Competition for referrals heats up

Wednesday, August 18, 2010

Some independent HME companies say hospitals are being more "aggressive" about referring patients to their own HME companies.

"It's been more intense lately," said Kathy Nichols, vice president of operations at Prestonburg, Ky.-based Cooley Medical Equipment, which competes with hospital-owned HME companies in a handful of its nine territories. "Everyone's trying to drive up their revenue."

From a legal standpoint, there's nothing stopping hospitals from referring patients to their own HME companies, say industry attorneys.

Still, some independent HME providers think it's unethical.

"I've had some of my patients go to a hospital-affiliated doctor for power wheelchairs and the next thing you know the patient's referred to their PT and their HME company," said Steve Bach, president of Springfield, Mo.-based Bach Medical Supply, which competes with two hospital-owned HME companies. "They say it's for continuance of care."

Some independent HME companies say they can't really blame patients, especially those who've never needed equipment before, for going with the flow and using a hospital-owned HME company.

"If you're getting out of the hospital and someone tells you that you need a wheelchair and that you can get it from someone you prefer to do business with or you can get it from the hospital-owned HME company—you have to be realistic," said Jeff Friedman, owner of New Orleans-based Total Health Solutions, which competes with one hospital-owned HME company. "Unless there's a prior relationship with an independent HME company, that company is invisible to the patient."

That's why both Nichols and Friedman ramp up their advertising presences in areas where they compete with hospital-owned HME companies. Friedman even created a handout that he distributes to patients that says: "You have a choice; if you're in the hospital and need services, you have the right to ask for us."

"We do have patients who are loyal to us and want to continue doing business with us," he said.

Hospital-owned HME companies say that they honor patient choice and that the playing field is no different for them.

"My physicians, right now, if I'm not over there marketing like all of the rest of the DME guys, I won't get the business," said Ron Burns, director of the rehab department at Springfield, Mo.-based CoxHealth Home Support Systems, part of CoxHealth. "It's a fight."