CIT: HME providers and manufacturers remain bullish

Sunday, November 28, 2004

November 29, 2004

TEMPE, Ariz. - The prognosis for the nation's specialty healthcare providers is excellent, according to the results of the first annual CIT Healthcare Industry Overview, which found that balance sheets are strong and patient volume is on an upswing, leading to a continued investment in improved technology and new equipment to enhance patient care.

The survey, released by CIT Healthcare Finance, a unit of CIT Group provides an in-depth look at the current state of the U.S. specialty healthcare segment.

A majority of survey participants from specialty healthcare organizations and durable medical equipment (DME) manufacturers reported strong confidence in the financial soundness of their companies. On a scale of 1-10, 64% of providers and 58% of DME manufacturers ranked the overall health of their organization as an eight or higher (with 10 being "excellent").

Compared with 2003, 44% of providers and 61% of DME manufacturers said that the overall financial health of their organization was better in 2004.

Capital spending is on the rise at many specialty healthcare organizations as providers invest in facilities and equipment. Fifty-six percent of surveyed providers anticipate a move or renovation within the next five years and 45 percent of those who plan to acquire equipment said they would spend $200,000 or more in total.

For those looking to raise capital, 54 percent of providers said they would use the funds to acquire equipment, software and other capital items. Corresponding to providers' plans to purchase medical equipment, nearly three-fourths of DME manufacturers expect their company's net earnings to rise, with an average projected increase of an impressive 43%. Additionally, almost 70% of providers expect their region's patient-dollar volume to increase.

Business Strategies

Both providers and DME manufacturers are keeping a close watch on their competition, which, according to 92% of providers and 79% of DME manufacturers, has increased or stayed constant in recent years. To remain competitive and increase net patient revenue, many providers are putting a premium on increasing the number of patients they serve, and 28% are adding doctors, services or locations to their organization.

Among DME manufacturers, about eight in ten survey participants hope to increase their market share; 76% plan to take an aggressive approach to marketing and sales; and 30% plan to raise the prices they charge for their goods and services.