Roberta Domos: Diversify product, payer mix
Location is important because it is difficult for a new provider to break into markets that are already saturated with HME providers. Ideally, I would start a full service HME company focused on rental equipment in an emerging retirement community situated in a state where the major private insurance payer networks aren't closed to new providers (as they are in some areas of the country). Alternatively, I would choose a rural, underserved location, particularly if I had existing relationships in the referral source community through previous work experience.
PRODUCT AND PAYER MIX
Respiratory products such as oxygen and sleep therapy are still the most profitable. However, while I'd have a niche area where I'd focus marketing efforts, I would still diversify my product and payer mix so as not to hold all my eggs in one or two baskets. For instance, I would promote my company as a one-stop shop with a high level of expertise in caring for respiratory patients. In short, my business plan would be ambitious but strive for balance in my product and payer mix. This would minimize the effects of industry changes such as deep reimbursement cuts to a small group of products.
Improving productivity with automation can reduce labor costs and stabilize profits in the face of decreasing reimbursement. Therefore, I would automate my business processes as much as possible and choose HME software systems carefully with the goal of maximizing efficiency. At a minimum, I would expect a software system to have an efficient medical necessity documentation tracking system; bar code capabilities to automate the delivery confirmation and equipment tracking processes; a purchase order system that communicated with the software's perpetual inventory system; and a descending balance accounts receivable aging report so that high dollar accounts are prioritized during the collections process. Document imaging capabilities that would improve the productivity of staff members working collections would be a definite plus, as well.
MANAGEMENT INFO SYSTEMS
On a monthly basis my executive dashboard would track the percent of billing (after contractual adjustments) converted to cash; days sales outstanding; amount of unbilled revenue in terms of dollars (billing being held for documentation); accounts receivable aging by payer and by product category; adjustments/write-offs, coded to specific reason codes so I could zero in on the causes; new rental revenue vs. re-rental revenue vs. non-recurring (product sales) revenue; revenue by product; new referrals by referral source; product mix and payer mix. At least once or twice a year I would assess revenue per employee and overall profit margin by product.
Accountability starts at the top. My favorite management maxim is "Expect what you inspect." If a process or metric is not important enough for management to keep tabs on, it will send a message to employees that it shouldn't be of inordinate concern to them either. Goals, expectations, and processes should be clearly defined; employees who meet those goals and expectations should be appropriately rewarded.
There can often be competing interests among different departments. Management must promote a teamwork atmosphere where each employee understands that the success of each department is crucial to the success of the company as a whole, and in turn, to their own success.
Age: 45 Company/position: Domos HME Consulting Group Location: Redmond, Wash. Background: More than 20 years in health care, including corporate operations director for mid-sized regional provider