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I've heard from several providers lately that they cannot keep
up with the volume of changes coming down in the industry. Who
can?
In addition to the upheaval surrounding competitive bidding, which will
shape the future for your business, and audits, which can cut off
its present cash flow, there is a growing stream of regulatory
changes gushing through the works. CMS' proposed physician fee
schedule for 2011 brings more new rules. Thirty days after a final
rule was issued Aug. 27, a set of expanded supplier standards took
effect requiring immediate compliance.
If only one of these things didn't push you to think about your
business and how it operates, the sum of the changes certainly must
have.
Five years ago, consultant Wallace Weeks predicted the HME
sector could lose 25 percent of its then-existing providers by
2010. The industry isn't there quite yet: In May of 2005 there were
115,000 active supplier numbers and with current estimates at
98,000-plus, that's a loss approaching 15 percent. But Weeks
believes that number is bound to go higher, not only because of
competitive bidding but because many providers will delay for too
long — or won't ever — make the tough decisions
necessary to save their businesses.
From now on “it's just going to be much harder for an HME
provider to make money,” he told me in an interview earlier
this year. “The companies that survive are going to be the
companies that are willing to sell and service at the level that
the market is willing to pay for — that means what Medicare
is willing to pay for.”
To do that, providers are going to have to change their values
to make it, says Weeks. But he believes a lot of them will refuse
to cut back on service to patients. “Most providers won't
change their values, particularly those that have been around a
long time,” he says. “The people in this industry have
to be, without a doubt, the most caring bunch of people on this
planet, and a lot of providers are caring to a fault to their own
detriment.”
Weeks has consulted in the industry since 1992 when he formed
Weeks Group to focus specifically on the HME sector. After
analyzing more than 300 HME companies, he notes the most successful
providers are those who are able to “quantify where they are
and where they need to be.” But to move to the top in coming
years, those analytical skills must be coupled with “an
obsession with managing the cost side of the business.”
Weeks advocates a start-from-scratch approach to deal with the
issues affecting providers' profits and the HME market's radical
changes. “Clean out the building and start over, detail by
detail,” he advises. “Tell your team to forget the way
it is done. They are starting over. Forget the resources they have
and don't have — nothing is off limits.”
Weeks, who has been counseling HomeCare's readers on
business and operations strategies in his monthly “Better
Business” column since 1998, recently announced a new start
of his own. He will leave his consulting business at the end of
this year to follow his own obsession as a commercial photographer
(www.wallaceweeks.com).
Weeks says it will be hard to say goodbye to the providers he
has worked with for so long. It will be harder still for the
providers in this industry to take his advice. Starting over is not
easy. It's a risk. It requires planning and perseverance, as Weeks
so often points out.
Every day as I think about the future for those connected to
this industry, I'm reminded of another piece of advice Weeks passed
along, a quote from business strategist W. Edwards Deming:
“Change is not necessary. Survival is not
mandatory.”
As the rest of us attend Medtrade in November, Weeks will be on
a month-long photo shoot in Southeast Asia. Wallace, while we're at
the show listening to the latest on competitive bidding and
whatever else the government throws HME's way, I'm sure we will all
wish you were here.
