Page 22 - HME Business, Jan/Feb 2019

Keeping Pace with HME’s KPIs
“... The bottom line is that, in order to submit the clean claims to payers that result in fast and efficient collections, you’re going to need access to actionable data for monitoring KPIs.”
— Sunil Krishnan, Brightree
performance and maximize their revenues, but as an industry that encompasses multiple sources of revenue from retail to Medicare funding, HME comes with a unique set of needs.
“HME billing has its own set of challenges and is both capital and resource intensive,” explains Sunil Krishnan, CP of global operations and analytics at HME software company Brightree LLC. “When you couple those issues with today’s reduced reimbursement rates, it’s critical for providers to do whatever they can to get paid as soon as possible upon filing the initial claim.
“And the bottom line is that in order to submit the clean claims to payers that result in fast and efficient collections, you’re going to need access to actionable data for monitoring KPIs,” he adds.
KEEPING UP WITH
INDUSTRY CHANGES
Using KPIs to measure the health of your busi- ness is not a new practice, but changes in the HME industry require providers to pay closer attention to them in order to increase, maintain and monitor cash flow. With CMS funding cuts, more and more HME providers are integrating retail into their business model to seek out other sources of revenue. And providers who continue to rely on Medicare funding must be even more vigilant about making sure they are bringing in revenue.
David Golen, vice president of business development at industry software firm Universal Software Solutions Inc., has been in the industry for 18 years and has witnessed the industry’s changing landscape. KPIs have become much
more granular, delivering much finer points
of data, he says. This has pushed software to be better and more equipped to handle more complex operations.
“When I started in 2000, the software was more billing related and did duties that were specific
to certain processes in our industry,” Golen explains. “Now, software is becoming much more than just billing. It is really an overall business management from front to back.”
This includes improved access to data, smarter decision making on the part of the provider and better efficiency across the industry. “Before, you didn’t really know. You were guessing on a lot of things,” Golen adds.
With competitive bidding, new retail opportu- nities, and funding changes across the industry, guessing is not really a viable strategy for providers. The increasing demand for better, granular data has necessitated the development of more robust HME software solutions.
Though there are some general, rule-of-thumb KPIs that all providers track, such as days sales outstanding (DSO) and sales revenue, providers can dive deeper into their data to learn even more about business performance on multiple levels. For example, with DSO, a provider can learn how many days it takes to collect revenue, but as Golen points out, “there are many different components that cause the DSO to have a higher value that would be important to get your hands on, then to make better decisions that ultimately will affect your DSO in a positive manner.” In other words, more granular data let providers see how and why they got to the final DSO number in the first place.
“The driving force behind better software is the fact that you’re squeezing the ability to make any money in this industry, hence needing that information at a greater level,” Golen explains. “The need to get to granular pieces of informa- tion has driven the software to get better. There is no doubt about that.”
WHICH KPIS SHOULD
PROVIDERS TRACK?
When thinking about which KPIs to track,
Patty Harrison, content creator for Computers Unlimited (CU), developer of TIMS Software, recommends that “providers should most closely monitor the performance indicators that align with their strategic goals.” Though there are some KPIs that HME providers have tradition-
ally tracked, and should continue to track, such as DSO or sales revenue, the type of business a provider runs will largely influence what KPIs they choose to monitor more closely.
The integration of retail streams of revenue introduces a broader range of KPIs for providers, especially for those who are new to retail. Here are some essential KPIs for retail providers to consider tracking:
Gross profit serves as a touchstone for your business’s overall health. This KPI measures the difference between revenue and the cost of providing a service before deductions, such as payroll, taxation and overhead. A shift in margins between these two factors can be an early indicator that something is wrong and needs attention, so it’s important to monitor this KPI on a daily basis.
Cash flow is a simple but important KPI that accounts for the difference between a retail busi- ness’s cash inflows and outflows. If this KPI shows positive cash flow, then the business is in good shape, but if it shows negative cash flow — that the business is taking in less than it is spending — then there is a problem.
Sales per square foot is a standard retail KPI, which measures how well the store is performing by breaking down sales per square foot of the floor space. By monitoring this KPI on a frequent basis, providers can learn of any changes that
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Quick Guide to
Some Popular KPIs
• Gross Profit: measures the differ- ence between revenue and the cost of providing a service before deductions, such as payroll, taxation and overhead.
• Cash Flow: accounts for the difference between a retail business’s cash inflows and outflows.
• Sales per square foot: measures store performance by breaking down sales per square foot of the floor space.
• Inventory turn times: measure the busi- ness’s efficiency in turning inventory into sales per year.
• Customers per day: tracks individual customers who enter the store.
• Days sales outstanding: calculates the average amount of time it takes to collect revenue.
• Held A/R: reflects how much of a company’s accounts receivables is comprised of invoices on hold.
• Claim submit volume: monitors volume of claim submissions.
• Percentage of denials: indicates what percentage of claims or invoices have been denied for payment.
“The need to
get to granular pieces of information
has driven the software to get better. There is
no doubt about that.”
— David Golen, Universal Software Solutions