A Fresh Start

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.