What is ROI in Medical Billing for DME?

One of the most common measurements in determining a business’s profitability is ROI. Return on investment is a fundamental accounting principle that helps companies project whether their investments will result in a gain or a loss. 

It’s essential for any healthy business to be able to understand the ROI on any of their investments, including medical-industry enterprises. Tracking your costs and calculating the potential value of your expenses is important for planning your company’s future.

How do you quantify your investments in medical billing, specifically for durable medical equipment (DME)? Why is that necessary? And how could doing it better save you money?

What Is Return on Investment (ROI) in Medical Billing?

If a company spends $5,000 to invest in billing software or stock up on extra supplies, they want to be sure that their investment is worth the price. Will that investment bring in more revenue? Will it save costs? Will it allow them to run more efficiently and profitably?

The same is true for any other costs you incur, whether it’s for labor, machines, supplies, consultants, or other expenses. Any investment should contribute toward your bottom line. 

How to Calculate Your ROI in Medical Billing

The formula for calculating ROI is generally simple. You start with the projected net return of the investment, divide it by the cost of the investment, and then multiply by 100. The resulting number gives you a percentage that tells you how much return — either positive or negative — you should expect to receive.

For example, a company wants to invest $25,000 in purchasing a delivery vehicle. They anticipate that providing deliveries will increase their income. But how can they be sure? An ROI analysis will help. 

First, they estimate the amount of income they can reasonably expect from using the vehicle. Then they add up all the costs of the investment (the vehicle, insurance, maintenance, etc.). Next, they divide the costs by the projected income, then multiple times 100 to get a percentage. 

If their estimated ROI exceeds the original cost of investment, then it may be worth the purchase. But there are other investment options, such as hiring other drivers to use their own cars and make deliveries on their behalf. If their costs for hiring drivers versus buying a car are lower, then purchasing a vehicle has a smaller ROI than hiring drivers. 

The same principles apply to DME medical billing. When a firm experiences a high volume of DME orders , the chances for errors, rejected claims, and delayed payments increases dramatically. 

You could bring on additional staff to manage all that extra work, OR you could hire an experienced firm to manage the billing for you. Considering the costs of hiring staff (wages, benefits, insurance, industry knowledge, etc.) versus the costs for outsourcing that function, you will likely find that the potential ROI is going to be far greater when that work is outsourced. 

Medbill Improves Your ROI in Medical Billing

Medbill provides everything providers and distributors of DME need to ensure their billing is completely timely, efficient, and accurate. 

Since the team at Medbill lives and breathes DME billing — including staying up to date on policy revisions, changes in the law, and the ever-evolving requirements of the medical industry — they’re the best-qualified partner to ensure you get the best possible return on your investment. 

Talk to a medical billing expert at Medbill about how much money and time we can save your company. The conversation is free, and we’re confident you’ll find the benefits freeing.  

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