HME Dashboard
How providers are leveraging executive-level reporting tools to put operational efficiency in the fast lane.
- By David Kopf
- May 01, 2012
“What gets measured gets managed.” That management axiom might be as old of the hills, but it speaks abundant truth about how critical it is to constantly monitor a business’s performance in order to ensure success. And perhaps no industry better embodies that sentiment than home medical equipment.
HME providers are under monolithic levels of funding pressure. Whether it’s Rounds One and Two of competitive bidding; the 9.5 percent cuts Medicare Improvements for Patients and Providers Act; category-specific pressures such as the oxygen rental cap or the removal of the first month purchase option for standard power mobility; or CMS’s staggering ramp up of pre- and post-payment audits on various claims — not to mention pressures from the private payor sector — providers have watched their revenues through Medicare funding ratchet down on an incredibly fast basis. So must so that they have had to practically reinvent their entire business plans.
This has put HME businesses in the position of having to buttress their bottom lines as much as possible, and that means focusing on efficiency. Management cannot take a laissez faire attitude towards keeping strict control over inventory overhead; optimizing delivery operations; and ensuring that set-ups are smooth and adhere to all documentation needs the first time around.
Moreover, providers need to maximize the performance of their efforts to drive revenue. For example, they must ensure that their retail operations are leveraging patient trends to drive sales, or that retail transactions are tied to overall inventory control.
And, of course, billing efficiency has taken on a whole new dimension when it comes to managing HME businesses. Ensuring that claims are properly submitted and that all documentation correct not only adds alacrity to the reimbursement process, but helps protect providers from costly audits and recoupments.
While these seem like diverse concerns that would be almost impossible to rein in on their own, there is one tool that can tie this all together: software systems specifically designed to help manage HME businesses. In just a few short years, HME-specific software systems have helped providers quickly respond to massive industry changes by helping them maximize efficiency, ensure compliance and streamline workflows.
The overruling factor in how software has helped providers create these nimble businesses that can pivot at a moment’s notice is data. Once software is in place, providers begin generating and collecting data. And that means that they can start to examine that data and use it to not only judge how their business is performing, but to identify areas in which it can improve.
Reporting tools are incredibly invaluable for HME providers in terms of monitoring, and thusly managing, their businesses, and perhaps no tool better gives providers at-a-glance feedback on how their operations are performing across all departments than dashboards. Consider software dashboards a sort of “executive summary” HME owners and managers to monitor how each element of their business is performing, and if there are any possible problems. Just like the dashboard in a car, dashboards pull key metrics and assemble them into one or two simple screens, presenting them via basic graphic and numerical feedback.
For the providers that have adopted dashboards and similar reporting tools, the quick access to key data has become essential in driving their business management.
“They’re very important,” says Ryan Bennett, president and CEO of Providacare Medical Supply, which operates multiple HME locations in Texas and Minnesota and uses Brightree Software’s dashboard features to stay on top of each site. “We actually look at it as our scorecard, and to make good decisions.”
Given how complex and intricate running an HME business can be, owners and operators have to ensure that they are keeping above the details, and getting a more “holistic” view of their businesses.
“What the managers are looking for is for everything to be boiled up into a few screens,” says Ken Pereira, vice president and general manager of Alternate Care Solutions for software firm Mediware. “How many new referrals did I get this month? Did I get enough new referrals from this new source? Are my contracts profitable? They’re looking at the top analytics. … They want the top view of a very complicated business.”
Beyond know if they are making their money and are profitable, Pereira says providers are looking for efficiency and productivity.
“If [managers] look at a given contract and see that it’s not profitable, it’s either a bad deal or it’s that their being imposed by so many different requirements with that contract that the productivity is way down,” he explains.
There are a variety of pieces of data that get collected different dashboard tools offered by software vendors. While HME software might have started out offering lots of powerful billing tools, now every aspect is being measured — especially those that represent considerable overhead.
“One of the big ones is inventory turns,” says Spencer Kay, president of Fastrack Healthcare Systems Inc., a maker of HME software for HME providers that includes a dashboard feature. “A lot of providers are finding that they need to be better managers of inventory; understand what products are moving; and maybe they should be drop shipping or outsourcing certain portions of their inventory. So much of their capital is tied up in the inventory.”
A key inventory report is open tickets and held items, which Bennett says his business combines as a single metric.
“We combine those both into one, and the reason being is that it represents a product that we have set aside that we have yet to file a claim for,” he explains. “So whether it’s a held item for which we haven’t received a CMN or an open ticket where we just generated an order, we monitor the days it takes to close those out, and the percentage that is sitting on the sideline that’s not yet been billed.
“We also look at our asset management; how many units do we have out that it’s our cost to purchase that unit that is not earning us any revenue,” he adds.
Kay says an other important data point is seeing how much business is coming from referral sources, and what kind of business, when, and from whom. They can see where patients are coming from and how much business they represent. “So we’re seeing a lot from almost sales and marketing standpoint,” Kay says.
And then providers are also using dashboards to monitor classic HME provider business metrics such as days sales outstanding (DSO) and other traditional operational and billing metrics, such as collection efforts and how much is being brought in by various collectors in the company.
Other key financial metrics providers should monitor include the volume and dollars associated with sales orders; sales orders created vs. sales orders confirmed; the volume of CMNs logged; percentage of claims on-hold waiting documentation; dollars of payments on a monthly basis and what percent of the allowable dollars that are being created as revenue, according to Steve Andrews, general manager of customer services for HME software company Brightree LLC.
A key dashboard element that Providacare relies on is one that monitors 60-days’ collection, Bennett says.
“If we book one dollar in January, of that dollar, this shows within 60 days how much of that dollar do we collect,” he explains. “Our goal is to collect 97 percent or more of what we book 60 days prior.”
But providers have to be careful about the data that they monitor via their dashboards. Often, they can lose the forest before the trees. Case in point: DSOs.
“DSO is the most misunderstood and mismanaged metric in this entire industry,” Brightree’s Andrews says. “It’s a financial metric and nothing more than that.”
Andrews gives an example: “You have a million dollars in accounts receivable, and your average daily sale is $10,000. If you take one million and divide it by 10,000 that tells you that you have a 100-day DSO. I’m going to come in and tell you that 50 percent of your accounts receivable is over a year old. Just write it off; you’re never going collect it.
“Now your accounts receivable is $500,000,” he continues. “Take 500,000 and divide it by 10,000, and now your DSO is 50 days — in one day. Now everyone is skipping down the hall saying, ‘Our DSO is 50 days!’ You should be crying about the fact that you just wrote $500,000; not that you have a 50-day DSO.”
So, monitoring one metric through a dashboard, without monitoring the other metrics that impact it could lead providers to completely misunderstand an important element of their businesses. Suffice it to say that care is required.
“People have to understand that DSO is only worthwhile if you’re actively writing stuff off, and you’re actively managing your collections,” Andrews explains, using the DSO example. “If you let items build up in your accounts receivable, it is a useless metric.”
The key to dashboard effectiveness, Providacare’s Bennett says, is to get as close to real-time information as possible. Challenges can be minimized if they are reported and caught early enough, and dashboard that is refl ecting what is going on in the business in as at-the-moment fashion as possible is going to give owners and operators the kind of early warning system they need to address the problem.
This is especially true if the business is growing and perhaps running multiple locations. And even more true if those locations are somewhat geographically dispersed. Then feedback at the fingertips becomes critical.
“I think the bigger the organization gets, or as you try to scale it, the only way you can have your finger on the pulse, so to speak, is to have that dashboard visibility,” Bennett explains. “You can’t physically be in every location, and I think if you’re going from a single location to multiple, you’re really going to have to have some type of dashboarding. Then you can be out ahead of things.
And it can be tough for growing providers to come to that realization, he adds, explaining that while at one time a provider operating at one or two nearby locations might be able to huddle the team together to quickly assess performance and identify and address problems, once a provider grows beyond that, it needs to realize that systems and the data they produce are the replacement for that feedback.
Dashboards become the virtual team huddle, and with them, not just management, but departments can see how they are performing and where problems might be. Sales and billing operations can see how much they are booking for each branch, vs. how much is being collected, for instance.
“We have eight locations now, and three of them are in northern Minnesota and the other five are here in Central Texas,” he explains. “For the management team will alert management and employees, and they can respond as needed. If a warning light comes up on the dashboard, then Bennett says providers can use the tool to “start digging in the details, and say, ‘Okay, where are we having a hold up in this system?’”
In fact, turning dashboard features into a real-time “scoreboard” can help motivate staff to increase their performance. This can be great at motivating teams of CSRs, for example.
“You can go to a screen and see all the CSRs, all the orders they’ve entered for the day, and the dollar value of those orders,” says Fastrack’s Kay. “That constantly refreshes throughout the day, and what we’ve said to clients is to put that up on a widescreen monitor in that department so that everyone can see how each other is doing. It’s a great incentive for people because everyone wants to be at the top and doing the best.
“It really gets people excited,” he adds. “People want to do a good job, and sometimes you have to give them the tools”
And the tools can let providers respond to problems in powerful ways. While they might be a dashboard, they are tied to powerful software systems that can offer much more detailed insights into the problem.
Think of your car. While the check engine light might come on, you probably won’t know what that light represents until you can take it to the shop and the techs can hook your car up to a diagnostic system that can interpret the problem codes produced by your car’s computer in order to troubleshoot your car’s problem.
Using a software dashboard, it’s as though a car was already connected to the auto shop and the techs were already discerning what was wrong. In the case, the HME to see what’s going on, and to have that ‘field-level’ dashboard … that’s really the ultimate operational efficiency tool.”
And if operational inefficiencies rear their ugly heads, the dashboard owner can see a problem on the dashboard, and immediately click on the chart or graph that is illustrating the problem to start “drilling down” into the data to help identify the problem.
And of course, using dashboards isn’t entirely reactionary. A provider can use software dashboards to monitor how much progress it is making toward adhering to new performance objectives. This can be set for not only the organization as a whole, but by department.
“We’ll set a goal such as keep our open ticket below 10 percent,” Bennett says. “So if you’re over 10 percent, not only is that an area of concern, but we’ll benchmark you against another branch that is of similar size and if you’re 12 percent and they’re at 4 percent, we’re going to use that operational dashboard as a learning tool.”
So, if the other branch or department is doing the same type and scale of business, but seeing much more positive results, there is a hang up in a process that is causing problems and needs to be fixed. This shows the power of a simple tool: it can be used to monitor adherence to goals, and help detect and fix the faults that might be causing a lack of adherence to ensure long-term performance improvement.
Ultimately, a provider can’t make smart decisions unless it has information to go on, and software dashboards provide them with instant information on how their businesses are performing at that very moment. Imagine trying to drive without a dashboard in your car; difficult indeed. Now imagine trying to drive a race car without a dashboard; almost impossible. This is the challenge providers face in today’s funding environment. Because they must be able to drive efficiency at breakneck speed, for many of them dashboards will become an indispensable tool.
This article originally appeared in the May 2012 issue of HME Business.