Managed Care: Spread cost reduction

Q. How can I manage cost in the modern world of HME?
Thursday, October 22, 2015

A. Many HME companies still seem to be focused on getting vendors to further reduce product costs. While no one should pay too much, it is important to understand that our success in winning lower product costs is one of the main reasons reimbursement across all fronts has dropped steadily over the past two decades. It is time to start focusing on cost reduction in places that bring those savings to the bottom line without producing corresponding reductions in revenue. Here are some places to look.

• People: Do the values of our employees match the values of our company? If not, those employees whose values are not a match will be unable to work to their full potential.

• Processes: Are they efficient? Do they make sense? Do they produce accurate data?

• Rework: Every time work needs to be redone we have a performance improvement opportunity. Will we just excuse it as how things are or look for the root cause and make real changes?

• Delivery: Do we know what we can afford to deliver with our own truck and when we need to use a third party?

• Technology: Are we making good use of technology and investing appropriately in it? If not, we can be sure that the competitor who will replace us in our best accounts is doing just that.

• The HME world isn’t just changing. It has already changed. While there are signs that some payers are starting to realize that the rates they have been paying are unsustainable, it is not yet a trend. Choose between holding on to the past or creating our future.

Lynn Everard is managing director of Valumatrix, LLC. Reach him at