Since raising prices is not something we can do easily in this industry, profitability depends largely on how efficiently providers operate. If a company
by Wallace Weeks

Since raising prices is not something we can do easily in this
industry, profitability depends largely on how efficiently
providers operate. If a company wants to be efficient, it only has
to manage two areas, because all improvement (or decline) in
efficiency originates in “throughput” and

Throughput refers to the quantity that gets produced in a
certain time-frame, such as how many deliveries a technician makes
or how many claims are processed through billing. Quality is
lack of failures in what the customer perceives he has paid

To manage throughput and quality, use these eight strategies to
make your good company better.

Specialization can be used at both the company level and
the job level within the company. An HME company can be specialized
in a product or a category of products, such as in serving
respiratory or diabetic patients. An example at the job level might
be the specialization of the billing department, which can be
separated into Medicare billing and private insurance billing.
Generally, the more narrow the specialization, the greater the
opportunity for efficiency.

  • Standardization was proven to be valuable by Henry Ford.
    The output of the work is first given a standard, and then the
    processes that result in the output are given a standard. If we
    used standardization at the industry level we might all look alike,
    but standardization at the company level allows providers to
    differentiate themselves from their rivals by finding better ways
    to solve customers' problems.

    We use standardization at the company level to require all
    intake staff to ask the same questions and put the answers in the
    same places. What if one intake coordinator was allowed to put
    patient information on the billing system, and another was allowed
    to put patient information in a spiral notebook? The inconsistency
    would certainly dampen efficiency and profitability.

  • Some industries use Shared Infrastructure better than
    HME. Most of what HME shares is through group purchasing
    organizations, and is generally catalog publishing.

  • Consolidation will continue in the HME industry. When two
    companies merge, they become more efficient because they can better
    use specialization, standardization and shared infrastructure at
    both the company and job levels. Often, the efficiency of shared
    infrastructure shows in the elimination of duplicated jobs.

  • Controlled Growth is used by the smartest of companies to
    evade the “Law of Diminishing Returns,” which states
    that if one factor of production is increased while the others
    remain constant, the overall returns will decrease relatively after
    a certain point.

    Sometimes this phenomenon manifests itself in what seems to be
    chaos in the company. Before that happens, however, the point of
    diminishing returns can be estimated so that a provider can control
    growth to match the acquisition of resources.

  • Quality is tied to any company's efficiency, because most
    customers will pay only for a certain level of mistakes. If billing
    quality is poor, for example, a provider will have more cash
    consumed by accounts receivable than is necessary, thereby reducing
    profitability, sustainable growth, competitiveness and morale.

  • In general, health care, HME included, has great opportunity to
    become more efficient through the use of Technology, which
    can make it easier for customers to do business with your company.
    Technology also can be used to deliver a superior solution to your
    customer and to make sales and administrative processes more

  • Government Intervention is the most difficult strategy to
    execute. It's not easy to get governments to change policy, but
    your involvement with industry lobbying organizations can help. It
    is also important to look beyond the federal government level,
    because certain efficiencies may be acquired through local
    government intervention.

    Wallace Weeks is founder and president of The Weeks Group,
    Melbourne, Fla., a consulting firm that specializes in total
    business improvement for small businesses, specifically in the area
    of post-acute health care. He may be reached by phone at
    321/752-4514 or by e-mail at target="_blank">