HCS Team
The HCS leadership team, L-R: Brian Desmarais, Sam Caruso, Jamie Fitzgerald, Justin Cognata, Jay Cognata, Adlin Siri, Ashleigh Hebert, Ed Pellot and Andrew Kleiner
Finding a silver lining
by Kristin Easterling

Respiratory and home medical equipment (HME) providers have had a rough couple of years during the COVID-19 pandemic. With supply chain challenges and product recalls, their challenges aren’t going away any time soon. But in spite of this, some HME providers are experiencing growth.   

Take Home Care Specialists (HCS), which is headquartered in Haverhill, Massachusetts, and has operations in Maine and New Hampshire. HCS is not only planning to hire in the second half of 2022, but has also purchased a new location in Haverhill, with plans to move in next month.

“It’s a family business,” said CEO Brian Desmarais. “We’re trying to keep this thing going. We’ve been very fortunate over the years.”

The company was founded in 1979 by Bill Desmarais and Gary Rudis, who were working as hospital respiratory therapists at the time.

“They started moonlighting, setting up patients on oxygen tanks at home, basically in the back of their cars,” said Desmarais, who is Bill’s son. Around 1981, the first oxygen concentrators became available, along with Medicare reimbursement, and Bill Desmarais and Gary Rudis left their jobs at the hospital to build Home Care Specialists. In 2017, the Desmarais family acquired Rudis’s stake in the business.

The company gradually expanded into more types of HME, including beds and mobility products, and added a hospice line in the 1980s. In 1998, the team at HCS made its first acquisition, buying a company heavily focused on sleep apnea and CPAP supplies—now one of the organization’s core segments.

Reimbursement Woes

Desmarais said he made the decision to stick with a full product line as competitive bidding shook up the HME industry. The company bid in every category it could—and won.

“We also lost a lot of competition over it,” Desmarais said.

The disappearance of up to 40% of the competition for beds and bent metal items in the area meant HCS could offset the competitive bidding rate cut with sheer volume of patients. The clients they took on were “already on our streets, on our routes,” Desmarais said, so the transition was relatively easy for all involved. Respiratory competition remains stiff, he added.

The Centers for Medicare & Medicaid Services (CMS) said it did not see expected cost savings in the most recent bidding round, and the program is effectively paused for the time being. Desmarais said the new challenge is for CMS to address rising inflation that is driving manufacturer and provider costs through the roof.

“I mean, we got a little bit of a bump this year,” he said. “They threw a couple other bones at us, but all the feedback I’m getting is that Congress is not hearing from their constituents, even though they are aware of the rising costs.”

Pandemic Hangover & Remote Work

And now, the company is continuing to deal with the after effects of a lingering pandemic.

“With very little guidance and a rapidly changing environment, we had to run a model with staff in facilities, in homes and in other places where everybody was suspected to have COVID with very little guidance or anything to work with,” said Desmarais. On March 16, 2020, he sent all office staff home to work remotely—and so far, he’s not calling them back.

“The remote workforce has been a win for us,” he said. “I couldn’t get anybody to come back if I wanted to.”

He added that before the pandemic, his employees were already logging into remote cloud systems such as Brightree—they were just doing it in the office. Today, new staff must train in the office to earn the benefit of working remote, but that’s an option for billing and most customer service jobs. He added that in-person training and meetings supplement remote work to maintain important human connections.

Letting his office staff work remotely has also meant that a wider variety of people are applying for open roles.

“We’re seeing a lot of people [apply] who have worked in other fields, and we believe this is partly due to our remote work philosophy,” said Desmarais.

Desmarais called the pandemic a boon for the company and for HME as a whole.

“What we got from the pandemic is validation that home respiratory and medical equipment services were essential because they assist health care facilities maintain patient capacity. It’s been validated by the patients that the preferred place of care is home, and they want to age in place now,” he said.

Hiring Still Isn’t Easy

HCS plans to add 10 full-time and five-part time jobs in the next three years, both remote and on location. The additional staff will largely consist of delivery technicians, as well as customer service and billing support to keep up with increased volume.

But the broader range of applicants isn’t necessarily making hiring easy. Desmarais said the company is competing against Amazon and FedEx for new employees—and Amazon can pay more. Amazon also announced in late February that fully vaccinated workers no longer had to wear masks in its warehouses and was not firing workers who chose not to be vaccinated.

Health care doesn’t have that luxury, Desmarais said, and some applicants back out when they realize this. The CMS vaccine mandate for providers who work with Medicare and Medicaid populations was still in effect at press time, despite challenges from states. A clean driving record and background check are also essential for health care workers making equipment deliveries, which can rule out some candidates.

Desmarais also sees a lot of similar paying jobs that have traditional 9-to-5, Monday to Friday schedules. Even with the new remote component, most HME employees will have on-call rotations and overtime, he said.

Navigating Shortages

Desmarais was hesitant to discuss the recent recall by Philips Respironics of some of its CPAP devices and ventilators, but he did say it is “a disaster for everybody.”

Desmarais called the sleep business an “iceberg” that slowly melts without enough new patients. There is a shortage of CPAP devices due to the recall and the dearth of semiconductor chips. ResMed and other manufacturers haven’t been able to backfill the void left by Philips.

One of the lasting impacts of the recall Desmarais is seeing is that there are patients who used a CPAP, but weren’t invested in their therapy or perhaps didn’t see the benefit they wanted. Now, those patients aren’t going back on therapy.

HCS has a robust resupply program for CPAP users, which Desmarais calls a “key to survival” in the sleep space, but has seen a significant attrition rate for patients with recalled devices. Patients would ask to be removed from resupply contact lists until new machines arrived, and then connected devices sent data to HCS showing that many weren’t even turning on their new machines.

“There was this whole population of borderline users,” he said. “That gave them a good excuse not to use their machine. And now the data we’re seeing shows that they’re not picking therapy back up.”

There’s also the challenge of payer management, Desmarais said. Many payers require a connected device to monitor patient compliance with therapy. Most of those, he said, are ResMed or Philips devices. Most providers are on an allocation model, receiving only a limited number of machines based on their pre-recall order history. And if a provider worked with referral sources that preferred Philips, they are having a real challenge getting ResMed or other machines to fill the void, Desmarais said.

In the midst of this, some physicians are creating a feeding frenzy by sending out multiple referrals for the same patient.

“I’d do the same as a physician,” Desmarais said. “But it’s actually creating more problems because it’s creating a bigger pile to sort through to figure out what your patient’s needs are.”

“Everybody’s just waiting to ride this thing out and see what happens,” he said. “The bottom line is that the industry needs more machines.”

Partnering With Hospice

In the 1980s, Bill Desmarais took a gamble on hospice. Reimbursement was high, said Brian Desmarais, but reimbursement rates for HME were based on long-term rental agreements; hospice patients only need equipment for a short time, which ultimately lowers the reimbursement.

“A lot of providers decided that wasn’t sustainable,” Desmarais said. But for his father and the company, the move proved to be lucrative.

Hospice providers directly contract with HME providers for the needed equipment, which decreases the administrative burden on the company because the hospice does the legwork on reimbursement and claim filing. HME is included as part of the daily rate for hospice care.

“Whatever they order is what they want and that’s what they’re going to pay for, and there’s no questions asked about it,” said Desmarais. “They control their utilization; they control their spend and what and how much they want to provide.”

He added that reimbursement isn’t great right now, but as more people desire to age—and die—at home, HCS is seeing demand for wheelchairs, beds and patient lifts soar. The notes the company receives on its orders directly relate back to patients wanting to stay out of nursing homes, he added. And Desmarais is seeing more family members who can provide care for their loved ones at home due to remote work and increased access to telehealth services.

“We believe that’s the future. This whole people at home providing more care will continue to evolve,” he added.

To the Future

On a more pessimistic note, Desmarais sees consolidation increasing in the sleep business. And that could lead to manufacturers stepping in. Some have already launched direct online ordering for patients, he said.

“I could see CPAP and the resupply business going away in my lifetime,” he said. “But we’ve been saying this for 40-something years, too.”

For now, HCS is growing. The new location features increased warehouse space and happens to be next door to the organization’s former building, which it was leasing. The company received a $2.9 million loan for the purchase with assistance from the Mass Development loan program, which is committed to stimulating business, driving economic growth and helping communities thrive across Massachusetts.

Like many in the industry, Desmarais wonders how reimbursement will change in the new, tech-driven environment created by the pandemic.

“I think that the pendulum has swung too far down the low reimbursement road,” he said. “The pandemic has highlighted what the HME industry can do in a number of different aspects. The question is how do we fit into these new conversations and models, and how do the payers adapt to the realities of 2022?”

Kristin Easterling is managing editor of HomeCare magazine.