When did you last check your HME company’s metrics?
This task might be last on your list (and with good reason): the day-to-day challenges of patient care and billing processes probably occupy your mind. You might focus on whatever it takes to keep the lights on.
Tracking too many or too few metrics (or none at all) is more common among HME providers than you might think. Tracking the right metrics is easier than you might think, too.
Key Performance Indicators
Enter key performance indicators (KPIs). KPIs allow you to track what is relevant to your goals and apply them to the decisions you make for your business.
Below are a few of the KPIs that are crucial to your HME success.
Days Sales Outstanding (DSO)
DSO indicates how well your A/R balances are being managed. It is the average amount of time between your date of service and date of payment. For example, if your company has a DSO of 60, it takes 60 days on average to collect after providing a product or service to your patient.
90+ A/R Percentage (90+ A/R)
90+ A/R represents the portion of A/R aged beyond 90 days from the invoice date. Most A/R should be collected before the first 90 days, so this metric indicates “trouble” A/R. Drilling down by payer and product will reveal where your team should apply pressure to get results. Often, a high balance suggests legitimate issues or a lack of processes internally to handle adjustments and write-offs.
Payment Rate
Payment rate is the percentage of allowable billing that you collect on average each month. If your payment rate is at 80%, then you collect, on average, $0.80 on every $1.00 in allowable billing. When a provider claims a 95+% collection rate, for example, they are referring to a payment rate with net revenues in the denominator rather than allowable billing.
Write-off Rate
Write-off rate is the percentage of allowable billing adjusted off your A/R each month as bad debt. Bad debt is A/R that should have been billed and should have been paid, but will never be paid. For instance, claims filed past timely filing and claims filed without a valid prior authorization tend to be written off as bad debt. You should regularly monitor write-offs and take preventative action when possible.
Staying on Track
These metrics are available in our free white paper, Are You Tracking the Right Metrics?
Next week, we will round out this must-have list of HME metrics. Until then, follow us on Twitter and LinkedIn for the latest HME industry news and trends.
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.