Automation – From document imaging to Point of Delivery (POD), GPS, efaxing, automated attendant supply calls, automated private pay outsourcing, and more, it is critical to choose a task that costs you an inordinate amount of time and weigh the costs of performing the function manually against an automation initiative to eliminate or significantly reduce the time it takes to produce the same results. In fact, in many cases, the cost of automation allows you to not only solve the problem today but it enables you to grow without adding costs and resources in the future. Allow a learning curve where it is warranted and set goals to achieve desired results. Pick one or two automation initiatives and budget accordingly so you can manage and track outcomes. To start, after you determine the most manual and costly processes, poll your staff on possible automation options/choices. To assuage the staff’s fear and vulnerability that an automation initiative will mean they are no longer needed, reassure them that their jobs are not in jeopardy and weigh their input when making the ultimate decision. After all, it is staff that utilizes the automation and the more they buy in, the more likely you will achieve positive results.

Accountability – Knowing you need staff to buy in, one of the best ways to know if staff is truly on board is by measuring their productivity. This is done by establishing concrete and measurable goals and grading staff’s achievements. Set a high, medium and low benchmark and measure against it. For example, if after examining your denials you realize you are butting up against timely filing deadlines, set goals to avoid losing money unnecessarily by adding a project to work on denied claims well in advance of timely filing limitations. First determine how many denials need to be worked and by when. Then determine how long it takes, on average, to work each denial. From there, assign staff a specific number of denials to work and require staff to document their actions. Check their work (via random audit) to be certain they are thoroughly working each denial and determine their achievements by checking for cash collected on their work. Set high, medium, and low achievement levels and begin grading them. You will soon learn who your high achievers are as opposed to your poor performers. Posting the results instills healthy competition.

Attempt to shore up your operation by dissecting the manual processes followed by your staff throughout the operational flow. Observe and examine details used to accomplish goals, looking for manual tasks and functions that are too time consuming and/or too costly. Automate those functions to enhance efficiencies but use the right staff. Accountability and goals will quickly distinguish your strong employees from those needing improvement. Always quantify the results by comparing costs today against the results of your changes. Stake out your corner of the market by ensuring your operation runs profitably. Wherever the changes take the HME industry, you will be positioned for your next move.

DIVERSIFICATION

The first step is to ensure that you don’t rely on one single payer source for your revenue. The best bet is to examine your revenue percentages by product and payer. Make sure that no one payer and/or product represents the majority of your sales and reimbursement. At the same time, look for items both reimbursable and non-reimbursable that might accompany your main products. The more revenue you generate per patient, the better. After all, if you are going to bill for 1 or 2 items, why not bill for 3 or 4 for the same patient? Additionally, to diversify your book of business, generate new business from other payers by working with different referral sources, payers and patients. That does not mean you should be everything to everybody and carry every product requested.

CONSOLIDATION

The next step is to consolidate processes, including operational flow and vendors. Ensure that you have the best access to product and that you don’t take so many steps in the operational flow that you exhaust all your profit. Rather, work to audit productivity and accuracy on the back end by regularly assessing your process after the fact. That is not to say that you shouldn’t have a QA process and a confirmation protocol. However, you should not have to check a file five times before releasing it to billing. This is simply too costly in the current environment. If you find that you have staff issues as a result of your regular audits, train the employee(s) and measure for improvement. Once you’ve provided ample opportunity to learn with training and retraining provisions, if an employee is still not successful, do not keep them in that position or let them find a place where they can be more successful.

AUTOMATION

The final step in cutting expenses is to automate as many functions as possible. This includes but is not limited to document imaging, GPS tracking for deliveries, bar coding, fax servers for CMNs and more. By visiting with each department, observing their manual processes, think outside the box about what you might do to automate a manual function. Your primary objective should be to create increased efficiency. For many providers, creating a paperless environment is the single most productive automation initiative to impact their bottom line for the money. Measure your outcomes of each these measures. By diversifying, consolidating, and automating your business, you should realize improved efficiencies. Altogether, you should be able to realize cost savings, reduced expenses and increased profit. This should ensure your survival in the slumping economy.

Evaluate your Revenue

Segregate your revenue/sales by payer and by product. Know your top grossing products and from which payers that revenue is driven. This will show you your potential exposure in the event that you are in one of the chosen MSAs. It would behoove you to focus on individual product types (HCPCS) and product categories. We know that Medicare will require you to bid on an entire product category if you choose to bid. If you choose not to bid, you will know what your potential revenue shift will be so that you can begin looking for alternate revenue sources. For example, if oxygen represents 25% of your overall business and you know that Medicare pays for 99% of that oxygen, if you choose to bid, will you grow within your MSA or expand into another region? Will you work with another company to network together? If you choose not bid and your area is one of the top 10 MSAs chosen, what will you do to make up the 25% loss of revenue? Once you determine your revenue by product and payer, you will be able to make a sound business decision about what to do if you choose, lose or choose not to bid.

Examine Internal Operations

Whether or not you bid, you should take a look at internal operations to determine what you can do to streamline operations. Regardless of what happens, you will have created more efficiencies and make your business run more smoothly. For example, are you billing all payers electronically if they accept electronic claims? What about electronic funds transfer (electronic payment posting with Medicare)? This can save you a considerable amount of time. How much manual work do you do? Why? Avoid this at all cost and see how much you save in time and effort. Operational enhancements like these will create savings. This in turn translates into a more economical bid price and/or a more attractive company to sell.

Consider your Demographics

As you streamline to find more economies, remember to consider your demographics. What is the average age of your market area? What are the socioeconomic influences that impact your business? To say you will diversify into sports and recreational products that are expensive private pay items when the majority of citizens in your area are on Medicaid would seem like a futile business proposition. On the other hand, if you live in a young and growing area and you decide to become a pediatric niche provider, you may find synergy. As you can see, demographics matter when considering your future direction.

Create Several Possible Scenarios

After you improve your operational flow and you carefully scrutinize your core businesses, focusing on your demographics, you should devise a plan that includes several options. If you veer in any one direction, you may be surprised to find it won’t work. By planning several options, you will easily be able to turn around and follow a different path. This means that if you submit a bid for Medicare oxygen and you learn that you do not win, if you create a contingency plan, you will remain viable. Anticipate many various possibilities, knowing that if one fails you can easily switch to another. This is true whether you decide to expand your business for competitive bidding or reduce your product selection veering away from Medicare. Either way is fine but arm yourselves with other ideas so you don’t get stuck. The last thing you need is to have to sell. If you choose to merge, that’s great. Make it your choice not someone else’s.

Better yet, who should be responsible for training? Should it be a real “trainer” or a person who understands how to perform the job, regardless of their ability to train? Actually, I believe it ought to be both. Despite whatever efforts they may make, it is rare that I encounter a company that has truly mastered the art of training. That is to say typically, training in an HME company is the job of a tenured employee who can do the job with their eyes closed but does not have an inkling how to teach their duties to others. Conversely, if there is someone knowledgeable in how to train/teach, they often don’t have the HME background to teach the nuances and details associated with the job. The result is that the trainee gets confused or is simply ill prepared to perform his/her responsibilities

So what should you do?

Ideally, depending on the size of your organization, you should create a position for someone who is knowledgeable in the field (job function) but also has the personality to be trained as a trainer. It would seem easier to teach someone how to train rather than teach someone the ins and outs of the job. Therefore, you should find a train the trainer program to provide basic teaching skills.

If your company is large enough to have a full time trainer, I recommend adding this position to develop training materials and to coordinate and oversee the training programs for both the trainers and trainees.

How do you know if your training methods are effective?

Most important is that once you teach staff; test them to ensure that they have absorbed the information. It does not need to include a “blue book” type test but should rather determine if the staff member would be able to find the information if they need it. This could entail an “open book” test. Since the HME industry is inundated with regulatory changes, it is hard for staff to remember all they need to know. Consequently, expect to train and retrain staff periodically.

All in all, the importance of training cannot be overstated. The more time you take now, the more you benefit later. The untrained employee can become your worst nightmare, both internally and externally. Rather, if you spend time focusing on developing your staff, you will benefit by increasing staff retention and ultimately, adding value to your bottom line.

PROPER ORDER INTAKE

How well does your staff perform under pressure and high scrutiny? The order intake employee today is responsible for being a negotiator, a Medicare and insurance expert, a detective, a politician, a social worker and a sales person. Further, they must be able to multi-task and think on their feet. Not a small feat, order intake is truly what makes or breaks the order. In fact, if the order is not right, why continue the rest of the operational process?

TRAINING

Training is where you can make the difference. Give your staff the benefit of ample training and do not work under desperation. Allow them time to make mistakes but have them shadow your knowledgeable staff until they are able to try it on their own. Have the trainer observe the trainee until they are both comfortable that no real serious mishaps will occur. Finally, provide resources such as Medicare manuals and additional websites and web-based training. With proper tools, the intake department should be able to make an educated decision about an order.

ENSURING CLEAN CLAIM SUBMISSION

Another way to improve operational efficiency is to ensure that the claims you submit are accurate. Clean claim submission is determined during the intake process. As mentioned before, are you making educated decisions about the financial viability of an order during intake? Equally important is to gather the medical necessity information up front and make sure the equipment is authorized (for non-Medicare patients). Further, if the item requires a CMN, make sure you are using the most current form. Many companies fail to update their forms when Medicare changes. Because Medicare makes changes available through their list-serve (whereby they actually email YOU of any changes), there is really no excuse for not adhering to the changes. By peering internally into your standard operating practices and staying current with Medicare requirements, you should be able to generate cleaner claims with minimal effort.

OPERATIONAL EFFICIENCY

As you consider the additional costs associated with employing the necessary procedures to undertake enhanced scrutiny and compliance, you may feel frustrated as Medicare continues to make allowable reductions. However, if you are looking for ways to cut costs in other areas, conduct an impromptu visit around your company in search of every manual function. You will likely find hand-written logs that duplicate the data found in your software. The good news is that if you automate these functions, you will free staff to perform more important tasks.

AUTOMATION

While simple manual and duplicate functions seem easy to eliminate, also look into automating other functions. This includes document imaging of your important forms in a patient file. Such forms include intake, medical necessity/authorization, delivery tickets, invoices/statements, remittance notices and more. Inventory scanning and on-line purchasing will also save time.

Internet eligibility and benefits checks go hand in hand with electronic claim submissions to the vast majority of your third party payer sources. Invaluable for your company, you should either be submitting commercial insurance claims electronically already or preparing for it.

Although there are many unknown variables with respect to the MMA and its impact on HME providers, one thing is certain: change. Are you ready? Prepare by examining operations for proper intake, adequate training, clean claim submission, and increased automation. Ways to create additional efficiencies should be found. The result should be a well planned and successfully executed strategic plan.

This can only be achieved by the company’s employees. Even if an item is equipped with special compliance measurements or bells and whistles, the staff must manage and track this to know if the patient is appropriately
using the device.

Typically, in a well run HME company, a core group of employees exists. These employees manage the day-to-day operations and make it function. Where there is no real core group, it is much more difficult to find a smooth and well run operation. However, with the optimal flow and process and the right “core” group, you should succeed.

If you have found the right mix of these special staff members, treat them well and make them feel like owners. Hopefully, their positive influence on others will be contagious and you will have plenty of people to promote
for your future growth.

What to do first?
Determine your game plan for the various phases of price reductions. Know how much of a reduction you will endure. This will depend upon how much Medicare revenue you garner from certain core products, as listed below.

For 2004 we already know that inhalation therapy drugs have been reduced to 80% (albuterol and ipratropium) and 85% of AWP (average wholesale price).

For 2005, we know that these same drugs are subject to price cuts whereby average sales price (ASP) plus 6% will be the total Medicare payment amount. This pricing structure will make it difficult for any company to dispense these drugs. The remaining cuts will be based on the difference between the 2002 allowable and the FEHBP (Federal Employee Health Benefit Plan) for a handful of items — oxygen, nebulizers, manual and power wheelchairs, diabetic supplies (lancets and strips), hospital beds and air mattresses.

By 2007, we will face competitive bidding for a handful of products in 10 MSAs (Metropolitan Statistical Areas). This will essentially force HME providers to enter into a contract with Medicare much the way they bid for and contract with HMOs. In 2009, the competitive bidding program will be expanded.

Start with data tracking
Begin tracking how much revenue each of those core products represents to your operation (Medicare patients only). Determine your potential loss as each of the cuts gets implemented. You will first need to sort revenue reports for 2003 and 2004 by payer and by product. Isolate the products that you know will be affected. Calculate the potential loss and plan as follows:

Decide if you will diversify by product, payer or both. You might also decide to increase the size of your company to account for the revenue loss. Finally, you might decide to relocate or add offices in other locations where the potential customer base may be predominantly non-Medicare.

One final significant consideration is to enhance operational efficiencies creating more cash to the bottom line. Look from the outside in to see where you have duplicative efforts, where you rely on manual systems, and where you waste time. This type of cost savings may help you maintain profitability. As always, whichever path you take, you will position your company for its future.

As Medtrade 2003 approaches, it is time to search for new product ideas and ways to diversify your business. Further, when you evaluate your operation, look from the outside in. Take your management team off-site to help you self-evaluate. Use an unbiased professional to help facilitate a strategic meeting. Look for ways to create efficiencies in your operation.

Ask yourself…what you are doing manually that could be done by your software? How well are you tracking your inventory? How automated is your purchasing? How many insurance companies are ready for electronic eligibility checks and on line authorizations?

The answers to these questions will help you develop more efficient ways to operate. These and other changes will prepare you for the impending changes due to hit our industry any time soon.