CMHM: ‘We have to grow - we don’t have a choice’

Saturday, July 31, 2004

BOLIVAR, Mo. - Deep reimbursement cuts in what Medicare pays for respiratory drugs and possibly for home oxygen equipment may rattle some providers, but not Citizens Memorial Home Medical Equipment.

The hospital-owned company put the pedal to the metal in June, opening a new 2,000-square-foot HME location in Buffalo, about 25 miles east of Bolivar, and a respiratory pharmacy in Bolivar. Later this summer or fall, Citizens Memorial plans to open another HME location in Stockton, 30 miles west of Bolivar.

“We see there is a demand for these products and services in this area, and our strategy is that we have to grow - we don’t have a choice,” said Brady Vestal, the HME’s director. “We believe that if the demand is there, the reimbursement issues will take care of themselves. Even if we take a hit in one area, we may be able to expand and go into another area and grow that business.”

The 17-year-old HME derives about 50% of its business from home respiratory therapy, and Vestal expects that to jump to 60% to 70% once its neb-med business kicks into gear. Of the company’s 300 oxygen patients, about 95% are on concentrators, and many also require respiratory medications, Vestal said.

About 45% of the company’s business comes from Medicare, 35% from Medicaid and the rest from commercial payers.

Despite the precarious times for respiratory meds, Citizens Memorial decided to open its own pharmacy to cater to the demands of physicians. Locally, doctors prefer to refer patients to a single provider rather than one for the nebulizer and another for the drugs. Likewise, to compete successfully with national HMEs in this rural area, Citizen’s Memorial must provide great service, the most technically advanced equipment and one-stop-shop selection, Vestal said.

If respiratory med reimbursement drops sharply in 2005, it may even reward Citizen Memorial’s aggressiveness, allowing it to pick up the med patients of providers who exited the product line. If that happens, the company also may be able to boost its business by providing those patients with hospital beds, CPAPs, concentrators and other equipment, Vestal said.

“We always have to view reimbursement cuts and other roadblocks as opportunities to grow the business in other areas,” he said. “Our strategy is that we have to look at new products and services and opportunities and to always grow and be on the forefront of technology and service. That way patients view us as the primary source for their home medical needs.”