Mike Mallaro: Track performance metrics
Despite current reimbursement and regulatory challenges, demographic and behavioral characteristics make me optimistic about the future of HME. I'd build a business centered on identifying and meeting the needs of customers, and I'd build a team that understands my customer base and is passionate about meeting their needs.
PRODUCT AND PAYER MIX
My business has three segments: respiratory care, DME and home lifestyles. My respiratory care is clinically based and includes oxygen, sleep therapy and pediatrics. I'd seek to differentiate my company via an exceptional RT staff, oxygen in multiple modalities, disease state management programs for COPD, asthma and OSA and strong follow-up. My DME segment provides a full line of product. My home lifestyles segment provides a range of products and services that improve quality of life including home modification, barrier-free baths, whirlpools, lift chairs, patient lifts, plus the traditional retail items. Aesthetic design and fashion are key considerations in this category, as I believe the customer of tomorrow will demand we go beyond the sterile functionality that characterizes the industry. My payer mix is balanced. Oxygen and DME will be heavy Medicare businesses but rely on private insurance in sleep and pediatrics. Many items in home lifestyles are reimbursed by Medicare; others rely on patient pay. I'll have a Medicare number and get in networks with the major health carriers. I don't like Medicare's direction with HME, but it covers half my customer base so I need it.
Using technology to create efficiency and drive out costs will be integral. I'll start with GPS tracking in all delivery vehicles. GPS means more productive drivers and less overtime. I'll image all documents to make my back office mostly paperless. I'll use contact management software to track interaction with patients and referral sources. I'll use an Internet-based billing system to preserve capital while maintaining flexibility.
MANAGEMENT INFO SYSTEMS
In my business, we track and publish key performance metrics weekly, including billings (number and dollars), cash collections, DSO and revenue per customer. We seek to maximize the revenue value of each customer. Accordingly, we encourage our staff to converse with patients and identify other medical equipment and supplies that could benefit them. We train staff on this consultative selling. We value great listeners in hiring. Many oxygen patients could benefit from mobility products and home lifestyle products. It's in my company's best interests, and our professional responsibility, to be aware of our patients' circumstances and make them aware of products that can raise quality of life. It is imperative that I get a superb billing manager, so I'll spend a little extra on that position and invest in training. This person needs to be detail-oriented, analytical and organized. ACCOUNTABILITY
I'll implement an incentive plan to encourage superior performance from my entire team. This plan will include all employees, and awards will be based on one's ability to impact financial results. I want everyone in the company to feel ownership and to have a reason to celebrate our success.
My customer, the end user of the equipment, is at the center of my business. When we think about our decisions in the business, from the people we hire to the products we carry to the processes we put in place, we must consider the impact on the customer. If we lose sight of the customer then there really isn't any reason for my business to exist.
Age: 42 Company/position: The VGM Group, CFO and CIO Location: Waterloo, Iowa Background: Five years at VGM, four years as CFO of retail chain, 12 years as CPA with Deloitte & Touche