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Lately HomeCare has gotten a lot of comments from
readers about selling or closing their companies. Here's one that's
typical:
"Honestly, the changes coming to home care have made me question
the long-term viability of our company. If nothing changes …
we are prepared to lay off employees as necessary, and cease
operations. This is a sad ending for a 25-year-old company that
takes great pride in serving rural clients."
No kidding.
Competitive bidding
cuts many longtime, local HME companies out of serving patients in
nine of the biggest-ticket Medicare product categories. For those
left standing in the bid areas, other payers could follow the
limbo-like reimbursements. Experts say that, after a bit, it will
be hard to tell bid winners from losers in Round 1 because they
won't be able to fulfill their contracts under the
low-as-you-can-go rates.
The fallout from health care reform is just beginning, too. The
law expands competitive bidding from 70 cities in Round 2 (set to
be bid this year) to 91, for a total of 100 areas in the program.
Rural companies are not off the hook, either. CMS must extend the
bid, or the bid pricing, to all areas by 2016. That means, of
course, it could happen sooner. And the agency's 2011 Physician Fee
Schedule cements a national bid program for mail-order diabetic
supplies.
The Affordable Care Act also includes an excise tax for
manufacturers that could crimp research and development, a
particularly ironic circumstance considering the amazing
possibilities emerging from new advances in HME.
Medicare audits are exacting a huge toll, and government funding
for those efforts has been increased. As usual, the OIG again has
HME in its sights, with reports scheduled on Medicare payments for
power mobility devices, hospital beds, oxygen concentrators and
enteral/parenteral nutrition. Struggles with the 36-month oxygen
cap are ongoing, and elimination of the first-month purchase option
for power wheelchairs delivers another blow.
That's a lot of stuff to deal with for a business in which most
HME providers started with the simple intent of helping people with
chronic illness or disability stay put in their homes. As our rural
provider admits, the changes may prove too much for some.
Making it in the home medical equipment business as the industry
morphs into its new shape — whatever that may be — is
going to require a special set of skills. Providers will have to be
the savviest of businessmen, adept at automation with the
pocketbooks to invest in technology, geniuses at marketing and
probably retailers. It's clear owners and managers will not only
have to think differently about the way their companies run but
even about their mission and purpose. That might be the toughest
blow of all, as tried-and-true models including patient service may
have to become do-whatever-it-takes-to-survive models.
Here's the thing. Most providers don't want to give up patient
service, and most don't think it's time to give up fighting for it
— or their companies. For as many comments as we've gotten
from thoughtful providers about not being able to serve patients in
the way they believe those patients deserve, we've received just as
many about continuing to fight against the forces —
particularly competitive bidding — that threaten to take that
service away.
For starters, here's one from a recent interview with industry
veteran Tom Ryan, president and CEO of Homecare Concepts in
Farmingdale, N.Y. While some top economists are calling for a
redesign of CMS' competitive bidding plan, Ryan said he is hoping
for something more:
"Before I commit to a redesigned auction as suggested by some
renowned economists who have spent their careers in auctions, I
want to prove this is a disaster … This fight is far from
over!"
