Provider Strategy

Let Your Data Speak

Three ways advanced KPIs and analytics can help HME providers increase their profitability

At a time when many home medical equipment (HME) providers need to keep track of every penny passing in and out of their doors, many still don’t take the time to understand their numbers and struggle with knowing how to increase profitability. Running an HME business without utilizing data and analytics is akin to driving a car using only your rear view and side mirrors. You can see where you are and where you’ve been, but it’s extremely difficult to see where you’re headed.

What providers need is robust, actionable information. More importantly, they need to know the right data and be able to track it on a reliable basis. Fortunately, HME software systems can help providers track the key performance indicators (KPIs) that will help them ensure success. By using analytics, providers can visualize their entire workflow to immediately understand bottlenecks and take corrective action.

If your HME business has a hard time gathering and interpreting data, it might be time to make analytics an integrated part of your company. If you put KPIs in place, you can be proactive by seeing where your money is coming from, finding new opportunities for cash flow and solving problems before they become a headache.

If you’re looking to improve your business’ bottom line and increase profitability, here are some ways that data and analytics can help generate revenue and improve operations.

1. Know Your Winners From Your Losers.

Setting a baseline for your business’ overall health is crucial. If gross profit changes, something needs to be addressed — quickly.

In order to determine product profitability at various reimbursement rates, you need a tool that can use your actual sales data to instantly calculate gross and net profit for all payers. Being able to input things such as fixed costs like delivery, administration costs, overhead costs, et cetera allows you to select from several cost allocation methodologies.

It’s also important to be able to see real-time sales, costs and profitability in detail. With reports such as these, it’s easy to see your gross or net profit at any given time. Measuring gross profit is an easy-to-monitor, warning system for your HME business. It’s a good baseline for the rest of your benchmarks and analytics.

2. Don’t Wait, Drive Your Receivables.

With long billing cycles and denials, it’s critical to automate your cash flow and forecast 30, 60 and 90 days out. This very simple metric will show the difference between your business’ inflows from sources such as sales or loans, and its outflows for items such as bills or inventory purchases.

Additionally, it’s critical you monitor trends like Days Sales Outstanding (DSO), revenue billed versus collected, revenue held for pending documentation, new sales orders versus confirmed sales orders and more. Take advantage of tools that can help you manage your outstanding A/R, and use fixed reports and real-time interactive worklists that you can distribute evenly among your team members.

These strategies will help you effectively measure where your money is by payer and timeframe, and help you successfully collect your receivables.

3. Inventory – Turn Baby Turn.

Once you understand your profitability, you need to determine and maximize the pace of your profit. Using a tool that measures the speed your company can sell inventory is critical to business performance and success. Because many items that HME businesses keep in stock are very expensive, inventory turn times are a “must monitor” KPI.

You want highly profitable items to show increasingly higher turns over time; low turns may be a sign of product overstocking, obsolescence or marketing deficiencies. You don’t want to be under and then out of stock on a key item, nor do you want to be overstocked on items that aren’t profitable or ones that will soon become obsolete. Inventory turns are critical for all HME providers and product lines, whether purchasers use government or commercial insurance or retail/cash. Using an inventory tool makes it easy to measure and manage turns, so you always keep the right amount of stock on the right items at the right time.

Summing Things Up

The world has moved confidently into the information age, and the one thing businesses are not short of is information. Luckily for HME providers, there are software systems designed to help track KPIs and important data. Today’s HME software systems offer a variety of robust reporting tools that can help drill down on the metrics that mean the most.

With information readily available, you can use the data points as benchmarks to get an idea of how your business currently performs. Ultimately, by measuring KPIs and utilizing a strong support tool such as business analytics, HME providers can improve output, fine-tune efficiency and enhance overall performance all while increasing profitability.

Who knew your data had so much to say?

This article originally appeared in the September 2018 issue of HME Business.

About the Author

Sunil Krishnan is the vice president of operations and analytics for HME software company Brightree LLC’s Revenue Cycle Management (


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