Complex rehab providers debate whether to ditch DME

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Friday, December 9, 2016

YARMOUTH, Maine – Complex rehab providers that have traditionally also offered DME are questioning whether or not they can continue to do so.

“If we did maintain that business, it goes without saying it would be a loss leader and who can afford to have a loss leader in this industry anymore,” said Doug Westerdahl, CEO of Rochester, N.Y.-based Monroe Wheelchair, which specializes in complex rehab and mobility, but also offers DME.

As more providers sell off certain product divisions in favor of niche markets, Julia Humphries says companies like hers, Reno, Nev.-based Accellence Home Medical, which provides complex rehab, respiratory and DME, are becoming a minority.

While Accellence Home Medical loses money on hospital beds, nebulizers and oxygen, Humphries says the company wants to be a one-stop shop for all the products and services its patients may need.

“A lot of our patients have neuromuscular diseases,” said Humphries, operations manager. “If they need vents, a power chair, suction or a hospital bed, they only have to deal with one company. They get one bill and one therapist. It’s a continuity of care.”

How does Accellence stay in the black? Hospice contracts, says Humphries. “It’s cash,” she said.

Over the last few years, the complex rehab industry has veered toward becoming more of a niche, driven by a flurry of acquisitions. National Seating & Mobility, for example, acquired the complex rehab division of Webb Medical Systems in February, and the complex rehab division of Integrity Medical this month.

Niching tends to allow for better cost structure, better communication of your strategic mission, and better patient/referral source relationships, says Don Davis, president of Duckridge Advisors, an M&A advisory firm.

“Those things become simpler if you’re less scattered in your product approach,” he added.

All things considered, it’s hard to argue against niching in the current environment in the HME industry, Davis says.

“You might lose the opportunity to service your patients, but providers are not getting paid for that anymore,” he said. “It’s really difficult to scold someone for not being more broad-based in their support when they’re not incentivized to do that.”

 

 

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