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  • Michael Breslin

5 Actions You Can Take to Immediately MAXIMIZE your profits

Updated: Oct 28, 2020

Why Your Business Is Not Reaching Its’ Full Potential!

I have chosen to write this white paper in outline form to hopefully make it an easier read. I hope you enjoy and most importantly, TAKE ACTION!


Is it any wonder that it gets harder and harder every day to turn a profit in this business? Let’s count the obstacles that stand in our way:


1. Consolidation of Payor Networks

a. More and more payors are restricting who can get in network and who can’t

b. If you are not in network, then you are receiving out of network reimbursement and having to collect from more patients

c. Out of network benefits cost the patients more so it is even more difficult and expensive to acquire new patients.

d. Having to turn down business because many payors do not offer out of network benefits.

2. Payor Audits & Appeals

a. We all know that Medicare has been conducting numerous audits and ADR’s. Whether it is a MAC, TPE, RAC, CERT, or ZPIC audit, Medicare audits are here to stay and I truly believe that you will see a step increase in RAC audits because RAC contractors are paid a percentage of the recovery amount and can go back three years and secure a much bigger payday than an ADR or TPE audit.

b. Medicaid audits are increasing, as well as, Humana, UHC, Aetna, and BCBS are increasing their volumes of audits of missing medical records. The commercial payor denials and audits are going to be particularly challenging since almost every contract state “Follows Medicare Guidelines” but we all know they do not… what most suppliers and providers don’t know is exactly what Medicare guidelines they DO follow.

3. Fee Schedules & Payor Guidelines

a. We must work harder for our reimbursement. More payors, products, and line items are requiring PAR’s. Payor guidelines are tightening and it feels like they are looking for more ways to deny services rather than approve services.

b. Many commercial payors are outsourcing appeals and audits to outside contractors who, in my experience, are not well versed on Medicare/payor guidelines. (if the contractors don’t know the guidelines, then how are the suppliers/providers supposed to know???)

i. On a side note, in a past life of mine, Humana outsourced their recoupments to an outside vendor. It was clear from the onset that they did not understand guidelines, nor did they know how to interpret how to apply Medicare LCD’s. Luckily, we had a highly qualified registered nurse on our team who is a Medicare and payor guideline expert and she was able, over many months, to (in essence) train the contractors how to apply the LCD’s. She saved us A BOAT LOAD of money by halting the recoups and winning the appeals.

4. Rising SG&A and Decreasing Reimbursement

a. No one told our landlords, employees, benefit companies, and vendors that our reimbursement is decreasing. So, we immediately have more pressure on our margins due to rising SG&A, unbilled revenue, denials, audits, consolidated payor networks, patient acquisition costs, and COGS. That’s right, no one told our manufacturers that our margins are under assault, or they just refuse to listen as their product costs continue to rise. Higher product costs-lower reimbursement is a recipe for disaster.

I could go on with the doom and gloom, but what can we do to improve our margins and EBITDA…and overall valuation of our business.

Ten years ago, when I got started in this business you could make money just by being in the “game”. Suppliers and providers did not have to be good. In a previous life of mine, we were generating margins above 70% and EBITDA exceeding 30%. That’s right, you could make a ton of money and, quite honestly, suck at this business.

THOSE DAYS ARE GONE!

Today, many people are trying to generate positive cashflow due to product margins in the 25%-40%...and that is before SG&A. It is now common for companies to have EBITDA in the low teens. The good news is that due to regulatory oversight and everything stated above, many of the companies that tarnish our business are out of business or in jail. OIG PROSECUTIONS

But how do YOU make money in this business today?


Here are the TOP 5 ACTIONS that you can take action today and begin maximizing your profits.


1. Labor is the largest cost most business owners face. We MUST fully OPTIMIZE our labor force in order to secure the greatest ROI on their efforts. How?

a. Investing in their development and training.

i. We need EXPERTS; not jacks of all trades.

1. New Account Experts

2. Customer Service Experts that ensure we retain our customers

3. Insurance Experts that ensure we avoid bad debt write-offs due to errors

4. Documentation Experts…This is FOUNDATION of any healthcare company in today’s turbulent regulatory waters.

a. Without Medical Records Experts you will ship before you should, bill before you should, lose audits and appeals, frustrate and lose referral sources, have rising unbilled revenue that cripples cashflow, lose good outside sales reps, and have more compliance issues than you can handle. If you can only choose one area to become AWESOME in, choose documentation verification!

5. QC Experts that ensure compliance and quality and ensure we avoid costly errors

6. Billing & Collections Experts that ensure we get paid every single penny we have rightfully owed to us. Insurance companies know most companies don’t follow up regularly on collections, so those that make the most consistent noise get paid first.

b. If your labor costs are above 20% of revenue, then you need to immediately look at your labor, processes, compensation plans, staffing ratios, etc. and find a way to get your labor in check.

2. Management of Unbilled Revenue

a. If you are shipping on verbal orders or dispensing orders, then undoubtedly your unbilled revenue is growing. If you are a Brightree EHR customer, then other CMN and HCPCS issues could be causing approved items to become unlogged and put on a hold. I imagine this will occur with other HER systems that are HCPCS driven, but I know for a fact that this is a silent reality with Brightree.

b. Manage your unbilled revenue DAILY. I can’t even begin to tell you how many suppliers/providers manage it monthly, if at all. This lack of oversight also leads to an increase in untimely filing denials and write-offs.

c. Once again, documentation/medical records issues will also drive this number up, creating aging that makes it almost impossible to collect documents and release holds, and cause erosion to patient satisfaction and retention, as well as referral source satisfaction and retention.

d. You have an opportunity to increase profits if your unbilled revenue exceeds 5% of your monthly shipped revenue

3. Improve Your Analytics and Accountability


Here are a few quotes to illustrate the importance of analytics


“You cannot manage what you cannot see”- Peter Drucker

“You cannot fix problems if you don’t recognize them”- Jamie Dimon

“A company without an effective data and analytics plan is a company without an effective plan”- Michael Breslin

a. It never ceases to amaze me how many companies are surprised that they are not making money. Or that they can’t figure out why they are not making money. Or they can’t tell me where they are spending money ineffectively.

b. In god we trust, everyone else bring data. Effective utilization of data drastically reduces “gut” reactions, bad planning, bad decisions, doomed to fail initiatives, underperformance, negligence, etc.

c. Effective utilization of data allows you, your leadership team and your team members to learn how to win the game. Believe you can win the game. And understand why you will win the game. It allows you to make decisions based on sound logic and historical performance. It provides effective talent management through relative performance metrics. Here are just a few metrics that must be managed effectively, and by doing so, your financial performance will skyrocket:

i. Units per hour by role, department, team, and team member

ii. Absentee rate. If the team doesn’t show up, you simply can’t win.

iii. Conversion rate: lead to order and order to ship

iv. Recur rate for businesses with consumable product lines

1. Average span dates between orders to identify sweet spots to engage

a. Cost per Acquisition

b. Revenue per order

c. Time in Process: by role, team member and process

d. Patient Retention Rate

e. Referral Source Order Rate

f. DSO by payor and overall

g. Bill & Collect Rates

h. Contact rates for businesses with tele-sales functions

i. Labor Cost to % of Revenue

j. Shipping Cost to % of Revenue