LUBBOCK, Texas — If you think the home medical equipment sector is going nowhere these days, The MED Group has a word for you, or three: orthotics and prosthetics.
The member services group has created a new program designed to help HME providers establish a viable O&P operation.
Tim Pederson, who is leading development of the program, introduced the National Orthotics and Prosthetics Network during the company's business meeting at Medtrade Spring earlier this month. Pederson, formerly CEO and president of WestMed Rehab in Rapid City, S.D., and past chair of the American Association for Homecare's Complex Rehab Mobility Council, believes that by adding O&P to their product mix, providers can reinvigorate their futures. With only about 1,800 existing O&P providers, according to the group, there's plenty of room to maneuver.
"Just because things are down in parts of our industry does not mean there are not opportunities," Pederson said. "There are opportunities to get back in the game and be a force in our industry and be successful. This is one thing you can do to make sure you're successful."
That's especially true for providers who are already offering complex rehab, which has plenty of commonalities with O&P, Pederson said. Even as the sector works toward a separate Medicare benefit — which already exists for O&P — there has been much consolidation in the rehab segment, Pederson said.
However, "you won't find companies with O&P and complex rehab trying to consolidate," he said. Why? Because the more stable O&P is saving the day for those providers.
Pederson believes he can help HME companies, even those without a complex rehab foundation, navigate the ins-and-outs of getting into O&P.
"I made a lot mistakes along the way myself in my own business," he said, adding that network providers "can all have the benefit of my mistakes. I have graduated from the school of hard knocks with honors. My goal is to make sure nobody else has to go through that program."
Here are more of Pederson's insights into the new program:
HomeCare: As providers consider diversification, why should they look into O&P? What about this line makes it particularly viable?
Pederson: If you are interested in maintaining your independence, [this is the way to go]. The margins are higher, payment and funding cycles are shorter and the regulation is really not that different [from complex rehab]. It provides the stability and profitability that you're looking for. Revenue diversification is a key component to future prosperity in our business, so why not diversify in the right way and maintain your profit and your revenue stream?
HomeCare: What are the pros and cons of the sector?
Pederson: The pros are that it's already defined as a separate benefit in the DMEPOS category, it has very well defined coding and reimbursement and it is similar to the complex rehab model, so it can be familiar.
There are indicators that some of the off-the-shelf orthotics may be included in competitive bidding, but it's really a small part of O&P. They won't bid that for the same reason they don't bid Group 3 power wheelchairs.
[Also], they actually give medical weight to the notes from the medical practitioner. In O&P, they are considered part of the medical notes. In many cases the O&P practitioner will have hospital privileges.
I think the cons would be expecting too much too soon. You want to build it logically and not expect the moon when you first start. You need to pay very close attention to charting and medical documentation; it is also subject to the crazy audits we are having in the rest of the industry.
HomeCare: What does it take to get into this sector in terms of financial outlay, inventory, staffing, credentials, etc.?
Pederson: Just like complex rehab, you need adequate facilities, but they are very similar to what you already have. In the facility, you are going to need evaluation and fitting rooms. One is going to have to be outfitted with parallel bars for gait training. You need space to fit somebody with a prosthetic and show them how to use it.
You are going to need a fabrication lab and some special fabrication equipment. If you don't have sufficient space, you may need to look at adding more space or reallocating space. You're going to have to have an oven to heat plastic, an area for cutting and grinding. Other than that, it is identical to custom rehab with your patient lounge, your showroom, etc.
The ability to cross-train your personnel is also important. A good complex rehab technician is probably going to become a good O&P technician. There is credentialing available. It is not required, but it is a certainly a nice career path. There are certified fitters.
There are two credentialing bodies for professional staff: the American Orthotics and Prosthetics Association and the American Board for Certification in Orthotics and Prosthetics. You have your certified prosthetist, certified orthotist or joint certified orthotist/prosthetist. This is not something you can just pick up and take an exam; it is very much like a physician model for their schooling. They are compensated very similarly to your better ATPs.
There is some outlay for inventory, but not as much as you think. It's very much like complex rehab — it is a referral business. You meet with the team, outline a solution, figure out funding, then figure out the components of what you need to do for that patient. The outlay for inventory is as the orders come in. You will need to carry some bracing and some components for service and repair, but it's not a huge outlay.
You have to be diligent in wanting to be in this business. It is probably going to be a rough couple of first years if you're starting from scratch, but once you are past that and you are effective in your marketing, you'll be successful.
HomeCare: How long would it take for a provider to get an O&P section up and running?
Pederson: You can have it up and running in a short time. It depends on how hard you work on it. You have to be prepared to have a good marketing plan and get into those referral sources, which are all the same if you have complex rehab. If you work at it as you should, you should see a return in less than the two years I mentioned.
HomeCare: Any caveats?
Pederson: You can't run it as a sideline. It's got to be a focused part of your business. You don't want your O&P division to feel like the stepchild, because then it won't thrive. Much like complex rehab, it's not product-driven, it is referral-driven.
