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As providers scurried to get their surety bonds finalized and submitted to the NSC, others were busily worrying about their accreditation surveys, sweating to see if they’d have to voluntarily revoke their Medicare provider numbers. Those that finished with those two major feats were and still are attempting to figure out what this year’s oxygen capping (months 48-60) will bring to their already downtrodden bottom line. Further, while they worry about their next oxygen dollar, providers must constantly look ahead to competitive bidding (or lowered pricing via Inherent Reasonableness for all). Finally, providers can’t neglect to look behind them to plan for yet another Medicare post pay audit specimen – RAC, CERT or otherwise. The real constant in the current HME climate is that your Medicare dollar is more volatile and turbulent than ever before. So the question is what to do with your HME business that used to always rely on Medicare for oxygen payments and other consistent rental/sale items?

PAYER DIVERSIFICATION

Many providers are looking to diversify away from Medicare as a revenue source. They are focusing more on Medicaid (depending upon your location and socio-economics) and other third party payers. Further, negotiating well for a hospice contract can be profitable as long as both parties “win.” For example, instituting a delivery and pickup fee for same or next day pickups/deliveries prevents hospice staff from taking advantage of the HME provider. Other providers, depending upon their locale, rely more heavily on the managed care market as a strong base for their revenue, even if the net margin is lower than Medicare’s. This is primarily done because the more metropolitan areas have more managed care members than Medicare. Finally, there are many HME providers who have bolstered their retail showrooms to enlarge their cash business. As more and more people pay cash for their health care needs, this will become a growing market segment. Therefore, as Medicare strives to limit the number of providers in the HME market, it is time to look to alternate payer sources for more secure payments and revenue streams.

PRODUCT DIVERSIFICATION

As competitive bidding steams up again, HME providers are looking for ways to steer clear of this potential commotion in their business. If they lose, they will be forced to reengineer their company. But why wait? Even if you win a bid, you know that minimally your Medicare allowables will be lower. So many companies are looking for alternate payers for the same products and others are diversifying away from the competitively bid products to avoid the “what-ifs” in competitive bidding. Finally, providers who are gaining are those who look for opportunities that may not be as alluring at face value but underneath, they may provide strong volume and revenue growth with less risk. For example, the companies that have always provided Medicaid approved diapers and supplemental enteral nutrition are able to count on this revenue every month. Margins may not be as large as with Medicare patients, but they are consistent and constant. Supply or recurring sales, a category that is traditionally more labor intensive than the rental products, is more and more appealing as requirements aren’t often not as arduous (once the initial claim is paid and utilization is established) and the work is straightforward and repetitive (and less demanding of staff). Orthotics is another product category that is not necessarily reliant on Medicare for its revenue. Depending upon your demographics, sports medicine can be lucrative and orthopedic surgeons/doctors provide a nice referral base for this market. Finally, by formally and informally assessing your referral community for their current needs, you will learn where you can shift your product mix. Aim to meet the demands of the market by providing the best product and service for the patients/customers. Talk to the self insured employer as well as the physical therapist, orthopedist and more to determine your next move. After all, cultivating relationships is where you find your next referral and order.

INNOVATION

Marrying the payer with product changes mentioned above is a great way to relaunch your business. To learn more about your needs, meet with core staff to hear their ideas. Also engage your lower level staff to find out what they would do to make a difference for the business. They are rarely asked for their input but they often have great ideas and they feel valued and motivated when they are engaged in this type of discussion. The result will provide potential cost-savings and/or revenue gains and can ultimately take your business to the next level. If you decide to expand, you will find that many companies that would’ve been for sale even a year ago are simply looking for an exit plan. Why not scoop up their talent and inventory? Be cognizant of everything in the marketplace around you. Now is the time to think outside the box and work on unorthodox ways of conducting business. Enlist your employees and others for ideas. Those that sit idly by are the ones who will falter. Those that create and seize opportunity are the survivors in this Darwinian period. It is companies like Google, Amazon, and Southwest Airlines that made their marks during recessions. Like these companies, why not become the next business to forge ahead during an economic downturn? The time to act is now!