Looking for Answers

As home medical equipment providers make their way to Orlando for Medtrade 2004, the venerable trade show’s 25th annual conference and expo, visiting Disney World (though it’s a fun extra) is not their top priority. Instead, owners, managers, equipment buyers and other HME professionals say they will be looking for the products and information that can help them shore up business for 2005, which many predict could be a rough year.

They tick off concerns including reimbursement cuts on oxygen, beds and other products, drastically slashed payment for inhalation drugs, uncertainties about power wheelchair coverage and pricing, impending guidance on supplier standards from the NSC and, looking further out, the implementation of competitive bidding. But toughened over the years by numerous legislative and regulatory twists and turns, providers in general say they are optimistic about dealing with these issues — and any others that might come their way.

Wendi Phillips, director of accounts and marketing at Wichita, Kan.-based Hart Pharmacy & Home Medical Equipment, is looking forward to the show and says her company’s focus will be on a broad range of products. “We deal with everything from oxygen and POVs to CPAPs, and we do pharmacy and compounding,” says Phillips, who explains that an emphasis on quality will dominate her product search at the show.

But Phillips is also apprehensive about the coming year, and says the sessions that deal with accreditation will be of special interest. “It is scary to know that in our business we have to rely on insurance,” she says. “The other thing that is scary is that we know [mandatory] accreditation is coming down the pike. We want to make sure that we know what we are doing [to get ready for] accreditation.”

“We always like seeing new products at Medtrade,” says Derick Fontanez, operations manager of JRS Medical Supply and Oxygen, which is based in Orlando, “but this year we will probably be looking at the conferences.” Fontanez says reimbursement cuts are the main problem he sees for 2005, and he is hoping to gain some insight about the cuts that are now set to take effect in January — and exactly how deep a dent they will put in his business.

Then again, he notes, reimbursement “is always a problem.”

As general manager of Richmond, Va.-based Roberts Home Medical, Bob Evans echoes concerns about “government intrusion and reimbursement cuts” that can put “pressure [on providers] to reduce the quality of service.” In between walking the aisles to look at the latest respiratory and rehab products, Evans says, he, too, will be looking for education from this year’s show.

GOOD VENDOR RELATIONS

“I’m frustrated because we are almost to January, and I still don’t know how to plan for those cuts,” says Jerry Woolam of Star Medical Equipment, Lubbock, Texas. While seeing new products is always worth the trip to Medtrade, he continues, “We are especially interested in trying to negotiate with vendors to see if we can find better products [for] better pricing.”

Woolam stresses that with the ongoing pattern of Medicare payment decreases, pricing will be a key factor in the future success of his business. Vendors are going to have to “share the loss,” he feels.

The Texas provider adds that he intends to make whatever business adjustments are necessary to survive while still providing adequately for his customers. “There won’t be a lot of customer service cuts. We are still going to provide our customers with what they need,” he says, “but we will have to reevaluate all of our spending.”

“[The cuts] will make it more important to maintain really good relationships with manufacturers so that we are able to get good terms and good discounts,” agrees Matthew Burke, director of operations at Burke Medical Equipment, Chicopee, Mass., and chairman of the American Association for Homecare’s Rehab and Assistive Technology Council (RATC).

Although equipment prices remain important, Burke points out that sacrificing quality is not an option. “I’m very concerned about the fact that more and more products are being manufactured offshore, which has led to a focus solely on the cheapest product. I want to make sure quality is not forgotten.”

Choosing the right company to work with can make his job simpler, Burke continues. “It’s a matter of selecting the right product from companies that are easy to work with, are efficient and that make us more efficient. We can’t do business with companies that don’t help us to be more efficient. An example of things that can help are companies that offer electronic purchasing options, like Web-based, or EDI (electronic data interchange), purchasing. Those companies that refuse to get a Web site and insist that you fax an order need to modernize or [they may] die.”

Despite any problems, Burke is committed to the industry and to keeping his company strong. “The good and the bad thing about our business is that the need is not going to go away. People are always going to need wheelchairs and medical equipment; unfortunately, that is the reality. But if you look at it from the traditional business [view], the demand is always going to be there.”

EDUCATION, INFORMATION

While some providers say they are interested in Medtrade’s general tracks, others say they are counting on seminars geared to their particular area of business for education and information. “The seminars always have good speakers, and [the topics are] day-to-day stuff that is pertinent to our operations,” says Thomas Gloyer, owner of Tomball, Texas-based Home Health Store. Gloyer expects to do a lot of networking at the show and to talk with other providers in business operations and reimbursement sessions.

Gary Salazar, president and CEO of Mobility Giver Inc., a custom rehab provider in Huntington Beach, Calif., plans to attend seminars with a seating and positioning focus. He says the current reimbursement climate has made him wary of Medicare and Medicaid business “because you are not ever sure — even if you are authorized — if they are going to pay you.”

But Salazar also sees opportunity in the industry’s changes. “There is going to be a push to have qualified people doing the business, and we are one of those companies,” he states. “Some companies have not been professional in their business practices … and it’s going to be harder for them to do business. That is going to give more opportunities to the companies that are doing business the way it should be done.”

Glenn Schrader, president of Low Country Home Oxygen, Hilton Head, S.C., says he will be jumping between sessions in the show’s respiratory track and others in the business operations area. He hopes by the conference end to be better informed on how to prepare for the coming cuts, specifically nebulizer medications. “I think the oxygen cuts are survivable,” he says, “but the medication cuts concern me.” He proposes that his company might have to shut down its pharmacy and drop its respiratory meds program, following large providers that have announced they may be forced to exit this portion of respiratory business.

To combat the potential loss of income, Schrader anticipates expanding his product line and branching into other categories. “We are getting into rehab and high-tech wheelchairs,” he says. “We are just trying to stay in our neighborhood and keep growing. With the potential oxygen cuts and nebulizer medication cuts, it just seems healthy to make sure we have a Plan B.”

Phillips says her company will take a different approach. “We are going to have to look at more cash business versus insurance business,” she says, adding that there is opportunity in “knowing that our industry deals with the aging population and the baby boomers, and then also taking care of their kids. This is a great industry to be in. How you look at your cup — as half full or half empty — determines how you think your business is going to do.”

“I’ve been in business for 22 years now,” sums up Schrader. “We [as an industry] were supposed to go out of business many times … We will survive, we’ll change. The demographics are great for our business. We will have to get a little more efficient, but I’m very optimistic for the industry.”