Optimize resupply with new paradigm

I recently had an enlightening conversation with Bob, CEO of a mid-sized HME, about his CPAP resupply business. His cut-to-the-chase with me: “I don't want choices, I want recommendations! With payer cuts and NCB, I need complexity removed. I need guidance on how to improve my resupply business, or I'm going to have to just get out.”

His comments speak to current realities: Resupply has become more complicated with more restrictive government rules. With more competition and options, patient expectations continue to rise. Unhappy patients and referrals quickly switch to providers that provide better patient experience. With all these challenges, there is good news: A solid resupply program can produce ongoing, profitable revenue streams for many years.

This got me thinking about how resupply providers are not adapting to these changes and are missing out on huge revenue opportunities. A recent survey we conducted found only 38% of CPAP providers have more patients and revenue today compared to last year. Yet, we all know this marketplace is growing at 14% CAGR, according to recent data. HME providers maintain their resupply programs because they have a duty to patients and referral sources, but many are not making money. HME providers are now at a crossroads and must decide if they want to go “all-in” to improve their business.

Let's look at this from a real-world perspective. You have 1,000 new patients. After 90 days, only 800 are compliant. Of those, you only subscribe (convert) 600 to your resupply program. Then only 500 purchase supplies from you a year later. For all your efforts, you only earn resupply revenue from half of the original 1,000 patients! To keep more of those patients, as well as provide better customer service and achieve profitability, focus on the following five key areas to optimize the resupply process:

Compliance - Compliance for some Medicare patients can be as low as 50%. Providers can achieve higher levels, but are you leveraging modern technology to maximize compliance? CPAPs have built-in, cloud-connected monitoring, and EMR systems can interface to these tools. Are you maximizing these tools and interfaces to boost compliance to the highest rate possible?

Conversion - After compliance, ensure your patients are converting into resupply patients, who actually purchase supplies according to payer rules. Do you have in-place automated contact management programs (voice response, email, web site, or live contact)? These contact methodologies are essential for patient satisfaction and profitability.

Retention - What steps do you take to retain your resupply patients? Don't fall into the “we just don't have time to follow up regularly, just write them off” trap. Sleep disorders are rarely cured. Those patients are getting supplies from someone, and you want it to be you, since you are the one who did the setup!

Optimization - Aside from these patient-centric areas, you must also optimize ordering and dispensing so your patients get the right supplies at the right time, and the payer reimburses you at the maximum level. One order per year is bad, but so is 12 orders per year. Orders should optimize the right frequency and contain what is needed and reimbursable to coincide with payer rules to maximize profitability.

Measurement - I find that some providers are unsure how to use tools or data to achieve best-practice results. We must use technology more effectively: Make sure you're using available reports and dashboards in your management systems to better monitor your team (“what gets measured gets done”).  Constantly monitor your data to manage the peaks and valleys of order volume, including the ability to confidently outsource pieces of your resupply program (patient contact, fulfillment, order management, collections) and yet still run a profitable resupply operation.

Ever-evolving modern technology is now critical to a successful resupply business—in fact, there are tools available today that weren't available six months ago. So, I'll tell any provider what I told Bob: “You don't have a choice.” You must employ technology to survive and thrive in this new reality.

Gary Long is the chief business development officer at Brightree. Reach him at glong@brightree.com.