HME Industry Outlook
The 2013 outlook for HME providers largely depends on whether they serve a metropolitan statistical area (MSA) impacted by Round 2 of competitive bidding. As the year begins, uncertainty is the rule among many providers, anxious about how the next round will play out. Winners and losers will emerge, obviously, but industry consultant Alison Cherney of Cherney and Associates says providers should also keep an eye on the larger market.
Emerging trends such as concierge health care, Accountable Care Organizations (ACOs) and implementation of the Patient Protection and Affordable Care Act (Obamacare) have the potential to broadly impact the HME market in 2013 and beyond. “Things are brewing and you have to understand what’s going on,” Cherney says. She says HME providers should also watch what is happening among doctors, who could face a cut in Medicare reimbursement unless the “doc fix” continues to be implemented. If a large number of doctors decide to no longer serve Medicare patients, the disruption to referral patterns will impact HME providers.
Cherney says the HME market’s overall 26 percent price cut, as reflected in Round 1 of competitive bidding, points to a need for the industry to match its level of service to the associated price, such as offering high-end, mid-range and low-end pricing, each tied to a corresponding level of service. “The reality is that we are paid at different levels, but we just haven’t adjusted our service to those three levels.” An apt comparison is to the hospitality industry, says Cherney, where there are luxury hotels, business hotels and economy hotels, each with its own level of service expectation.
Cherney observes that providers looking at the year ahead typically fall into two camps, either the “deer in the headlights” camp of those who see competitive bidding as an insurmountable obstacle, or the opposite extreme of optimism and an eagerness to grab the opportunities of a changing industry. She says few providers fall in the middle ground between the extremes. “Companies that truly understand are doing very well.” There has been a weeding out of weaker players, with most of the remaining companies more well-positioned. “There are a lot of opportunities to build better customer relationships and to look at the cost side of the business.” Cherney sees managing an HME’s product selection as akin to tending a garden, with a continuous need to prune.