Keep Your HME in Tune

As the debate over health care reform becomes more intense, it is taking on one of the characteristics of the crescendo in a piece of symphony music. You can hear different notes and different instruments that previously blended in. However, the new notes and players are not making the composition more pleasant.

There are now more comments from legislators directed at cuts in spending for DME than I have ever heard since 1993 when I became involved in this industry. Even so, it seems too early to make any decision other than, “My business must be more nimble than ever before.”

Since we don’t know how the reform debate will affect Medicare and Medicaid payments for DMEPOS (about half of the industry’s revenue), there is a limited number of solid actions HME managers can take. Among them are length-of-service management, product-payer combination adjustments and business process reengineering, all of which will make a business more profitable regardless of the situation.

There is one more action that all providers can and should take: Make the company nimble. Those who do will be able to sidestep the punches and get in safe positions.

One note of caution is due at this point. Don’t mistake your company’s responses to previous reimbursement cuts and regulatory changes for “nimble.” Being nimble is more about being proactive than it is about being reactive.

So what will these nimble companies look like and how are they made? Spotting a nimble home care company is not instantly obvious, because nimble is largely an attitude or culture. Like other attitudes it is not seen, but we can see its manifestation.

Certainly the nimble HME has core products and payers that are like those of the rest of the industry and the company hires people for similar job descriptions, but the processes are often different. And the nimble home care company will have more than just core products and payers. The outlying business could even operate under a different name.

Some nimble companies might appear to have a lack of focus, but instead they are testing new markets and methods. The differences that may appear to be quirks are what develops the poise to move quickly.

Nimble companies will do what others are not doing. This doesn’t mean they will abandon the normal DMEPOS products and payers. Management will look through other provider businesses to find out what they don’t do, then selling those products or working with those payers will go on the list of possibilities.

The nimble company is not reckless; management won’t take off down a path just because no one else is on it. They will apply due diligence and answer questions like:

• Can it meet our profit margin requirements? Can we use existing capabilities and procedures for the opportunity?
• Can current employees fulfill the demand? Will the customers be the same or similar?
• Does the company’s identity and visibility lend itself to the new opportunity? Can we be passionate about the opportunity?
• What if the core business … ? What if the opportunity … ?

Nimble companies will try new things, but even with the best laid plans, some won’t work out. So nimble companies don’t bet the farm on a new opportunity. Those that pass the test then get attention equal to their relative potential.

Keep in mind that relative potential changes with the market, so an opportunity that has less potential than others today may offer a different proposition in the future. Even then, the nimble company will hedge its bets.

Managers of nimble companies are careful listeners, and they pay attention to detail. It is one of the ways that opportunities are identified. The nimble company is innovative. The innovations may be shelved until the business environment makes them worthwhile, but then they will be rolled out.

Nimble companies foster innovation by mixing people up, being unafraid of failure, putting ego aside and detesting the thought of being a lemming.

The nimble company is then poised to shift resources to the highest yielding product-payer combination.

Don’t assume that a negative answer eliminates the opportunity. Instead, it signals an aspect of the opportunity that requires additional consideration.

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Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. You can reach him at 321/752-4514 or [email protected].