‘Change before your have to’

Tuesday, July 31, 2007

Q. How does an HME owner lead during these uncertain times?

A. This is no time to hunker down. Leaders should develop and execute a plan to communicate the impact of proposed reimbursement changes to their elected officials; they should engage employees and customers to support their position. Leaders should also support and use trade associations and equipment manufacturers as resources—but do not leave it to them to fight the fight.
Many HME owners, grappling with the issues of the day—sales, operations and reimbursement—have no budget or financial projections that include expected changes to costs and reimbursement. Don’t fall into this trap. Prepare a 2008 budget using a conservative, worst-case scenario—a 20% increase in health insurance, 5% increase in salaries, $5 per gallon for fuel and reimbursement at 80% of existing Medicare rates. Then determine how you need to change your operating model. Should you continue to provide all product lines? Deliver oxygen? Change patient and referral source expectations? Jack Welch, former General Electric chairman, said, “Change before you have to.”
HME owners demonstrate leadership by constantly evaluating how to leverage new technology to minimize expenses related to customer service. Good business leaders also communicate effectively. They keep their management team and staff aware of industry dynamics; they also explain the company’s plan to compete in this difficult environment. Business leaders share this plan with vendors, lenders and investors—before changes occur.
Bernie Lambrese is a senior partner at Healthcare Strategies. Reach him at