Busy Week in Orlando

Orlando, Fla.

While providers attending Medtrade 2004 said they are worried about next year’s DME reimbursement cuts, many also said they are ready to replace the revenue and are optimistic about the future for their businesses.

Held Oct. 26-28 in Orlando at the Orange County Convention Center, the 25th annual show and expo, produced by Atlanta-based VNU Expositions, drew 18,000 providers and others allied with the home health industry from across the country to view new products in 300,000 square feet of floor space.

“We’re worried about the cuts, so we’re looking at ways to cut costs and increase cash sales,” said Cynthia Jarman, director of operations for Alliance Medical Inc. (AMI) in Albemarle, N.C. Jarman said the HME is planning to expand product offerings by growing the company’s respiratory business. She and others from the firm were also combing the show for “higher-end equipment where people will pay the difference.”

“We’re watching what we do and paying attention to how we’re buying,” said Cathy Roberts of Lech’s Pharmacy, with locations in Tunkhannock and Nicholson, Pa. Roberts and the company’s Lori Krukowski said they were particularly interested in new respiratory products “that can keep patients off plugs,” and were searching for any new products that “can give our patients freedom and mobility.”

Along with prowling the aisles for products, providers took advantage of the show’s conference sessions. “I’ve been in business for 14 months. I haven’t fallen on my face, but I know I have a long way to go,” said Justin Rogers, general manager of Primary Medical Supply, Midland, Texas, at a session called “Meet the HME Experts in Sales and Marketing.”

Similar “Meet the HME Experts” sessions on billing and reimbursement and legal and regulatory issues also drew crowds, as did the all-day Continuum of Care, which preceded the show on Oct. 25, a session on accreditation with panelists from JCAHO, CHAP and ACHC, and a presentation on benchmarking HME business.

Other conference highlights included an account of his personal struggle with multiple sclerosis by industry advocate David Williams, author of Battling the Beast Within, a line-up of speakers at Grassroots Central and a packed retail design workshop for HME showrooms.

Overall, close to 3,000 attendees participated in the show’s educational conference, according to VNU officials.

• M&A on the rise “This industry is extraordinarily entrepreneurial, ever finding ways to conduct business and find a way through” the changes handed down by the government, said Dexter Braff, president of The Braff Group, Pittsburgh, during a session on mergers and acquisitions. Braff explained that despite industry uncertainty, M&A activity in the sector has risen to unprecedented levels, as buyers are under pressure to reach a critical mass and diversify to withstand government cuts, while other companies are eager to sell before their business loses value after the cuts take place.
• Days Sales Outstanding (DSO) declines For the 114 providers who participated in the American Association for Homecare’s annual Financial Performance Survey, DSO decreased from an average of 83 days in 2002 to 74 days in 2003. “That decrease allows [HMEs] to free up money to go into the business,” said Dr. William Cron, professor of marketing at Texas Christian University, who presented the study findings at Medtrade.
• A policymaker’s perspective Several CMS representatives, chosen to spearhead the agency’s massive DME competitive bidding project, got their first taste of Medtrade this year.

CMS Health Policy Analyst Michael Keane and other agency representatives sampled the latest technology on the show floor as they prepare to implement competitive bidding in 10 of the country’s largest MSAs (metropolitan statistical areas) by 2007, as mandated by the Medicare Modernization Act. They also attended seminars to become familiar with the industry’s accreditation bodies, how they work and what they offer. Per MMA, Medicare will require providers to be accredited to maintain their supplier number.

Keane has been a CMS point person for DME competitive bidding and a key organizer of the Program Advisory and Oversight Committee (PAOC), a group consisting of consumer and industry stakeholders who will advise the agency throughout implementation of the bidding program.

“I’m learning about new technologies in the market for Medicare,” Keane said. “We’re hearing the industry’s worries and apprehensions about the [competitive bidding] program when it starts in 2007. We can take this back to work and use it when we develop some of the policies.”

Heard at the Show

On planning

“We just went through the budget process for 2005. We’re budgeting a 7 percent reduction in Medicare business — and that’s a conservative estimate. Everything you read points you in a different direction, so it’s very hard to tell what really is going to happen next year. Efficiency is what’s going to allow us to continue to serve our customers without cutting customer service.”
— Irene Magee, vice president/director, Northeast Home Medical Equipment, Green Island, N.Y.

On competitive bidding

“Competitive bidding is the most ridiculous thing in the world. CMS controls the price — why not lower it? If I don’t want to do it for that price, I won’t provide the product. Right now, with the price set where it is, it’s very competitive, because the only way I’m better than my competitor is to offer more and do more, and take better care of patients. Once competitive bidding enters the situation, you have fewer competitors and less of a reason to offer additional services to compete. It’s going to be price-based, and it doesn’t give the patient the right to choose whom they think can take care of them the best.”
— Dean M. Cheney, owner, Dallas Oxygen/Prescription Air, Dallas

On profit

“Profit is the name of the game, and we’re working like dogs to make it. [The 2005 cuts] are just one thing too many, so I am exiting the Medicare business and looking at expanding my already very active retail business.”
— Mary Sitcoske, president, American Surgical Supply, Pottsville, Pa.

On referral sources

“The challenge we face as a DME company is [education about new technologies] to the actual referrals. We can’t just buy equipment if nobody’s ordering. The doctor also has to see this new equipment, too.”
— Sara Shoun, respiratory services care coordinator, Lambert’s Health Care, Knoxville, Tenn.

On 2005 reimbursement cuts

“I wish they weren’t coming. But since we know they are, we are looking at increasing our volume.”
— Wendy Staples, respiratory therapist, Preferred Home Medical, Tyler, Texas

On mobility needs

“I’m seeing an expanding market [of customers] who don’t necessarily have a medical need [for powered mobility], and the manufacturers are seeing that. The population is becoming less healthy. After walking a show floor like this, a scooter looks real attractive.”
— Mike Madrid, CEO, Madrid Medical, West Lafayette, Ind.