Clinical, policy expertise key to pediatric success

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Monday, December 31, 2001

Physical rehabilitation and respiratory therapy are highly specialized markets in their own right, but pediatric adaptation of these services is on another plane altogether. Therefore, referral sources - as well as the clients themselves - typically look for providers with specific insight and inventories to meet the rigorous demands of this particular audience.

Not surprisingly, the providers who serve this market say handling special situations comes with the territory and those who can't respond shouldn't be in the business. Commitment is the foundation of this time- and resource-intensive market.

"Pediatrics is a specialty within itself," notes Doug Crana, president of Newburgh, N.Y.-based Consolidated Medical. "When you deal with pediatrics, there is a different approach to these patients. You need to have extra compassion - especially for rehab. There is so much involved."

Indeed, serving the needs of young muscular dystrophy, cerebral palsy and cystic fibrosis patients takes a high level of clinical and technical skill. However, the key to financial success in pediatrics also relies heavily on deftly navigating the labyrinth of Medicaid reimbursement policies and managed care contract engagement, advises Dan Hunt, CEO of D & L Medical, Austin, Texas.

"From the beginning we understood Medicaid and other payers," said Hunt, whose company's payer mix is 80% Medicaid. "We learned about the Medicaid waiver program. We studied how to get all the paperwork exactly right - it's difficult to do. But Texas Medicaid is better than other states. They pay promptly."

Jerry Dahlstrom, who vindicated himself in a contentious Medicaid investigation last year, is no stranger to the hassles of Medicaid. His company, Tenth Street Medical in Topeka, Kan., relies on Medicaid for half its pediatric rehab business. Yet he maintains that if he weren't already in the market, he'd stay away.

"I wouldn't enter the market today because it's so complicated on the Medicaid side," he said. "There is too steep a learning curve. There is too much to know."

Other providers relate similar observations about serving Medicaid, which along with other state-sponsored programs accounts for approximately 40% of pediatric market funding, according to Charles "Mac" McIntyre, executive director of the National Network of Pediatrics Homecare.

Despite myriad billing idiosyncrasies and oft-inadequate reimbursement levels, pediatric providers still do a fair amount of Medicaid business. McIntyre's company, Van Nuys, Calf.-based Proactive Homecare is strictly pediatrics.

His mindset - common in this field - is that serving the impoverished is obligatory despite being financially uninviting.

"Medi-Cal (California's Medicaid program) has a reputation for being the worst system in the country to deal with, but we can't ignore the poor population," he said. "We make less than 1% margin with Medi-Cal, but we're fine with that. It builds our acknowledgements in the community as being a company that is willing to serve these babies."

Although many providers are still active participants in Medicaid, signs point to companies pursuing more private payers as a counterbalance.

"(Private) insurance is driving the market," observed Crana, whose company is one of a handful of small providers to get a preferred provider contract with Empire Blue Cross/Blue Shield, the state's largest payer. "Medicaid used to be the bulk of our business, but we're searching for more managed care. If we get the right contracts, we get the referrals."

Dahlstrom adds that the reason more providers are landing more private insurance business is because more coverage is available now than a few years ago.

"For a long time, a lot of privates didn't understand pediatric rehab," he said. "Case managers didn't have a clue about contoured seats or head-switch control options for power chairs. But they have since learned about the equipment and are offering coverage."

The provider community has undoubtedly contributed to private payers' increasing familiarity with the nuances of pediatric equipment. After all, demonstrating expertise is the surest way to land contracts and referrals, they contend.

Crana says serving pediatric rehab patients takes a special brand of patience and commitment - demands that other providers have told him they'd never touch.

"I might see a child three or four times to fit a chair right," he said. "You have to be willing to get to know this child. Otherwise, you won't be able to treat the child properly or get along with the family."

But does this dedication translate into marketing fodder for referral sources? Crana isn't convinced it does.

"You could put it in a marketing plan, but I don't know if would give you the advantage because it's hard to prove," he said. "From a therapeutic standpoint, I can impress (referral sources) with responsiveness and call backs. But from a financial standpoint, their primary concern seems to be price."

Crana is hardly alone in this view. Instead of marketing to referral sources, Hunt says, he's content to let the referral sources come to him.

Hunt and his wife Lindie entered the pediatric rehab business because their son needed equipment.

The business flourished due solely to word of mouth among the families of pediatric patients. To their surprise, a newsletter produced specifically for the Hunts' clients circulated into the clinical community.

"I got a call from a case manager inquiring about our services and I wondered how she heard about us," he recalled. "She told me she had seen the newsletter, and that it had been passed around at her hospital."

Referral sources come to D & L because the company offers hard-to-find products for pediatric patients, such as unusual sizes of suction and urinary catheters.

Besides being advantageous in attracting referrals, unusual items are often provided for little or no cost, Hunt said.

"The manufacturer reps will give them to you if they want your business badly enough," he noted.

Others however, actively seek relationships with case managers and pediatric clinicians. Norfolk, Va.-based Rehab Healthcare reaches out to the referral source community by teaming up with them on symposiums and fundraisers.

"We're very involved with children's hospitals and muscular dystrophy clinics," said Christy Sutton, manager of Rehab Healthcare's Richmond, Va. branch.

One inherent challenge in dealing with pediatrics is fitting patients with products based on the premise that they will grow into them, asserts Bill McKiernan, rehab director at Blackwood (New Jersey) Medical.

What's more, children's equipment needs to be more readily adaptable for vans, buses and buildings.

McKiernan, who has 20 years' experience in pediatric respiratory and rehab, says he has gained a broad range of knowledge in the field. As a result, Blackwood Medical has a long roster of established accounts.

Still, providers need to avoid the trap of complacency when it comes to a complex market like pediatrics, he said.

"I don't like to be called an expert because not a day goes by that I don't learn something new," he said. "And just because you've been in the business a long time doesn't mean you're good." HME

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