Worth the Fight

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!”