2013 kicks off with news galore

Friday, January 25, 2013

The HME News team got a rude awakening in the first few days of 2013. We all officially came back to the office on Jan. 2, after two weeks shortened by holidays (and Theresa’s and my birthdays, I might add), snow storms (about two feet, all told) and illnesses (there’s a nasty bug making the rounds of our office).

And it’s been non-stop ever since.

Just the news coming out of the complex rehab market, alone, is crazy. First, there was a new private equity owner for National Seating and Mobility (See page 19). Then there was a merger between ATG Rehab and United Seating & Mobility (See page 1).

I totally didn’t see that last one coming, at least not so soon. I pictured NSM, USM and ATG each continuing to acquire smaller companies in 2013, with some merger between two of these nationals coming years down the road. This adds a new wrinkle to a series of stories that Associate Editor Elizabeth Deprey wrote about consolidation in this market for the January issue. Foreshadowing, anyone?

There was acquisition news elsewhere in the industry, too: Advanced Home Care bought Extrakare (See page 15) and Brightree bought CareAnyware (See page 30).

There was also the realization that the recently passed “fiscal cliff” deal didn’t include language on the industry’s market-pricing program (MPP) but did include a provision to apply competitive bidding pricing to retail diabetes supplies (See page 1).

I mean, that was all in one week.

And the Round 2 payment amounts haven’t even come out yet (or not as of the writing of this editorial).

Now that I think of it, it was non-stop during the holidays, too, between Invacare’s agreement with the Food and Drug Administration (FDA), AssuraMed’s acquisition of Invacare Supply Group (ISG) and Philips Respironics’ pilot project with Kroger (See pages 1 and 30).

Speaking of Respironics, I’m not here to make judgments on a manufacturer’s market plan. I’m here to give providers a reality check, which I think is more important.

A few providers I talked to reacted to this news by raising the “direct-to-consumer” red flag. But a manufacturer selling its products through a mass retailer is not “direct to consumer,” especially if said mass retailer has a retail pharmacy and a license to provide DME.

Ever since Philips, which is very much direct-to-consumer, bought Respironics, providers have been waiting for the manufacturer to go in this direction. But this latest move ain’t it.

It could be, however, another competitor for providers—one with a big presence and big pockets. That’s unfortunate for providers, but hardly surprising. After all, HME providers aren’t the only ones hoping to serve a growing population of people with chronic conditions.

It is also a development that was hinted at some time ago. A PowerPoint presentation from Philips Respironics from 2008 included a slide detailing its plans to “transform traditional channel to mass market by 2015.” Company officials downplayed the slide at the time, but here we are, just a few years before 2015, and the manufacturer appears to be testing the waters with a mass retailer.

So what’s an HME provider to do?

I’m reminded of a presentation by Mindy Thompson-Banko at last year’s HME News Business Summit. Thompson-Banko is the founder and president of Simply Retail, which helps large hospitals enter the healthcare retail market, a market she sizes at $500 billion a year. She told attendees that even though mass retailers are likely to enter this market, smart providers have the upper hand.

“Someone in traditional retail is going to become a player—Bed Bath & Beyond is slowly trickling into this market,” she said. “But they’re so removed. They don’t have the expertise.”

Who has the expertise? HME providers do—that’s who. And I think it’s high time they start acting like it.

Hang on. It looks like 2013 is going to be a wild ride.