Savvy Survivors

If there is one constant in the home medical equipment industry, it is change. Product lines, reimbursement rates, governmental regulations, even the players themselves seem to shift daily.

This is not your parents’ industry anymore — or, for that matter, even the one you first got into.

Welcome to the new version of HomeCare‘s annual celebration of top companies. New, you say? Why new? Well, chalk it up to change.

HomeCare first published the 100 top HME performers — both public and private — in 1991. Back then, the industry boasted a handful of national companies and an abundance of small mom-and-pop shops eager to share their success stories.

But times have changed. The industry has been buffeted by continuous declining reimbursement, rising costs, tightened regulations and intense governmental scrutiny. For many, the changes have been too many too fast. They’ve closed up shop or sold out.

As they did so, the list changed. By 1998, it had tightened up to include 58 companies. Last year, it was 24. And this year, some of those who had long been a part of the roll call were absorbed by larger companies. Praxair Healthcare Services acquired Home Care Supply of Beaumont, Texas, which had held the top spot among private companies for three years running.

Air Products Healthcare added Ultra Care of Melrose Park, Ill., and Rx Healthcare Group of Monroeville, Pa., from last year’s list. Still others appeared on the brink of being sold.

Most prognosticators predict the trend toward provider consolidation will continue. Wallace Weeks of Weeks Group, Melbourne, Fla., estimates 4,300 fewer DME providers in the next five years.

So in 2005, we celebrate a selection of standout companies that are savvy survivors, and, we even turn the spotlight on an up-and-comer.

The private home care companies on the list this year (see page 29) may not all be tops in terms of revenue, but they all have hearty bottom lines — and increasing business. And in these ever-changing times, that is the mark of an innovative provider. Indeed, these providers see a strong future for HME, albeit a volatile one, and they are eager to embrace it.

Take a look at what some of these companies are doing right:

Associated Healthcare Systems

Amherst, N.Y.-based Associated Healthcare Systems has found its niche — respiratory services and products. But it doesn’t simply deliver products. “Our nine patient management centers pride themselves on being consultants to physicians on the treatment of [chronic obstructive pulmonary disease] and sleep disorder breathing in the home setting,” says Dennis Trach, corporate regulatory compliance manager.

That emphasis, he adds, has translated into keeping the company on the cutting edge of patient technology. “By focusing on a narrow band in the health delivery continuum, we can promise quality service to patients and those health care professionals who refer to us,” Trach says.

That dedication has paid off. The company enjoyed a 12.5 percent increase in revenue in 2004.

MedEquip/HomeMed/Wheelchair Seating Service — University of Michigan Hospitals and Health Centers

Improving efficiency can sometimes make all the difference in the HME world. That’s what the Ann Arbor, Mich.-based HME arm of the University of Michigan Hospitals and Health Centers discovered.

Faced with burgeoning medical records that required frequent rearranging of the office, increasing staff numbers to try to manage them and significant time lost trying to find them, MedEquip decided to go electronic. That involved a significant financial investment in equipment, much staff training and even updating of emergency preparedness plans. But the results have been impressive, according to James Shurlow, director of HME Services.

“While the initial cost of the hardware and software was substantial, the long-term potential gains in efficiency and reduction of workload made the start-up cost more palatable,” he says. “Almost instantly, we noted increases in staff productivity and staff acceptance.”

Shurlow says the company currently stores more than 45,000 patient files and 14.5 million images in the new electronic record system. Authorized employees can access the system remotely and with security, he says, adding: “The benefits to our on-call staff of obtaining patient information remotely 24/7 cannot be overstated. The ability for any authorized employee to access medical record information electronically has produced bountiful rewards to our organization, as well as improving the service we offer our patients.”

And that could account, at least partially, for the 9.4 percent increase in revenue the company experienced last year.

Sentara Home Care Services

Find a need and fill it. That could be the motto of Sentara. Through its pharmacy and infusion therapy division, the Chesapeake, Va.-based company developed a home-based sickle cell management program that seeks to provide therapies early on in order to help patients manage their pain and reduce the cost of emergency care.

A pilot program was wildly successful. Results, says Ray Darcey, vice president, showed a 300 percent decrease in hospital days, a 700 percent decrease in emergency room visits and a 200 percent decline in hospital admissions.

“Rapid initiation of therapy for sickle cell disease can make a dramatic impact on the severity and length of a sickle cell crisis,” says Linda Wiesner, R.N., C.R.N.I., infusion nurse manager for Sentara’s pharmacy and infusion therapy division. “Home care can administer multiple infusion therapies during crisis that include pain management, hydration, blood transfusion, chelation, antiemetics and antibiotics.”

The company, which experienced revenue growth of 15.6 percent in 2004, has also instituted other programs, including one for clients with swallowing disorders and a rehabilitation program for joint replacement patients prior to their hospitalization.

ThedaCare At Home

It’s no accident that ThedaCare has been around for almost 100 years. The Neenah, Wis.-based HME company has weathered plenty of storms in its history, mostly because it is adaptable and “encourages [innovative] thinking and fresh approaches,” says Randy Lutz, HME manager.

“Innovation is something that distinguishes ThedaCare At Home as a leader in home care,” Lutz says, noting that the company has more than 150 licensed health care professionals in 15 different specialties. ThedaCare is involved in HME, respiratory services, infusion therapy, skilled nursing, hospice care, pharmacy and a variety of other services and programs.

The company, which enjoyed a boost in revenue by 9.5 percent in 2004, continues to grow. It is now involved in residential hospice, has opened two new retail locations and, in an effort to enhance the quality of care to patients as well as measure outcomes, it now offers telemonitoring to home care clients. “All of these initiatives support the promotion of HME and enhance the vision and image of home care in our region,” Lutz says.

One Up-and-Comer: Cape Medical Supply

Keep your eye on Sandwich, Mass.-based Cape Medical Supply, because we think you may see it on future lists. The 28-year-old, $2 million respiratory company boasted a very healthy revenue jump of 19.6 percent in 2004 and has plans to increase that — independently.

“Maintaining our independence, providing excellent service to our community and a great work environment for our amazing staff are the focus of our operations moving forward,” says Gary Sheehan, son of founders Mark and Nancy Sheehan and general manager of Cape Medical.

The company’s stock-in-trade is largely respiratory equipment (50 percent) and HME (40 percent). Supplies make up the remaining 10 percent of Cape Medical’s business. But all of that is fluid, since the company routinely scrutinizes its operations and adds and subtracts business lines and practices as needed.

Last year, it shed an unprofitable division, dropped a contract with local fire departments and facilities, revamped its benefits for employees and added a clinical respiratory services division. It has also enhanced its technology to increase efficiency. “We have not been shy about reassessing long-standing practices to allow for improvement or to decide that we should not be participating in certain lines of business as we move forward,” Sheehan says.

Boldness, it seems, does indeed pay off.