No Margin Revisited

I saw a television report a few weeks back about alternative fuels. Somebody bright has figured out that chicken fat can substitute for gasoline. The chickens probably hate it, but the cars that run off this power source seem to like it fine. And since I just paid $2.89 a gallon to fill up my tank at the gas station, I guess I’m willing to consider any option that might cut down the damage to my pocketbook.

While scientists refine the new system, though, the reporter suggested that we’ll simply have to get used to high gasoline prices. He said we should be grateful we’re not paying the $5 and $6 per gallon that Europeans are living with now.

That may be so, but with costs on all sorts of everyday expenses climbing, I’m beginning to wonder how much my bank account can take. Interest rates are going up and tuition fees are soaring. There are bigger grocery tabs, growing insurance premiums — well, you get the picture. So like most of us who must pay the bills, when outgo threatens to surpass income, I have to sit down and reassess, alter and adjust.

That is exactly what most HME providers have been doing since passage of the Medicare Modernization Act in 2003. On top of a CPI freeze that’s still in effect, they are figuring out ways to adjust and adapt to the law’s mandated reimbursement cuts and additional provisions yet to come. Of course those high prices at the pump aren’t helping.

The home care companies that survive these financial hits are sure to be efficiently run, and may have a good shot when competitive bidding begins. But at some point, the government’s assault on HME’s bottom line has to end. While providers can continue to search for savings (and should if they are running their businesses well), altering operations to curb costs can go only so far before patient service and care are endangered. And you know what the late Sister Irene Kraus of the Daughters of Charity said about that: “No margin, no mission.”

By most accounts, Sister Irene’s approach to health care policy was based on advocacy for the poor and quality care, with a sound fiscal foundation for support. As chief executive of the order’s National Health System — then 36 hospitals and 19 other facilities in 17 states — and the first woman chair of the American Hospital Association, it sounds like Sister Irene had a lot of common sense.

Last month, CMS suggested that its dispensing fee for inhalation drugs might be too generous and would likely be cut for 2006. So once again, in a repeat of their warnings about this same fee last year, two of the nation’s largest providers have cautioned that some companies could be forced to exit the market if this newest cut is too deep. After all, they point out, providers can’t serve customer needs without profit. And certainly no business — which HMEs are — can afford to provide products or services at a loss.

The reality is that too many providers, including thousands of small, local companies that are the backbone of HME, have been through too many cost-cutting exercises too often already. Reducing budgets and staff is no longer an option if they want to maintain current service levels. But it turns out that, just like me, home care companies and hospitals have to balance their checkbooks, too.

Providers deserve to make a fair profit, and say they are willing to look for inventive solutions that can help them do so. Frankly, though, I’m not sure the industry is ready for the chicken fat thing quite yet. (But the next time you’re in my car, if it smells suspiciously like Kentucky Fried, just order in some mashed potatoes and enjoy the ride.)