MED’s Pederson: O&P Might Be Just What the Doctor Ordered

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.