Category Archives: HME/DME Trends


3 Steps to Revamping your Collection Policy


Tips for Creating Your Policy from Collection Experts

A written collection policy is the basis of your credit policy.  It should outline the company’s procedures on a variety of topics — from what information to collect from a patient upfront and how much credit to extend a patient. You’ll also want to think about how often you will contact a patient who has an outstanding balance and when to write off an account as a bad debt. The policy should establish the collection culture of your organization and define the workflow of who will complete which tasks throughout the process.

1. Observe the “C’s” of Patient Collections: Clear and Compassionate

The best bet is to treat every patient the same way – and provide clear details so your team can focus on their health and well-being, rather than details surrounding co-insurance and payment arrangements.

This isn’t to say that collections of these dollars should be ignored – our goal is to urge you to standardize the way you deal with each patient – and publish the rules. Our experience over the years has shown that these types of actions will both increase your internal team’s confidence in collections and the clarity with which patients work with the organization.

2. Observe the way that Patient Collections affects Days Sales Outstanding

We all know that collecting ‘more’ equals greater collections, but all HME providers aren’t affected the same way by their policy. You need to evaluate the type of business you do and the effort involved with chasing down patient balances.

Many companies use a metric called Days Sales Outstanding (DSO), which is a simple equation dividing the total amount of AR by the average amount of payments you receive on a daily basis. The resulting number is DSO: how many days of sales that are outstanding. You can calculate an Overall DSO, Insurance DSO or Patient DSO.

Try this equation, to create a Patient DSO for yourself.  Using $133,100 of AR and $1,020,000 of patient collections:

  • Total all of patient payments collected over a set period, ie, 90 days (we advise you exclude retail and cash sales).
  • Divide the total payments by the number of days in the period. This is your average of daily patient collections.
  • Total all outstanding patient AR and divide it by your average daily patient collections.

In this example, your Patient DSO would be 47.6 days.

The resulting number will be your DSO, or days sales outstanding. For reference – AG’s clients have an average of 55 days patient pay DSO across the board. Remember – each company isn’t equal, and we service healthcare organizations nationwide, so we have the experience to help you break this down further for your business.

3. Clearly understand industry standards

It can be a challenge to understand what ‘industry standard’ is but there are a few resources that can help, such as the HME Benchmarking Toolkit (http://hmenews.com/resource/hme-benchmarking-toolkit-2017 ) and data from vendors that aggregate details from many providers. This is a nice addition that has come forward recently in our industry.

You should be setting a standard for your team in your collections policy. We did a little research ourselves for this article and here’s what we figured out:

According to the HMENews benchmarking toolkit, in 2016 providers reported a “40% drop in (Insurance) DSOs under 45 days, while DSOs over 60 days increased by 43%.” If you’ve noticed a change in your cashflow, you are not alone.

Does the aging of your AR portfolio fall within industry standards? If not, you may want to review your collection policy. Our solutions are designed to combine software and best practices to bridge the gap between your patients and the co-insurance amount they owe you.

Like what you are reading here? This article is a piece of a 7-part series designed to help you review your collection policies and focuses on sharing some of the strategies we’ve learned over the 14 years we’ve been working with post-acute care providers. You can click here to share your email with us and we’ll deliver the rest of the articles right to your inbox, so you can enjoy them one at a time.

Maximizing DME Cash Collections in 2018


High deductibles, larger copays and HSAs have grown A/R portfolios. How do you slow down the growth? Learn the ratios to track and which processes will help you recover your A/R balances faster, reduce your collection costs and improve staff productivity. Join “Maximizing DME Cash Collections in 2018: 5 Ways to Grow Cash and ROI”

You will learn tips on how to:
• Assess your A/R portfolio’s health
• Establish and introduce financial policies to help your company
• Monitor your progress
• Implement a new culture

Register Now

Medtrade17 – Poising for Growth!


medtrade logo

Exhibiting at Medtrade17 is an exciting time, especially when it is your first show in Atlanta. Although I heard the show was smaller than in the past, it is an impressive conference.  The variety of vendors and products gave me a better understanding of how providers help their patients.  By attending some of the sessions, I learned about the impact congress can have on the industry and how competitive bidding has changed the landscape.

Watching the exhibit area, I viewed attendees consulting with experts about industry trends, examining new products, discussing management practices—the list goes on and on.  The owners and managers were in a different mindset.  They are taking a break from their daily responsibilities to focus on their strategic plans. With their SWOT in the back of their mind, they were pondering topics from the growth projections in the HME industry and the continued impact of high deductible health plans to reimbursement cuts to reducing DSO and increasing staff productivity.

Although the attendees were in research mode, they may not have realized they are also experts.  They are the best of the best, surviving the volatile environment HME.  They led their business through some tough times and now they are poising their companies for growth. They are streamlining workflows, expanding their retail floors, meeting with investors, outsourcing processes and fine-tuning their compliance procedures. They are forging the future of the industry by embracing technology and banding together to make an impact at CMS.

It was invigorating to collaborate with these owners and managers – the forward thinkers of HME– listening to their visions, hearing them describe the solutions they need to grow and brainstorming the new product features to help them reach their goals. They see the light at the end of the tunnel and want to be ready to take advantage of the new opportunities.  Their enthusiasm is contagious, and I am looking forward to an exciting future in this industry.

Sharon Bock, Marketing Manager

Opportunities Abound at 2017 HME News Business Summit


The 2017 HME News Business Summit prides itself as the premier education event for HME leaders and this year’s Summit certainly lived up to the expectation.   The Summit provided countless chances to better understand the trends in the industry from the HME owners’ point of view.

From the Welcome Gathering on Sunday to the Financial Benchmark Survey on Tuesday, there were a variety of educational opportunities — participating in workshops and panel discussions, listening to industry experts and talking with owners one-on-one. Topics ranged from the Affordable Care Act and Medicare to business models focusing on manufacturer- and customer-based relationships to using automation to reduce costs.

Keynote Learnings

Our keynote speaker, Donald Carroll of Cleveland Clinic, explained how 80% of our healthcare determinants were outside of the US healthcare delivery system.  Our health behaviors (diet, exercise), our social and economic factors (education, income) and our physical environment (quality of air and water) had a greater impact on our health than our access to care and the quality of care we received. Carroll wondered if healthcare expanded into the other areas, could we create a true public health system.

“Population Health,” which is the process of strategically and proactively managing a patient’s care while reducing costs, is a new buzzword in the industry. Can we achieve population health by coordinating the efforts of pharmacies, fitness centers, imaging centers, surgery centers, hospitals and recovery facilities? The end goal would be improving the patient’s experience of care by treating them at home as much as possible.  Carroll proposed that the first step toward Population Health might be shifting reimbursement from a volume-based to a value-based model with the role of the provider receiving payment based on a patient’s outcomes.  By managing the care continuum through all of the patient’s touch points, the provider can provide personalized care that transcends time and physical location which may help control the cost of care long term.

2017 HME New/SRA Financial Benchmarking Survey Learnings

The Summit concluded with its state of the industry presented by Rick Glass of Steven Richards & Associates. The HME industry has changed greatly over the last several years, and is continuing to evolve–we have fewer, but larger players. The reason Glass explained, “Profitability shrank from 12% to 10% and growth slowed marginally over last year, as providers continue to focus on improving efficiency of operations.” He does not see this trend reversing since providers continue to struggle with reduced reimbursements.  Glass shared that of survey responders, 23% of the providers are focusing on efficiency, productivity and reducing costs.

Reflecting on the summary of the industry overview, I was glad to reaffirm that Allegiance Group is part of the solution.  Our signature product, COLLECTPlusTM, can free your staff from the billing and collection process so they can focus on retail sales and other activities to grow your business.

I look forward to next year’s Summit!

Bruce Gehring, SVP Business Development

 

More Optimism at Medtrade Spring


According to the organizers of Medtrade Spring, the industry outlook is moving from cautious optimism to optimism.  As we were talking to attendees, we could hear the optimism in their voices.

We know the HME/DME industry is continuing to change. Today, HME/DME is a $46.5 billion industry.  It is projected to grow to more than $60 billion by 2020 according to Harris Williams & Co.  In 2010, one in ten companies only offered High Deductible Health Plans (HDHPs) to employees, Last year, one out of three only offered HDHP plans.  This means private pay portion in the HME industry will continue to rise. By 2020, the industry expects to nearly 37% of the industry’s A/R to come through private pay.  Business owners need to be prepared for this change.  We were happy to demonstrate how technology and automation can help them incorporate best practices in their private pay collection process.

Medtrade provided many opportunities for attendees to learn about new products and ideas–the exhibits, the panels, the discussions.  We heard both presenters and attendees enjoyed the new panel format for some of the educational sessions. The interaction of the panelists brought a new dimension to the session. Allegiance Group was proud to sponsor Andrea Stark, one of the panel presenters at two of the educational sessions.

We want to thank Medtrade for providing us the opportunity to meet with so many HME providers at this conference.

We look forward to Atlanta!

Planning and system integration can help boost your collection efforts


The ACA outlines a three-part goal of achieving better health care for patients, improving community health outcomes and lowering health care costs, and HME services will play an expanded role in achieving this goal. However, equally important to ensuring the outcome of lower health care costs is making sure providers, and HME businesses in particular, are able to recoup payment for services as quickly as possible. By increasing the speed at which co-pay collections are made and patient billing is processed, health care providers are able to increase efficiency, increase their bottom lines and pass on savings to patients. Your organization’s ability to collect payment for service may mean the difference between thriving and just surviving.

Receivables performance tops list

In CFO’s 2012 “Cash & Liquidity Management” report, results from a survey of CFOs and other financial professionals pointed to accounts receivable improvements as a key area for managing working capital. When asked to rank from most important to least important the main dimensions of working capital, the respondents ranked “receivables performance” first, above “inventory management” (second) and “payables performance” (third).

When asked what changes would most contribute to cash flow management, respondents again pointed to receivables performance and collection, ranking “motivating account relationship holders to support collections activity” and “delivering better reports on account delinquencies across the company” as two of the top three influential changes. This is without a doubt the most important time in the history of the HME industry to have a comprehensive strategy for obtaining cash from patients. Providers have no options other than to adapt with the changing environment.