2016 HME Handbook

How to Leverage HME Software as a Strategic Management Tool

There are several ways that HME software and information technology can help providers function more strategically.

HME SoftwareWhen providers first began using software to manage their businesses, their main objective was to simplify billing and claims processing. Now, information technology influences every aspect of the HME business, and has become a true strategic asset that providers can use to not just survive in today’s tough reimbursement climate, but thrive.

Software enables providers to increase their efficiency and cut costs, as well as identify new market opportunities and tap into them. How? Because IT turns them into more flexible businesses that can quickly adapt to marketplace changes. And if there’s one segment of the healthcare market that has seen considerable change, it is the home medical equipment sector.

There are a variety of ways that software can help providers function more strategically, but if there is one unifying theme, it is information. Software gives provider management the ability to more quickly collect valuable information on their businesses and then make the right decisions based on that information. Instead of guesswork, providers have a solid idea of how they are currently performing and what they need to do in order to improve their performance or adapt to marketplace changes.

Let’s take a look at some key ways that HME software solutions can help providers function more strategically:

Driving efficiency. One of the key strategic advantages of HME software is that it can help providers measure their operational efficiency and business performance. This is critical in the current Medicare and private payor insurance market, where reimbursement is being driven down on a seemingly regular basis by policies such as competitive bidding. This means that providers need to measure a variety of aspects of their business and start tracking their performance. The more that a provider can drive cost out of the business while increasing revenues, the more that provider will shore up margins and keep its businesses performing despite Medicare and other cuts.

Some key performance indicators (KPIs) that providers should monitor are days sales outstanding (DSO); number of incoming referrals; inventory turn times; incoming orders by referral source; time to process an order; time to collect an order; and employee task completion (compared to relevant peers). A solid HME software solution will help providers measure their performance in these capacities.

Setting objectives. Of course, those KPIs don’t exist in a vacuum. The point with any performance measurement is to use it to not just watch performance, but to improve it. By using these KPIs to benchmark business performance, providers can get an idea of how their business currently performs and use that as a starting point for setting company and department objectives for improving output, fixing a problem or fine-tuning efficiency.

Dashboards. One way that providers can stay on top of those KPIs and how they are comparing to goals is through a dashboard. Dashboards are essentially executive summary views that visually display the company’s current metrics and KPIs. Just like the instrument cluster on a car, a software dashboard is used to monitor the major functions at a glance to tell what is going right and what may be going wrong. Many software HME offerings offer dashboards that let provider owners and operators track KPIs on a real-time basis. Moreover, many of these dashboards can be tailored so that the provider can have a custom view of its specific KPIs. This can help them more quickly recognize and address a drop off in a department’s performance, and it can also help them identify when a department’s performance starts to excel beyond expectations — perhaps employees in that group have hit on a new efficiency that can be duplicated in other departments.

Reporting. On the other end of the performance monitoring spectrum are reporting tools that help providers watch their businesses over time. A provider needs to track its performance not only in real-time, but over the month, quarter, half and year so that it can have a solid idea of how it is performing against plan, identify seasonal variations, get a better idea of how well the business is doing, and what needs to be done over time to get it to the next goal.

Inventory control. While this might seem tactical, inventory management is truly strategic in the provider business. If there is one aspect of the provider business that needs strategic attention, it is inventory control. For many providers, their inventory of expensive DME items can represent their single biggest overhead item — and in today’s funding market that can be a big problem. Too much inventory and the provider is far too over extended. Moreover, if the provider cannot move that inventory, it is watching an expensive capital expenditure collect dust. And, in the case of retail sales, inventory turn times become even more crucial, because stocking too much of the lower priced retail items can keep a provider from running a profitable retail operation. Today’s software solutions help providers keep better, more cost-efficient track of their inventory and also help them implement automatic reordering for items that are heavily ordered.

Retail. As providers hunt to diversify their revenues into areas that are free from the constraints and cuts of Medicare reimbursement, retail has clearly risen as the chief way to achieve that strategic objective. Knowing that, many software companies serving the HME space have worked to give providers better tools to manage their retail businesses, including point of sales systems that incorporate cash registers, barcode scanning, and credit card processing, as well as integration with back office systems, such as patient records and inventory management. They can even let providers conduct the sorts of things retail customers expect, such as special pricing and discounts for promotional events.

Interoperability. Lastly, a key strategic aspect of HME software is interoperability. In the near future, providers will increasingly need to better connect with their referral partners so that they can more easily share claims documentation and similar records in a secure, and HIPAA-compliant fashion. Interoperability is already a key concern in the hospital and physician world, and those interoperability needs are bound to trickle into the post-acute care market. As providers work to maximize their strategic use of software, interoperability will be a key consideration.

Points to remember:

  • Software can help providers track key performance indicators, both through real-time dashboards, as well as reports over time.
  • Providers should use their reports to set goals throughout the business, and then use the feedback software offers to help them track progress.
  • A key strategic cost area that software can greatly help providers manage is purchasing and inventory control.
  • A key strategic growth area that software can help providers expand into is retail sales.
  • As providers leverage their software, they must prioritize IT interoperability with other care providers and referral partners, because it will be an increasingly expected capability.

Learn more:

This article originally appeared in the June 2016 issue of HME Business.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.

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