Orlando, Fla. While providers attending Medtrade 2004 said they are worried about next year's DME reimbursement cuts, many also said they are ready to

Orlando, Fla.

While providers attending Medtrade 2004 said they are worried
about next year's DME reimbursement cuts, many also said they are
ready to replace the revenue and are optimistic about the future
for their businesses.

Held Oct. 26-28 in Orlando at the Orange County Convention
Center, the 25th annual show and expo, produced by Atlanta-based
VNU Expositions, drew 18,000 providers and others allied with the
home health industry from across the country to view new products
in 300,000 square feet of floor space.

“We're worried about the cuts, so we're looking at ways to
cut costs and increase cash sales,” said Cynthia Jarman,
director of operations for Alliance Medical Inc. (AMI) in
Albemarle, N.C. Jarman said the HME is planning to expand product
offerings by growing the company's respiratory business. She and
others from the firm were also combing the show for
“higher-end equipment where people will pay the

“We're watching what we do and paying attention to how
we're buying,” said Cathy Roberts of Lech's Pharmacy, with
locations in Tunkhannock and Nicholson, Pa. Roberts and the
company's Lori Krukowski said they were particularly interested in
new respiratory products “that can keep patients off
plugs,” and were searching for any new products that
“can give our patients freedom and mobility.”

Along with prowling the aisles for products, providers took
advantage of the show's conference sessions. “I've been in
business for 14 months. I haven't fallen on my face, but I know I
have a long way to go,” said Justin Rogers, general manager
of Primary Medical Supply, Midland, Texas, at a session called
“Meet the HME Experts in Sales and Marketing.”

Similar “Meet the HME Experts” sessions on billing
and reimbursement and legal and regulatory issues also drew crowds,
as did the all-day Continuum of Care, which preceded the show on
Oct. 25, a session on accreditation with panelists from JCAHO, CHAP
and ACHC, and a presentation on benchmarking HME business.

Other conference highlights included an account of his personal
struggle with multiple sclerosis by industry advocate David
Williams, author of Battling the Beast Within, a line-up of
speakers at Grassroots Central and a packed retail design workshop
for HME showrooms.

Overall, close to 3,000 attendees participated in the show's
educational conference, according to VNU officials.

  • M&A on the rise

“This industry is extraordinarily entrepreneurial, ever
finding ways to conduct business and find a way through” the
changes handed down by the government, said Dexter Braff, president
of The Braff Group, Pittsburgh, during a session on mergers and

Braff explained that despite industry uncertainty, M&A
activity in the sector has risen to unprecedented levels, as buyers
are under pressure to reach a critical mass and diversify to
withstand government cuts, while other companies are eager to sell
before their business loses value after the cuts take place.

  • Days Sales Outstanding (DSO) declines
  • For the 114 providers who participated in the American
    Association for Homecare's annual Financial Performance Survey, DSO
    decreased from an average of 83 days in 2002 to 74 days in 2003.
    “That decrease allows [HMEs] to free up money to go into the
    business,” said Dr. William Cron, professor of marketing at
    Texas Christian University, who presented the study findings at

  • A policymaker's perspective
  • Several CMS representatives, chosen to spearhead the agency's
    massive DME competitive bidding project, got their first taste of
    Medtrade this year.

    CMS Health Policy Analyst Michael Keane and other agency
    representatives sampled the latest technology on the show floor as
    they prepare to implement competitive bidding in 10 of the
    country's largest MSAs (metropolitan statistical areas) by 2007, as
    mandated by the Medicare Modernization Act. They also attended
    seminars to become familiar with the industry's accreditation
    bodies, how they work and what they offer. Per MMA, Medicare will
    require providers to be accredited to maintain their supplier

    Keane has been a CMS point person for DME competitive bidding
    and a key organizer of the Program Advisory and Oversight Committee
    (PAOC), a group consisting of consumer and industry stakeholders
    who will advise the agency throughout implementation of the bidding

    “I'm learning about new technologies in the market for
    Medicare,” Keane said. “We're hearing the industry's
    worries and apprehensions about the [competitive bidding] program
    when it starts in 2007. We can take this back to work and use it
    when we develop some of the policies.”

    Heard at the Show

    On planning

    “We just went through the budget process for 2005. We're
    budgeting a 7 percent reduction in Medicare business — and
    that's a conservative estimate. Everything you read points you in a
    different direction, so it's very hard to tell what really is going
    to happen next year. Efficiency is what's going to allow us to
    continue to serve our customers without cutting customer
    Irene Magee, vice president/director, Northeast Home
    Medical Equipment, Green Island, N.Y.

    On competitive bidding

    “Competitive bidding is the most ridiculous thing in the
    world. CMS controls the price — why not lower it? If I don't
    want to do it for that price, I won't provide the product. Right
    now, with the price set where it is, it's very competitive, because
    the only way I'm better than my competitor is to offer more and do
    more, and take better care of patients. Once competitive bidding
    enters the situation, you have fewer competitors and less of a
    reason to offer additional services to compete. It's going to be
    price-based, and it doesn't give the patient the right to choose
    whom they think can take care of them the best.”
    Dean M. Cheney, owner, Dallas Oxygen/Prescription Air,

    On profit

    “Profit is the name of the game, and we're working like
    dogs to make it. [The 2005 cuts] are just one thing too many, so I
    am exiting the Medicare business and looking at expanding my
    already very active retail business.”
    Mary Sitcoske, president, American Surgical Supply,
    Pottsville, Pa.

    On referral sources

    “The challenge we face as a DME company is [education
    about new technologies] to the actual referrals. We can't just buy
    equipment if nobody's ordering. The doctor also has to see this new
    equipment, too.”
    Sara Shoun, respiratory services care coordinator,
    Lambert's Health Care, Knoxville, Tenn.

    On 2005 reimbursement cuts

    “I wish they weren't coming. But since we know they are,
    we are looking at increasing our volume.”
    Wendy Staples, respiratory therapist, Preferred Home
    Medical, Tyler, Texas

    On mobility needs

    “I'm seeing an expanding market [of customers] who don't
    necessarily have a medical need [for powered mobility], and the
    manufacturers are seeing that. The population is becoming less
    healthy. After walking a show floor like this, a scooter looks real
    Mike Madrid, CEO, Madrid Medical, West Lafayette,