DME offers a great potential source of revenue for orthopaedic clinics. Instead of sending patients to third-party DME suppliers, clinics can become suppliers and bill DME claims to insurance companies themselves. 

However, DME has to be managed right and evaluated regularly to make sure it becomes (and stays) profitable. You can use a pro forma to assess DME profitability for orthopaedic clinics and make decisions about how to proceed with your DME offering.

What is a Pro Forma?

A pro forma is essentially a financial statement that shows you the potential financial impact a key decision may have on your business. With pro forma statements, you can run through different hypothetical scenarios, based on real data, to get an idea of how different choices may affect your orthopaedic clinic.

There are many benefits of generating pro formas, including:

• The ability to assess the current state of your business
• Aiding in the decision making process by “testing” potentially profitable ideas
• Understanding what drains your business financially, and where to cut costs
• Helping you define your income goals and how to reach them
• Preparing for tax season

A Better Alternative Than Pro Forma to Assess DME Profitability

Pro formas are meant to be a much faster and easier way to learn about your business’s potential profits than full-blown business projections. That’s because business projections are built from a set of assumptions, from scratch, while a pro forma analyzes how one decision will affect your business using your current financial statements.

However, even pro forma statements can get complicated and time-consuming. You may build a pro forma from scratch with your own spreadsheets, taking the time to pull in data yourself and format documents. You could use a template online, but these can be limiting and not accurately reflect your business.

Compiling a lot of information to determine how your business is affected by one decision–like the decision to sell DME–can get overwhelming and slow down the decision-making process.

However, there are better alternatives to gathering all your current financial information just to create one report on how well the DME component of your practice performs. For example, you could use software like the kind offered by Select Ortho that only requires two inputs:

1. The number of doctors at your practice
2. The number of patients your practice sees in a year

Select Ortho’s software can get within 10% of what you should be making per doctor. With that kind of information settled, you could then add in hypothetical DME sales and see how your profits could increase.

DME Profitability: Adding a Revenue Stream to Your Orthopaedic Clinic

While you make a certain amount of money from doctor-patient visits each year, the DME component of your practice should bump up your sales numbers considerably, and draw in more patient visits creating an all-in-one hub for their orthopaedic needs.

Actually making a profit from DME can get tricky, though. You have to meet federal DME compliance guidelines, or you risk both losing profits and getting penalized. In fact, the industry-standard DME claims collection rate is less than 60%. This is often because practices send claims to insurance companies without following the necessary steps. These DME claims end up getting denied, and they lose out on 40% of their potential DME revenue. And this is assuming they are managing their supply efficiently. 

At this point, investing in a DME supply, billing, and revenue management software—one that can guarantee higher collection rates—is worthwhile. Select Ortho not only offers these services, but their track record shows a 95% collection rate of DME claims.

What’s more, Select Ortho shows you your potential profitability before you invest in them as a service provider without the need to sign an NDA. With our two-step process—telling us how many doctors and patients you have in your practice—we can tell you what your DME department should be pulling in.

With Select Ortho, you can easily get more information on how your practice is doing financially during the month or throughout the year. We offer each partner their own custom dashboard that shows them how much they’re making by product code, by doctor, and more.

Quickly get an idea of what the DME component of your practice should look like and how to achieve those goals with Select Ortho.