Products & Technology

Measuring Up

What metrics are providers using to quantify their performance — and success?

• By David Kopf
• Nov 01, 2015

You might have heard the expression “What gets measured, gets managed,” or maybe you have heard “What gets measured, gets done,” but no matter the variation on the theme, the meaning is clear: in order to improve your performance, you have to know how you’re doing.

This is why many providers are starting to pay much closer attention to how their businesses are performing. In an era where reimbursement cuts, competitive bidding, audits and other public and private payor pressures are impacting overall healthcare in the United States, providers must pay strict attention to their performance. Like cross-country runners weighing their food to the gram and tracking every step they take, providers must measure for success.

HME’s Metrics

The question is, where to start? Probably the first step into HME metrics is by defining the word. In the very basic sense, “metrics” are the measurements by which someone measures something. In the automotive world, key metrics might be cubic centimeter displacement, or horsepower. In the business world, key metrics might be gross margins, or monthly revenues.

In the HME world, the metrics by which a provider might measure are a little different. In fact, they can vary from provider to provider based on factors such as the types of medical equipment a provider specializes in, or the payors and revenue sources it might pursue.

That said, there are some commonalities worth exploring, and probably the best place to start is by breaking them down into two categories: business/operational metrics and care metrics. Providers need to know how their business is performing, and providers must know how the care they are offering patients is performing.

“In a typical HME business, patient care is at the top of the list,” says Jana Macon, vice president of Strategic Services for HME software company Brightree LLC. “Much attention is given to customer-facing activities and this should certainly continue. However, the HME businesses that are thriving in today’s reduced reimbursement climate have learned how to measure themselves operationally and have learned to move the needle in areas of efficiency and productivity.”

“The approach I’ve taken with most of the clients is this: Focus on what you can control,” says Dan Greyn, systems sales for HME IT vendor Computers Unlimited.

“Yes, you have to be cognizant of things like reimbursement rates, but you can’t control those,” he continues. “But what can you control? What can you become efficient at? And what metrics can you put in place to improve those areas?”

On the business front, one key area providers should measure is revenue generation and cash collection effectiveness, says Kimberly Commito, director of Product Management for the Home Care Solutions Division for Mediware. Providers need to know what types of sales are driving their revenue.

“In addition, categorization of products allows reporting on key reimbursement trends, which is also important to the health of an HME business,” Commito says. “Booking revenue and which products are selling most effectively is only one piece, the correct reimbursement and follow up required to collect cash once claims are processed with payers is also essential.”

Related to this is referral effectiveness. Providers must know what business lines are driving your sales and how effectively they are capturing referral business from the prescribers in their market, she adds.

One real area of concern is process and efficiency. Providers must focus on improving the process and execution of the most mundane tasks, according to Macon.

“An HME provider must know how many touches — how much effort is required (labor) for every major line of business,” she says. “They must work every day to decrease that cost in ways that do not forsake patient care.”

Greyn and Macon agrees that providers should take a key task and then trace every thing that happens to that order and literally every step of the workflow around that order to get a solid sense of how many touches go into its successful execution. That simple exercise is something many providers don’t do, and fail to realize big productivity gains as a result.

“There was a company that I was visiting a while back, and it’s not uncommon, but they were receiving the orders from a fax server,” he explains. “The first thing they do is they print it, then they route it, then they scan it. So looking at metrics on that is important. You can control how many touches [a process] takes. You can … get a baseline. But a lot of providers don’t have a good grasp of that.”

“I can think of the six major steps involved in any line of business: intake, documentation collection, delivery, billing confirmation, and cash collections,” Macon says. “In each of those areas there are discrete steps involved. All of those steps matter — which ones can be eliminated, automated, or streamlined?”

Bearing this in mind, Macon offers some examples for providers to consider:

• Time on hold.
• Time to collect documentation by referral source.
• Time to confirmation.
• Denial aging and follow up — is the provider following up as soon and as often as possible to collect its money?

Referral effectiveness is a key metric for Commito, who notes that providers should tracking what business lines are driving a provider’s sales and how effectively it is capturing referral business from those respective prescribers in its market.

Likewise, Greyn highlights the point about tracking how well referrals supply documentation for claims. Metrics are indispensable if there is a problem, because they serve as an objective third party.

“If you have the metrics, you can go back to back to the doctor and say, ‘We’re trying to service the patient, but we’re consistently having to go back and get additional information in order to service your patient,’” he says. “Without those metrics, I can’t go back and carefully have that question.”

Another workflow worth tracking is the amount of time between the delivery occurring (provision of product or care to a patient) to billing of the product or service, to collection of the cash associated is essential, Commito advises.

“This points directly to operational efficiency and the ability to provide care, and receive payment in quickest possible way, and in order to re-invest in your business to continue growth,” she says.

Another key area to measure is inventory. For many providers, inventory can represent their single largest overhead item, given the expense of some types of medical equipment. Inventory management is a bottom line reality that must be tracked and fine tuned, because it can also impact patient access to the right equipment, which in turn impacts care.

“Ensuring that product is moved out of inventory effectively and expiration dates are managed properly, for example in the case of enteral formula, is imperative to ensuring your cost of goods is protected,” Commito explains. “Inventory management solutions should allow for appropriate serial number and lot number tracking to ensure items are moving in and out of your warehouse at the proper speed and that inventory is being depleted properly so as to not compromise patient care.

Measuring Care

And there are various performance metrics related to the care given to patients, that providers should monitor, as well. This could be in terms of proper setup and training, therapy compliance, or outcomes, for example. Chief among those is ensuring providers adhere to their treatment, according to Commito.

“Compliance tracking is essential in monitoring patient activity,” she says. “Ensuring that patients are using their products appropriately and in the correct manner supports referral activity, which again promotes business and allows for growth. Even payors are beginning to require this type of tracking to provide adequate reimbursement.

“Software platforms that you utilize should be to track the ability to follow up on a regular basis with your patients that require monitoring, and should have the ability to import patient data for compliance in utilizing equipment or gather information related to their overall care,” Commito explains.

“Outcomes monitoring is essential as well,” she adds. “Defining desired outcomes and having a mechanism to capture data points related to the associated products provided to patients, allows DME providers to tell success stories around their services. In addition, the ability to share outcomes data with others in the industry, or benchmark to gauge success is important.”

Of course, the industry is already seeing providers in the venue of sleep therapy supply physicians and other key healthcare professionals with this kind of data in order to perfect a patient’s compliance and care.

“Providers that specialize in CPAP have begun to differentiate themselves with their referral sources by measuring their own performance,” Macon observes. “Two measurements that apply are time to service/set-up the patient and compliance with the therapy. These measurements are possible as CPAP machines are one of the first in the HME market to provide automated clinical feedback on usage/compliance for each patient.”

That kind of collaboration and monitoring can have a benefit beyond therapeutic benefits, because it can allow providers to differentiate among their competitors by proving their effectiveness as a partner in the care continuum.

“This is an exciting trend that will further enable HME providers to show to their referral sources what great results they produce,” Macon says. “The providers who are succeeding in this area have established very structured training processes at set-up, and they also have follow-up protocols where ‘sleep coaches’ are speaking to the patients after day one, week one, etc.

“The visibility that this provides to the referral source, and also to the HME provider, is outstanding,” she adds. “The HME provider can understand what types of support the patient responds to, thus allowing them to convert the patient to an ongoing resupply customer.”

Don’t think that care, compliance and outcomes monitoring will be limited to sleep therapy. As healthcare as a whole focuses on costs as they relate to outcomes, further attention will be placed on these sorts of metrics for all type so care. For instance, it’s like oxygen providers will soon monitor care metrics, and probably should if they want to establish their expertise and effectiveness to referral partners.

“CPAP therapy compliance is just the first market to benefit from the application of technology to provide necessary data, so that providers can focus their investment and effort on the exceptions — serving the patients that need their help in order to produce optimal results,” Macon says. “… By sharing the compliance data (initial and ongoing), the provider can continue to bring value and be relevant to the referral source and therefore gain more patients in the future.”

“That’s definitely going to grow into other areas,” Greyn adds. “And again, it goes back to metrics as far as what the provider can capture within its system. … Ideally having a system that allows you to configure and capture information, monitor it, follow up on it, and obviously report on it, is key.”

Technology’s Role

Already, the software and information technology that providers use offer various tools to let them track their performance (see sidebar, page 22). Various HME management and billing software packages offering reporting features to help them better understand key performance areas, and customizable executive dashboards to help management quickly summarize day-to-day business and care performance.

“Analytic tools are typically available with most software applications,” Commito says. “These not only provide good views into the metrics described above from a summary perspective, but also many times have additional reporting options to drill down into those metrics to provide granular detail in order to analyze and make adjustments to operational processes, and identify areas for improvement in gathering data more effectively to support initiatives around the areas described above.”

The key is the data input, she advises. Providers should evaluate what their software is capable of tracking and make plans to utilizing these reports.

“The data you capture, even on a simple day-to-day basis processing orders can tell a compelling story,” Commito says.

Macon adds that daily tracking and understanding basic workflows up-front will product powerful results on the back-end of the process.

The metrics that produce margin are often around the most mundane tasks,” she says. “If my technology platform can help me understand the ‘time in state or time in each step,’ it is helping me survive and thrive. A strong technology platform will allow providers to configure the optimal time for each step and will measure and display that in an automated way.”

It might sound a little over the top, but Macon says that optimally, staff members would have timers that would let them track their tasks each step of the way. That way they can truly set baseline metrics for performance and then work on streamlining to make big gains with the help of their IT infrastructure.

“If that level of work can be identified, management teams can have visibility to how many tasks, orders or revenue associated with orders is being held up at a particular point and they can work on solving the problem,” she explains. “For example, does that particular user or group need training, tools, or more resources?

“Every business has bottlenecks to clear and problems to solve every day; however, great businesses actively looking for issues and their technology should facilitate that effort,” Macon continues. “Having the proper reporting and real-time visibility to help you manage work in the most efficient way will make or break an HME business today.”

HME Metrics and the Future

As healthcare continues to evolve, one thing is for certain, an increasing emphasis on outcomes and costs will mean that providers absolutely must continue monitoring their businesses and their care.

“Therapy compliance and monitoring of patient success on various therapies will be key,” Commito predicts. “Insurance carriers and referral sources want to ensure that their patients are seeing success when using equipment, receiving treatment or utilizing certain products.”

This could possibly mean that partnerships could develop between the industry’s software companies and DME vendors and manufactures in order to share therapy information more effectively. Alternately, the industry could see collaboration on the gathering of patient data from different perspectives in order to paint a picture of overall patient and therapy success, she suggests. But one thing is definitely clear: metrics will define HME’s future.

“The days of receiving reimbursement just because you provided a service or product in a timely manner will be gone,” Commito says. “A patient’s success with that service or product and the improvement to their health, or quality of life, depending on the situation will become more and more important and necessary to be able to prove in the future.”

This article originally appeared in the November 2015 issue of HME Business.