CMS takes a Wall Street-like look at HME

Monday, September 30, 2002

WASHINGTON - CMS has issued a report -  Health Care Industry Market Update: Home Health -  that looks at market share, access to capital, business strategy, financial and stock performance. The goal: to provide "objective" information that can be used by CMS, HHS, Congress and others that oversee Medicare, Medicaid and S-CHIP. The report "can be used by regulators and legislators to assess funding adequacy, or the need for regulatory reforms," CMS Administrator Tom Scully wrote in his introduction to the report.

In the home respiratory and infusion markets, companies covered include Apria, Lincare, Coram, American HomePatient and Option Care.

Some of the report's findings:

- "Even after the Medicare reimbursement cuts (of 1997) Lincare generates one of the highest margins in healthcare services."

- The United States spent $30.4 billion on COPD in 2000.

- In response to BBA '97, home oxygen suppliers implemented a range of cost-cutting measures, but there's little evidence these efforts adversely affected patient access to services or quality of care.

- More than 2,000 local providers make up the majority of the home respiratory therapy market. Lincare and Apria generate each generate 20% of the markets revenue, with AHP generating 5%.

Lambert van der Walde, who previously worked at Salomon Smith Barney in New York, headed the CMS research team that put the report together. By looking closely at the publicly traded companies, it's possible to get a general sense of the entire sector, he said.

Not quite, said Asela Cuervo, AAHomecare's sr. vp of government relations.

"This is not something you can extrapolate out to the vast majority of our members," said Cuervo, noting that the report points out that more than 2,000 small independent providers comprise most of the home respiratory market. "If they were going to use this document as the foundation to call for reimbursement cuts, we would have a lot to take issue with."

Van der Walde granted Cuervo her point. But he added, noting the strength of Apria and Lincare: "A rising tide lifts all ships." HME