From HME Business: Keeping Pace with HME’s KPIs

The ways providers measure their performance are constantly changing, but HME software is becoming more robust to meet those demands.

From HME Business – January 1, 2019

As more HME providers explore new business models and develop new revenue sources, running their businesses without monitoring business performance data has become an untenable approach to HME. Fortunately, there are many tools and resources available to help providers track, collect and interpret data, and help them make smart decisions.

A key performance indicator, or KPI, is a broad description of the various quantifiable measurements that HME provider businesses can use to evaluate their success in meeting performance objectives by allowing them to see how close or how far they are from meeting that particular objective. KPIs give detail and context to performance goals by pointing to specific, quantifiable factors that contribute to a provider’s success or failure in meeting a goal. For example, if an HME provider doesn’t meet its target revenue, tracking relevant KPIs might help management see exactly what and where the business went wrong.

More than being measurable, KPIs are actionable. Instead of waiting to see whether or not an objective or goal is met, KPIs quickly deliver data that allows providers to make performance adjustments as needed to meet goals. Tracking your business’ KPIs helps you keep a finger on the pulse of the overall health of the business in real-time.

Many types of industries and businesses utilize KPIs to measure their

performance and maximize their revenues, but as an industry that encompasses multiple sources of revenue from retail to Medicare funding, HME comes with a unique set of needs.

“HME billing has its own set of challenges and is both capital and resource intensive,” explains Sunil Krishnan, CP of global operations and analytics at HME software company Brightree LLC. “When you couple those issues with today’s reduced reimbursement rates, it’s critical for providers to do whatever they can to get paid as soon as possible upon filing the initial claim.

“And the bottom line is that in order to submit the clean claims to payers that result in fast and efficient collections, you’re going to need access to actionable data for monitoring KPIs,” he adds.


Using KPIs to measure the health of your business is not a new practice, but changes in the HME industry require providers to pay closer attention to them in order to increase, maintain and monitor cash flow. With CMS funding cuts, more and more HME providers are integrating retail into their business model to seek out other sources of revenue. And providers who continue to rely on Medicare funding must be even more vigilant about making sure they are bringing in revenue.

David Golen, vice president of business development at industry software firm Universal Software Solutions Inc., has been in the industry for 18 years and has witnessed the industry’s changing landscape. KPIs have become much more granular, delivering much finer points of data, he says. This has pushed software to be better and more equipped to handle more complex operations.

“When I started in 2000, the software was more billing related and did duties that were specific to certain processes in our industry,” Golen explains. “Now, software is becoming much more than just billing. It is really an overall business management from front to back.”

This includes improved access to data, smarter decision making on the part of the provider and better efficiency across the industry. “Before, you didn’t really know. You were guessing on a lot of things,” Golen adds.

With competitive bidding, new retail opportunities, and funding changes across the industry, guessing is not really a viable strategy for providers. The increasing demand for better, granular data has necessitated the development of more robust HME software solutions.

Though there are some general, rule-of-thumb KPIs that all providers track, such as days sales outstanding (DSO) and sales revenue, providers can dive deeper into their data to learn even more about business performance on multiple levels. For example, with DSO, a provider can learn how many days it takes to collect revenue, but as Golen points out, “there are many different components that cause the DSO to have a higher value that would be important to get your hands on, then to make better decisions that ultimately will affect your DSO in a positive manner.” In other words, more granular data let providers see how and why they got to the final DSO number in the first place.

“The driving force behind better software is the fact that you’re squeezing the ability to make any money in this industry, hence needing that information at a greater level,” Golen explains. “The need to get to granular pieces of information has driven the software to get better. There is no doubt about that.”


When thinking about which KPIs to track, Patty Harrison, content creator for Computers Unlimited (CU), developer of TIMS Software, recommends that “providers should most closely monitor the performance indicators that align with their strategic goals.” Though there are some KPIs that HME providers have traditionally tracked, and should continue to track, such as DSO or sales revenue, the type of business a provider runs will largely influence what KPIs they choose to monitor more closely.

The integration of retail streams of revenue introduces a broader range of KPIs for providers, especially for those who are new to retail. Here are some essential KPIs for retail providers to consider tracking:

Gross profit serves as a touchstone for your business’s overall health. This KPI measures the difference between revenue and the cost of providing a service before deductions, such as payroll, taxation and overhead. A shift in margins between these two factors can be an early indicator that something is wrong and needs attention, so it’s important to monitor this KPI on a daily basis.

Cash flow is a simple but important KPI that accounts for the difference between a retail business’s cash inflows and outflows. If this KPI shows positive cash flow, then the business is in good shape, but if it shows negative cash flow — that the business is taking in less than it is spending — then there is a problem.

Sales per square foot is a standard retail KPI, which measures how well the store is performing by breaking down sales per square foot of the floor space. By monitoring this KPI on a frequent basis, providers can learn of any changes that occur suddenly or over a set period of time. This KPI, when considered in accordance with a planogram (a guide that shows providers the most productive product assortment and self-placement based on space) can help a provider assess how different product categories in specific areas of the store are performing.

Another essential KPI for an HME provider is inventory turn times. A lot of home medical equipment is expensive, and the longer expensive items sit on the shelf, the longer the money spent to acquire that expensive item ties up productive cash flow. Retail is a cash-flow intensive business model, so when expensive items tie up that cash flow, profitability can stall or decrease. This KPI can help providers not only identify which items are selling and which aren’t but also develop strategies for pushing that product or replacing it.

For HME retailers, much more so than HME providers that exclusively generate their revenues through funding from Medicare and private payer insurance, tracking customers per day is crucial to understanding a retail store’s revenue. Without in-person customers patronizing the store and making retail transactions, the business will not survive. This KPI lets providers know if they need to funnel resources into strategies to increase foot traffic or even investigate whether or not they have an ideal location for their store.

Unless your business is completely devoted to retail, you will still need to track KPIs that are relevant to the funded side of the business. And in the case that your business accounts for all of these, you will need to monitor KPIs from across the board. Here are some traditional and crucial KPIs for Medicare and private payer providers:

As mentioned before, DSO has been a vital KPI for HME that should continue to be tracked, even as KPIs become more fine-tuned. A DSO tells funded providers the average amount of time it takes to collect revenue. The higher the DSO, the more limitations on cash flow. This metric can also be an indicator of efficiency with which the business’s accounts receivable are managed.

The faster the turnover in accounts receivable, the more revenue you have on hand, so “held A/R” is a related KPI that reflects how much of a company’s accounts receivables is comprised of invoices on hold. A provider’s goal should be to minimize time between submitting a claim and receiving payment for it, and this KPI can point to even more granular details to watch, such as time to file the claim and accuracy of filed claims.

Claim submission volume helps providers keep a pulse on how many claims they are submitting on a consistent basis. A decrease in claim submission volume means revenue is going to decrease, so providers should set their objective at or above budget.

Claim denials are not only time consuming and frustrating but also costly as it slows down revenue collection. Percentage of denials as a KPI lets the provider see overall how many of their claims are being denied and set an objective for either maintaining a healthy claim denial percentage or decreasing an unhealthy one.

These are neither all the KPIs available to HME providers, nor the only ones to which they should pay attention, but they represent a good starting place. Providers should choose KPIs based on what’s relevant to them and apply KPIs in areas of the business where they can affect change. Moreover, many HME software solutions let providers customize their KPIs to help them zero in on what’s important to their individual business.


  • Gross Profit: measures the difference between revenue and the cost of providing a service before deductions, such as payroll, taxation and overhead.
  • Cash Flow: accounts for the difference between a retail business’s cash inflows and outflows.
  • Sales per square foot: measures store performance by breaking down sales per square foot of the floor space.
  • Inventory turn times: measure the business’s efficiency in turning inventory into sales per year.
  • Customers per day: tracks individual customers who enter the store.
  • Days sales outstanding: calculates the average amount of time it takes to collect revenue.
  • Held A/R: reflects how much of a company’s accounts receivables is comprised of invoices on hold.
  • Claim submit volume: monitors volume of claim submissions.
  • Percentage of denials: indicates what percentage of claims or invoices have been denied for payment.


Keeping track of all of these KPIs can be overwhelming. Fortunately, HME software solutions can help providers better streamline and interpret their data into useful information. CU’s Harrison notes that “while a generic system may include some general financial tools, an HME-specific software solution is more likely to help a provider monitor and respond to the KPIs that are most impactful to its strategic goals.”

For example, many providers are looking to develop strategies to reduce delivery costs, according to Harrison.

“Many of them are seeing significant opportunities to attack KPIs in that area with advanced routing and load optimization, and payment at the point of delivery — and it takes a very robust integrated system to accommodate and monitor those things,” she notes.

John Griscavage, CEO of software firm PlayMaker Health, lays out three areas of data collection that HME software can monitor to help providers effectively create as successful a sale’s program as possible:

First, Griscavage says “there’s the market data, which is the intelligence of what referral trends look like in the community.” This helps providers figure out whom to target and how to think strategically about how to do it.

The second area of provider data that Griscavage recommends providers watch is referral management data, which shows them the activity of their reps and sales managers in the field.

The last source of data, Griscavage says is the “patient management system [the electronic medical record system], and pulling that information in, integrating it into our applications, you can see it all in one place. … It’s the interplay of those three things that allow you to have the most effective sales program that you can.”

For Julian Ramos, regional sales manager for Albuquerque provider HME Specialists LLC, market data, and referral data in particular, help him measure his business’s position in his local market — a qualitative factor that the software turns into quantifiable and actionable information.

“My sales reps can document what happens in each sales call. Whether it be a fantastic sales call or maybe there’s an issue that we need to resolve, my sales reps can document that,” he explains. “With me having visibility to documents, we’re able to see where we stand in each territory and where we need to improve or where we’re doing great.”


Most HME software providers make this information customizable and quickly accessible with a dashboard, a user interface that displays the provider’s data in real-time, including KPIs that impact cash flow and financial and operational metrics. The purpose of the dashboard, Brightree’s Krishnan says, is to allow “visibility into the lifecycle of a claim in a clear and concise manner.”

With a smart, detailed dashboard, providers can see beyond big-picture metrics such as market and referral data, and drill-down to more granular KPIs that can help drive results.

“At a holistic level, you want to track certain KPIs, and in order to do so, you need to understand the variables driving that metric and how metrics impact each other,” Krishnan explains.

For example, inventory turn times feeds directly into cash flow since expensive items sitting on the shelf ties up cash flow. Because these two KPIs are closely connected, they should be monitored concurrently, and dashboards can help providers do that.

Krishnan says when a KPI registers a ‘warning signal’ that “a smart dashboard would then help you effectively drill down the subsection that is causing the impact and lead you to the subset of claims or resources that need to be corrected. This is an effective top-down approach rather than sifting through claims and hoping to identify issues.”

An important attribute of a dashboard is its ability to quickly furnish and refresh detailed information. As opposed to running a report, a dashboard serves up several key measurements much faster, Universal’s Golen says.

“Reports are still valuable, but running a report does take time and can interfere with other daily duties that are important when you have to stop to take time to run reports just to analyze them,” he explains, adding that to get all the finer details that a dashboard can provide, “you’d have to keep running the report over and over in different ways. But with a dashboard, you have the capability of drilling into it and seeing where the data came from very visibly and very easily.”

With the speedy delivery of key data, providers can make smarter decisions to affect outcomes as the information becomes available to them. Instead of scrambling to meet goals as the deadlines approach, you can consistently monitor progress and make adjustments as needed, before it’s too late to affect results. As Golen says, “More information to make better decisions is at your fingertips.”

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Media Contact:
Seth West
Director of Marketing & Communications

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