Analysts predict bleak future for HME under healthcare reform

Tuesday, June 30, 2009

YARMOUTH, Maine – When it comes to healthcare reform, the big money seems to be betting against the home medical equipment industry.

Certainly a lot has to happen before healthcare reform becomes a reality, but in the early goings, analysts predict that home medical equipment will be one of the big losers.

Investor research group Wachovia Capital Markets released a report this week that surveyed its clients on healthcare reform. In one section, 60 large investors said they expected health insurers, home health agencies and durable medical equipment companies to be the “most negatively affected.”

The investors expect the healthcare information technology industry to be the “most positively affected.”

Also this week, Deutche Bank stated that Lincare may be the only respiratory service provider capable of withstanding the 30% reimbursement cut now being considered in the Senate as part of healthcare reform. It should be noted that Lincare is a Deutche Bank client.

Details are still being worked out, but the 30% reduction in reimbursement would cut the monthly payment for concentrators to $95 and increase monthly payments for portables to $48. 

Another scenario includes changing the oxygen cap from 36 to 60 months.  Payment for concentrators also would be reduced to $95 in this scenario.