<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