<em>HomeCare</em>'s 2009 Forecast Survey shows reality setting in as providers face the cap and the cuts.
Thursday, January 1, 2009

Headed once again into a year with incomplete information on
which to base their business plans, home medical equipment
providers are preparing for the worst but hoping for the best. As
they deal with the realities of the 36-month oxygen cap, CMS'
post-cap payment regs and a 9.5 percent reimbursement cut, buying
intentions for providers participating in HomeCare's 2009
Forecast Survey even show an optimistic increase.

More providers than in last year's survey said they will
purchase the most popular products on the HME shopping list: manual
wheelchairs, beds, ambulatory aids, bath safety products and
nebulizers.

2009 2008 %Change
Manual wheelchairs 77.2% 70.1% +10.1
Beds 72.9% 66.7% + 9.3
Ambulatory aids 72.1% 66.5% + 8.4
Bath safety products 71.6% 64.7% +10.7
Nebulizers 70.6% 64.3% + 9.8

On the other hand, only 37 percent think their revenues will
increase this year, while 33 percent believe they will remain at
2008 levels. Another 30 percent are expecting revenues to fall.

While the credit crunch is definitely on providers'
middle-of-the-night worry list, it's topped by the cut, the cap and
the constant battle of keeping costs under control. Most providers,
(72 percent) ranked the 9.5 percent cut as their biggest challenge
this year, and many said the oxygen cap would gouge their business.
Thirty-eight percent, in fact, rated the cap's impact on a 5-point
scale as a "5," and another 16 percent called it a "4."

In a telling sign of the industry's continuing changes, almost a
quarter of the survey respondents (24 percent) said they plan to
leave the business, the same percentage found in the previous two
years' studies. The other 76 percent said they are ready to ride it
out in HME's morphing landscape.

But when it comes to exactly how they plan to do that and remain
viable, providers reported a number of different paths to growth or
simply to maintaining current profit levels. Most said they are
counting on increasing efficiency (65 percent), and many said they
are changing their oxygen delivery model (38 percent); changing
their product mix (28 percent); and specializing in a particular
niche (27 percent).

Most said they plan to grow primarily by adding more patients
(65 percent), doing more referral marketing (56 percent) and
entering new product areas (49 percent).

As for the effects of a new administration, respondents were
split: 24 percent expect a positive effect and 23 percent expect a
negative effect. Eight percent said they think there will be no
change at all, and 44 percent said they don't know what will
happen.

"No one knows where we are going," said one provider.

"You just fight back harder, grow your business, expand and deal
with it," said another.

And from a third: "I'm hoping that the new president and
Congress will revamp CMS and start from there."

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About Accreditation

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2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About Oxygen/Mobility

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2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About Company Revenue

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2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About Operations

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About the Future

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2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

2009 Product Shopping List

(Ranked by percentage of HME providers who intend to
purchase)

1. Manual wheelchairs — 77.2%
2. Beds — 72.9%
3. Ambulatory aids — 72.1%
4. Bath safety products — 71.6%
5. Nebulizers — 70.6%
6. CPAPs/Bi-levels — 69.6%
7. Oxygen concentrators — 63.4%
8. Bariatric wheelchairs — 59.3%
9. (Tie) Bariatric products — 59.1%
(Tie) Lift chairs — 59.1%
11. Pulse oximeters — 57.8%
12. Oxygen conserving devices — 57.5%
13. Portable oxygen systems — 54.5%
14. Power wheelchairs — 52.7%
15. (Tie) Incontinence — 51.2%
(Tie) Scooters — 51.2%
17. Support surfaces — 50.6%
18. Compressed gas regulators — 49.9%
19. Seating and positioning — 49.1%
20. Sport/lightweight wheelchairs — 47.3%
21. Diabetes prodoucts — 45.3%
22. In-home oxygen fill systems — 44.8%
23. Nutrition — 44.5%
24. Compression hosiery — 43.7%
25. Sleep products — 42.5%
26. Ramps — 40.2%
27. Wound care — 39.4%
28. Orthopedic softgoods — 38.9%
29. Urological/ostomy — 38.4%
30. Skin care — 34.5%
31. Hot and cold therapy — 30.2%
32. Pediatric respiratory — 24.0%
33. Orthotics/prosthetics — 23.3%
34. Pediatric mobility — 22.8%
35. Continuous passive motion — 26.6

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

Biggest Challenges

What are the biggest challenges facing your company in
2009?

  1. 9.5% reimbursement cut on Round One bid items —
    72.1%
  2. 36-month cap on home oxygen rental — 60.4%
  3. Keeping costs under control — 46.5%
  4. Medicare DME rental cap — 36.3%
  5. Keeping up with legislation/regulation — 32.7%
  6. Medicaid cuts — 29.9%
  7. Paperwork/administrative activities — 28.9%
  8. Claim denials — 26.3%
  9. Industry's damaged reputation due to fraud and abuse —
    24.6%
  10. Accreditation/quality standards — 23.8%

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

Alternatives to Competitive Bidding

What do you suggest as an alternative to competitive
bidding?

"5-10% cut in reimbursement"

"A blue-ribbon panel comprised of members from CMS and
stakeholders (HMEs, manufacturers and patient groups) who will
consider appropriate rates of reimbursement"

"Accreditation"

"Across-the-board cut to all covered items"

"Attack fraud and abuse and we won't need competitive
bidding."

"CMS just needs to come up with a fee schedule, then providers
can either participate or not, but it would give the little guys an
even playing field."

"CMS needs to improve its own efficiency and look at cuts in
other areas that are the largest part of its budget."

"CMS should set a reasonable fee schedule and allow all
accredited providers to participate."

"CMS tried to implement a very complicated competitive bidding
process and failed. They should just extend the 9.5% cut to other
product codes and stop the waste."

"Come to a fair price for what we do and make it across the
board. Go after the fraudulent dealers and punish them
effectively."

"Correct the flaws at CMS' end that allow so much fraud and we
could achieve significant savings there."

"Cut Part A benefits as well as physicians."

"Have Medicare stop paying for items less than $100."

"How about just letting the American way of competition and
capitalism work like it always has."

"Improve quality and focus on outcomes and disease
management."

"Let the market seek its own level with accredited companies
only."

"Make the 9.5% reduction permanent."

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

About this Survey

Data were collected Nov. 5-21, 2008. Of 319 companies
participating, 51 percent operate a single location. Sixty percent
reported revenue of $3.5 million or less, while 16 percent
indicated revenue of $25 million or more. Thirty-eight percent of
respondents' companies employ 10 or fewer people, while 14 percent
employ 100 or more. The largest group of companies is located in
Jurisdiction C (41 percent), with 16 percent located in each of the
other jurisdictions (A, B and D). Nine percent of participants
reported nationwide operations. Not all respondents answered every
question, and some totals may add to more than 100 percent due to
multiple responses. Survey methodology conforms to accepted
marketing research methods, practices and procedures.

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.

Recent Forecast Surveys

2008 Forecast
Survey

2007 Forecast
Survey

2006 Forecast

2009 Forecast Survey

Read Braving
the Storm to find out what HME experts think HME providers can
do to best deal with the uncertainties of this new year.