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
“quality.”
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
for.
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
efficient.
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">wweeks@weeksgroup.com.
