How to Cut HME Billing Labor Costs

The HME industry is expensive, but labor rates don’t have to be.

HME billing labor costs are rising – and the industry is feeling the impact.

Providers are understaffed and under pressure to retain workers while growing revenues. As HomeCare Magazine’s latest salary survey reveals, 44% of providers did not hire new staff over the past year. Of these providers, 60% gave raises to employees and 18% froze their salaries.

Are these fixed or increasing labor costs negatively affecting your business? If so, let’s explore their origins before working towards a solution.

A Look Back at HME Billing Labor Costs

The U.S. has added 18 million jobs since 2010, tightening the labor market and increasing labor costs. According to the Bureau of Labor Statistics, employment costs rose an average of 2.1% per year from 2010 to 2016, with a 2.5% increase in 2017 and a 2.6% increase in 2018. There is also active legislation in Congress to increase the federal minimum wage to $15 per hour, more than double the current $7.25.

Health care, including HME, is one of the most affected industries.

The demand for home care continues to grow, but providers are stretched thin by reimbursement cuts from the industry’s major payers, who are generally price-matching Medicare’s competitive bidding program. In turn, these providers face pressure to reduce labor costs while retaining staff or even increasing wages to recruit new employees.

“Unfortunately, low home health care reimbursement rates are directly impacting…wages and therefore the industry’s ability to effectively recruit,” said David Baiada, a participant in HomeCare Magazine’s salary survey.

What can be done to combat these rising costs?

Fourteen percent of providers surveyed added intake assistance, human resources and marketing teams, payer relations, or insurance verification to offset costs. However, nine percent of providers turned to another option: outsourcing.

The Case for HME Outsourcing

What is HME outsourcing? Why are providers using it to reduce billing labor costs?

Business process outsourcing (BPO), as it is officially known, reduces or eliminates large departments such as intake, billing, collections, and deliveries. As a result, HME providers can cut labor costs and focus more on what matters: quality patient care. Outsourcing can also lower your overall costs. It provides better visibility into your processes and better tools for your business.

There are typically two outsourcing options: full service billing and staff augmentation.

Full-service billing is a suite of services that outsources the management of your entire billing function, thus cutting your labor costs significantly. With this option, the outsourcing partner you select is paid on a percentage of collections. What does that mean for you? Your partner only gets paid when you do. Staff augmentation, on the other hand, brings low-cost assistance to your existing front or back-office team.

Which option is right for your HME business? Keep up with our blog as we dive more deeply into these options soon. Until then, take our quick HME Health Check to see where your business stands.

Next, we’ll discuss how to effectively manage your billing team. Don’t forget to follow us on Twitter and LinkedIn for the latest HME industry news and trends.

Featured in this post:

1. HomeCare Magazine 2018 Salary Survey

2. Which companies face higher labor costs and what it means for investors

3. Democrats introduce bill to hike federal minimum wage to $15 per hour

Prochant is the nation’s leading HME billing and process outsourcing company. Our highly-skilled team helps providers become more profitable by outsourcing or enhancing front- and back-office processes. We rapidly implement changes and proactively monitor metrics to ensure client success. Headquartered in Charlotte, North Carolina, we work with top medical equipment providers and health systems.