The charge

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Thursday, July 31, 2003

While the industry has been rightly
focussed this spring on influencing Medicare legislation, there is a longer term issue that needs to be addressed. That’s the need for solid, substantial national data to quantify the benefits of home medical equipment.

In mid-June, I attended the 15th Annual NEMED meeting and heard an excellent presentation by Cara Bachenheimer on strategies to survive IR price cuts. Cara discussed whether it’s appropriate to use VA pricing as a benchmark. Can an imputed mark-up truly make wholesale prices comparable to a Medicare retail transaction? And let’s not forget, the VA buys in huge volume, with a different pricing structure from supplier wholesale costs. But, I thought to myself, where’s the industry data to support that claim?

Later that day, I had lunch with a NEMED member, Tyrrell Hunter, president of a local HME provider. We had both attended Cara’s presentation and talked about the need for data to make the case to Congress. Tyrrell made an excellent point about the value of her business as a local employer and tax-payer. While she understands the costs associated with her own operation, the ability to do the sort of national survey research that’s needed is beyond her (or most other) company’s capacity.

Tom Connaughton, former CEO of AAHomecare, interviewed in the May issue of HME News states, “We’ve got to develop the data to show that we really are cost-effective and get the message across that we are part of the solution”. He goes on to say, “We have to work out among ourselves, to give [the government] some guidelines about how to best take advantage of the services and products we offer”. In his editorial in the same issue, Jim Sullivan calls for “the big strategic study that affirms the industry’s hypothesis that home medical equipment just plain makes sense.”

As we react to Medicare legislation and Medicaid cuts, we need to keep the bigger picture in mind. We can’t lose sight of the need for a comprehensive survey to unequivocally establish the value of the home medical equipment business in the continuum of care. The survey should look at true costs of HME, including the service component, rural, suburban and urban, and be based on realistic wholesale pricing, not some extrapolation from VA data. It needs to establish the savings incurred when patients are moved from a hospital setting to their home. It needs to underline the value that small and medium-sized HME’s bring to their local communities as employers, tax-payers and supporters of worthy causes in their markets. The survey needs to be proactive, not reactive.

The recent GAO study verified what we’ve known all along, that, given a choice, most people would rather be home than in the hospital. But it’s up to the industry to prove that it’s not only desirable from the patient’s perspective, it makes sense economically, too. We need to be educating our politicians, nationally and locally, about the value of HME. If, as Tom Connaughton states, growth in HME will come from volume, not reimbursement, we need to be able to strongly defend our position with hard numbers.

Budget crises and cuts aren’t going away. Cuts, NCB and IR will be back again, perhaps sooner than we think. Let’s be prepared with hard data that shows the value of what we do. The question is, who will lead the charge? HME

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