Oxygen
by Rob Kent

This is no doubt a tough time for oxygen providers. We work diligently every day to help our customers succeed in this environment. However, we are seeing more than ever a growing divide between those succeeding and failing.

If you are going to make it in oxygen today, avoid these five fatal lies.

1. Non-delivery equipment is too expensive.

Tanks are cheap, but they are also extremely labor-intensive to deliver and refill. Quality non-delivery equipment with five-year warranties will eliminate these costs and put in 60+ months of work for you. They also get you an extra $20 in reimbursement in most CBAs. The average monthly cost is $35, which is cheaper than the cost of a stop to the patient’s home. With an extra $20 in revenue, you need to rapidly adopt the model of patients getting one delivery per month.

2. There is no ROI on non-delivery equipment.

ROI mindset is a natural tendency with capital investments. However, that does not hold up in this environment. Reductions in rates have forced the industry into a non-delivery model for a growing segment of ambulatory patients. You must find the lowest monthly cost of managing each patient and get comfortable with capital investments and financing. Although our industry is reeling, the cost of borrowing is still cheap. Start by investing in the equipment for your most tank-intensive patient segment and make them cash-flow positive. Once your bottom line improves, you can get increased credit limits and expand your capital programs.

3. We need to cut costs to survive.

Yes, you need to be as lean as possible. But rest assured, you cannot cost-cut your way out of industry difficulties. You must grow, too. Most companies need to pick up 20 percent more patients just to retain the same revenue. The trick is finding a way to do it without adding staff. This means working smarter and adding business efficiently. Investments in technology are a necessity. Your oxygen solutions need to differentiate you in the eyes of the referral source. Connected, smart POCs are a great option. You can show your referral sources comprehensive ways to help reduce the risk of readmit. You can further automate your own processes to manage patients and drivers more efficiently. With staffing costs averaging 40 percent, solutions that attract new customers and leverage your costs down are a big win.

4. We don’t know if we’ll be around in three years.

The worst part of the bidding process is the long-term uncertainty in contracts. But long-term planning is still the best way to reduce your costs. By investing in higher quality, longer warranty equipment, in three years you will have a mostly paid-off fleet of devices, ready to generate cash for another three years. Reinvesting in an aging fleet could push inevitable capital investments into the next bid window, making you less competitive when you need to be at your best.

5. Pricing is all that matters.

There is a common misconception that lower prices on equipment mean more profits. Warranties and reliability save money in the long run. However, there is a more important breakthrough going on in oxygen. It’s the ability to remotely monitor POCs and redeploy them to the right patients. When a patient starts using too many tanks, you put them on non-delivery equipment right? But what happens when patients on non-delivery equipment stop ambulating? How do you know?

Connected POCs can be monitored remotely. They can also tell you if they are not being used for ambulation. We observed a great example recently where a provider placed orders for 20 devices each month for three months. We showed them how to identify machines not being used outside the home. This reduced their equipment needs by 25 percent over the four-month period.

It is certainly a different environment in oxygen today. Start having conversations with your vendors about more comprehensive solutions and better positioning your business for the future.