Respiratory Solutions

Evaluating Your Oxygen Business for Efficiencies

• By Chris Yessayan
• Jun 01, 2009

HME respiratory providers are focused on providing the best possible solutions for their patients, which includes product and customer service solutions. In today's challenging reimbursement climate, specifically with the 36-month oxygen cap, understanding all of the costs associated with your business is more important than ever. By understanding all of these costs and ensuring that you are operating your business as efficiently as possible, you will be able to survive and thrive in this reimbursement climate. And that means you will be able to continue successfully serving the customers who depend on you.

The best way to start evaluating your business is through process mapping. By reviewing your operations step by step, you are accomplishing activity-based costing. Examples of questions to consider include:

• What are your overhead costs?
• How much are you investing in deliveries?
• What is the average length of a delivery and how much gas is used?
• How much does it cost when every product leaves the door?
• How much does it cost to repair a product vs. buying a new one?
• Is it better to repair a product yourself or outsource it?

It is imperative to understand what costs your business money. When you have a solid understanding of those facts, you can begin to prioritize these pieces of your business and become more efficient in the necessary areas.

Off-the-shelf technology is available that allows providers to drive productivity in their business through manpower planning and scheduling. For example, respiratory providers can and should use this technology to proactively schedule service calls. Consider aligning your proactive maintenance calls so that you are focusing on specific, smaller geographies, allowing your technicians to touch more customers in a shorter period of time. This way, your field service team is making the most of its time in one area. Field service optimization is key to the efficiency of a provider's business.

Product technology has shown great advancement in the last five years. In the past, delivering tanks to ambulatory patients seemed like the best option, but new transfilling or portable oxygen product solutions allow respiratory providers to adopt a non-delivery approach. Dropping off a non-delivery product that allows patients to fill oxygen themselves vs. depending on weekly delivery of tanks provides an excellent opportunity to save on drivers, fuel, vehicles and a multitude of other overhead costs related to a delivery model. In addition, many patients prefer this type of technology because they do not have to worry about running out of oxygen.

Repairs are another key area to review during your activity-based costing analysis. Whenever a product is in your store being repaired, it is costing you money. Truly understand the cost of doing repairs by performing a make/buy analysis. Does it make sense to maintain the product yourself? Is outsourcing a better option? It also is important to have a rotatable pool of products. When a technician goes out to handle a repair, he or she should take along a replacement product so when the problem product is removed, the technician does not have to later return with the fixed version. By replacing that product, a trip to the patient's home is eliminated, saving the provider costs associated with another delivery.

Becoming more efficient does not have to be a challenge. It takes time to review business operations, but it is well-invested time. If you feel that you are too close to your business, use the opportunity to invite a consultant in to evaluate your operations objectively. It is often good to have a fresh set of eyes review the business that you deal with on a day-to-day basis. A consultant's perspective may reveal new areas of consideration with no emotional attachment where you may be able to save a great deal of money.

Being a respiratory provider in 2009 has unique challenges, but today's new technologies and services can help ensure that your business is here for your patients for a long time to come.

This article originally appeared in the Respiratory Management June 2009 issue of HME Business.