Providers Feeling Pinch of High Gas Prices

ATLANTA–As gas prices continue to soar with no relief in sight,
home medical equipment providers across the country are feeling the
effects.

The nationwide average at the pump is up to $2.61 per gallon for
unleaded, and $2.65 for diesel, according to AAA’s daily fuel gauge
report. And in some spots, prices have topped the $3 mark. Experts
say increased demand and limited supplies are responsible for the
rapid climb, and prices aren’t expected to fall until after Labor
Day when the summer driving season ends.

“It’s killing us,” said Vince DeStigter, owner of Western
Healthcare, Jackson, Calif., noting that $3.19 per gallon is the
cheapest diesel fuel he can find within 100 miles. “First we saw a
reduction in Medicare pricing [this year], then you increase fuel
costs by 24 percent. It’s a big-time cost issue.”

To make matters worse, the average trip for this rural
provider–located between Sacramento and Lake Tahoe–is 15 miles,
DeStigter said. “When you have to travel two-and-a-half hours to
make a delivery to a patient up on the mountain, you use 14 to 15
gallons of fuel just for one customer. Every other business could
pass that cost along, but we can’t pass it on to the [Medicare or
Medicaid] customer.”

To maintain profit, DeStigter said he is working on building up
his retail business–and asking customers to come to the store to
pick up items whenever possible.

Other providers also are making operational changes–such as
converting to alternate fuel sources, switching fleet vehicle types
and limiting service areas–to improve efficiency. Last year, owner
Cliff Woolard of Home Med-Equip Co., Concord, Calif., converted his
company’s delivery fleet to vans that run off of compressed natural
gas, which yields 160 to 180 miles per tank, and installed GPS
(global positioning) to improve routing. (See HomeCareXtra,
June 1.)

Last year, Jeff Wills, CEO and CFO of Oklahoma City-based CV
Medical, began converting service vehicles to diesel, and the
company’s drivers are using GPS. “It worked out well for us because
we gained 100 percent mileage,” he said. Although the cost of
diesel fuel also has increased, he noted, “we would be much worse
off if we hadn’t converted.

“I think along with our other costs, [fuel] costs are certainly
going to be a concern long term.”