For the second year in a row, home medical equipment providers are hunkering down as they plan for the New Year, and it shows.
With the pervasive unrest stirred by competitive bidding and the uncertainty of Medicare's reimbursements, purchase intentions have fallen across the board for the products on HME companies' 2008 shopping list. The most popular products haven't changed — manual wheelchairs, beds, ambulatory aids, bath safety products and nebulizers. But fewer providers participating in HomeCare's 2008 Forecast Survey said they plan to buy them:
Other results show fewer providers than in last year's survey said they would purchase CPAPs/bi-levels, -7.8 percent; oxygen concentrators, -6.6 percent; bariatric products, -7 percent; and power wheelchairs, -7.6 percent.
| 2008 | 2007 | % Change | |
|---|---|---|---|
| Manual wheelchairs | 70.1% | 81.5% | -11.4 |
| Beds | 66.7 | 76.8 | -10.1 |
| Ambulatory aids | 66.5 | 77.3 | -10.8 |
| Bath safety products | 64.7 | 75.1 | -10.4 |
| Nebulizers | 64.3 | 76.5 | -12.2 |
Some products will show a lesser decline: ramps by only 2.9 percent and diabetes products by 2.3 percent, for example. But providers said they will be buying fewer products overall. The average decrease for the 35-item shopping list as a whole was 6.2 percent.
In spite of their reimbursement jitters, the vast majority of providers (86.7 percent) believe company revenues will increase or at least hold steady next year. Only 9.9 percent predicted their income would decrease.
Nevertheless, providers said they are taking measures to reduce expenses. In fact, “keeping costs under control,” they said, will be their No. 1 challenge. To increase operating efficiencies, 59 percent said they now have a DME software package, and almost a third (30.8 percent) said they are using a document imaging system.
To hold delivery costs in check, 40.2 percent said they already have or plan to limit deliveries in company-owned vehicles, and 27 percent said they have or will limit delivery hours.
Costs aren't their only problems, though. Unease about Medicare's home oxygen rental cap surpassed competitive bidding as other obstacles providers said they are facing. Keeping up with legislation/regulation and changing their business model round out the Top 5 challenges on the stress list for 2008.
Providers said they plan to grow their businesses by adding patients, entering new product areas and increasing retail sales, among other means.
Those who don't plan to participate in competitive bidding's second round (40.4 percent) if their MSA is tapped or who bid but don't win a contract said they will replace Medicare revenues with more business from other payers, more retail, grandfathering patients and subcontracting.
Even though they are in a “wait-and-see” mode, as one respondent described, more than three-quarters of providers (76.4 percent) said they will hang on past 2010 and have no plans to leave the business, at least at this point.
But that could present another problem for some when it comes to accreditation.
The largest group of providers in any of HomeCare's surveys to date — 57 percent — told us their companies are accredited. That's an increase of 5 percent over last year's survey results, and a whopping 19 percent jump from results in 2004, when only 38 percent of providers reported accreditation.
Of those who are not accredited, 22 percent said they had begun the process, while 33 percent said they planned to become accredited in 2008 or 2009. Another 16 percent said they would become accredited when CMS requires it for all providers.
More than a quarter of those unaccredited companies (27 percent), however, told us they don't plan to apply. Industry consultant Mary Ellen Conway, Capital Healthcare Group, Bethesda, Md., said that could be dangerous.
“What this may cause is that many providers will be forced out of the Medicare business when they can't get accredited in time, rather than their making a conscious decision to exit the business,” she warned.
Those who said they don't plan to become accredited chose several different reasons from our list of survey responses: 22 percent said “I don't need it for my HME operation,” and another 13 percent said their payers didn't require it.
But nearly half of the unaccredited providers gave “other” reasons why they weren't moving into the process.
“The cost for accreditation does not reflect what my benefits would be,” stated one provider, while another said the “cost, time involved and too much government intervention” were keeping him from applying.
And one, exhibiting that stubborn entrepreneurial spirit of so many HME providers, said simply, “Don't want to.”
| More business from other payers | 33.9 % |
| Changing business to retail model | 25.6 |
| Subcontract | 16.1 |
| Grandfather patients | 20.6 |
| Other | 23.9 |
2008 Product Shopping List
(Ranked by percentage of HME providers who intend to purchase)
| 1. Manual wheelchairs | 70.1 % |
| 2. Beds | 66.7 |
| 3. Ambulatory aids | 66.5 |
| 4. Bath safety products | 64.7 |
| 5. Nebulizers | 64.3 |
| 6. CPAPs/Bi-levels | 61.1 |
| 7. Oxygen concentrators | 59.1 |
| 8. Lift chairs | 56.2 |
| 9. Oxygen conserving devices | 55.5 |
| 10. Bariatric wheelchairs | 54.8 |
| 11. (Tie) Bariatric products (Tie) Portable oxygen systems |
54.2 54.2 |
| 13. Scooters | 51.7 |
| 14. (Tie) Pulse oximeters (Tie) Power wheelchairs |
49.2 49.2 |
| 16. Support surfaces | 47.2 |
| 17. (Tie) Incontinence products (Tie) Sport/lightweight wheelchairs |
45.4 45.4 |
| 19. Compressed gas regulators | 43.1 |
| 20. Diabetes products | 40.9 |
| 21. (Tie) Nutrition (Tie) Seating and positioning |
40.2 40.2 |
| 23. Compression hosiery | 39.3 |
| 24. Sleep products | 38.0 |
| 25. (Tie) In-home oxygen fill systems (Tie) Ramps (Tie) Wound care |
37.8 37.8 37.8 |
| 28. Orthopedic soft goods | 37.5 |
| 29. Urological/ostomy | 35.1 |
| 30. Hot and cold therapy | 29.7 |
| 31. Skin care | 27.9 |
| 32. (Tie) Liquid oxygen systems (Tie) Pediatric respiratory |
25.4 25.4 |
| 34. Sleep diagnostic products | 24.3 |
| 35. Pediatric mobility | 23.6 |
About the Future
| Adding patients | 61.8 % |
| Entering new product areas | 49.1 |
| Increasing retail business | 47.6 |
| Expanding into another geographic area | 33.8 |
| Changing product mix | 32.6 |
| More advertising | 32.1 |
| Changing payer mix | 26.2 |
| Increasing sales staff | 23.5 |
| Acquisition | 21.2 |
| Expanding showroom | 20.6 |
| Opening a new location in current area | 18.2 |
| Specializing business | 15.9 |
| I plan to stay in business through 2008 | 8.1% |
| I plan to stay in business through 2009 | 2.9 |
| I plan to stay in business through 2010 | 9.7 |
| I have no plans to leave the business | 76.4 |
| No answer | 2.9 |
Why don't you plan to participate in competitive bidding?
“Do not have enough $$$$”
“Do not need the politics”
“Don't accept Medicare”
“Don't feel like I understand the process well enough”
“Don't need it”
“Don't want to jump through all the hoops”
“Don't want to change the personalized way we do business”
“I hate Medicare”
“I hope just to make it through the end of 2008”
“I think competitive bidding is a disaster for the industry”
“Lost cause”
“Low reimbursement”
“Medicare doesn't care about the elderly because if they did they wouldn't be doing this to us”
“My business is so small I don't feel like I could win a bid”
“No one should bid”
“Not worth the time”
“Pricing already too low”
“Since I don't plan on getting accredited, why would I?”
“The government is too flaky. I don't need them to have a successful business”
“Transforming into full retail sales”
“We are going away from Medicare, not towards”
“We do not think competitive bidding will prevail”
“We don't feel the expense of bidding and the reduced reimbursement justifies our participation”
| 1. Keeping costs under control | 57.5% |
| 2. Medicare oxygen rental cap | 48.1 |
| 3. Competitive bidding/preparation | 45.6 |
| 4. Keeping up with legislation/regulation | 37.1 |
| 5. Changing business model | 36.9 |
| 6. Medicare DME rental cap | 34.8 |
| 7. Paperwork/administrative activities | 31.9 |
| 8. Claim processing/payment time | 30.1 |
| 9. Medicaid cuts | 27.6 |
| 10. Accreditation/supplier quality standards | 27.4 |
| 11. Viability in a changing market | 25.6 |
| 12. Medicare coverage/pricing for PMDs | 24.5 |
| 13. Claim denials | 24.3 |
| 14. Staff issues (retention, training, etc.) | 22.2 |
| 15. Managed care contracting | 20.4 |
| 16. Quality patient care/services | 19.8 |
| 17. Compliance | 16.0 |
| 18. Technology investment | 12.1 |
About this survey:
Data were collected Oct. 18-30, 2007. Of 445 companies participating, 46 percent operate a single location. Forty-nine percent reported revenue under $3 million, while 14 percent indicated revenue of $25 million or more. Thirty percent of respondents' companies employ 10 or fewer people, while 21 percent employ 100 or more. Respondents' companies have been in business for an average 17 years. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures.
