Despite hardships, providers eye diabetes
After listening to the industry’s complaints about the difficulties with reimbursement, excessive paperwork and governmental red tape, HME providers considering adding diabetes to their business mix may think it’s not worth the trouble. Historically, this is why many providers opted not to enter the diabetes marketplace.
But these are extraordinary times in HME, as competitive bidding has caused providers to reconsider their business models and look upon risk more favorably than in the past. For diabetes, the allure may be the rapid growth of the disease in the U.S. and worldwide. The Centers for Disease Control and Prevention reports that in the U.S. alone, 18 states saw diabetic populations increase by 100% or more between 1995 and 2010 and it projects more of the same going forward.
During the 1995-2010 period, the prevalence of Type 2 diabetes increased by 50% or more in 42 states.
“The diabetes market is, unfortunately a growing market,” says Patricia Zwieback, president of Diablo, Calif.-based Nufoot. “It is unfortunate from the perspective of the overall health of the population. With that in mind, our job is to provide more solutions and comfort at affordable prices to ensure that every man, woman or child can access care and aid to help ameliorate their conditions.”
But while the prospect of escalating demand for diabetic products poses a commercial opportunity for HME providers—especially for retail sales—the Medicare reimbursement model for diabetes makes it nearly impossible to be profitable, says Frank Suess, president of Wellington, Fla.-based Prescriptions Plus.
“Providers who won a contract don’t know if they will win again, so they can’t invest in additional infrastructure, long-term commitments to manufacturers or expensive marketing to add new patients,” Suess says. “Many private insurers adopted the Medicare competitive reimbursement scale and others are likely to follow. Because private payers followed Medicare, many HME providers with private insurance patients cannot afford to service them.”
Focus on cash
There are various dimensions to diabetes supply, but the simplest entry into the market is carrying products that can be sold for cash, such as footwear, skin creams, compression hosiery and enteral nutrition.
“We are seeing more and more requests from providers for cash-only retail items,” Zwieback says. “In response we are designing and producing do not require the cumbersome paperwork required in reimbursement systems.”
While price points are definitely a strong consideration in determining profitability, Zwieback maintains that demand is more toward “quality products that are affordable to the masses” as opposed to “just cheap prices.” As a manufacturer, Nufoot is trying hard to keep costs down in order to “be cognizant of the wide range of socioeconomic situations of patients and design products that satisfy both need and ability to pay.”
Footwear is a critical component of diabetes health and wellness and should serve as the centerpiece of a retail product portfolio, Zwieback says.
Mequon, Wis.-based Dr. Comfort focuses on making its lines of orthopedic shoes fashionable and attractive, says Rob Heglin, product manager.
“When Dr. Comfort went into business we sought to change the stigma of orthopedic/diabetic footwear,” he says. “Our newest line of athletic shoes is not only the most fashionable we have ever released, they are also the lightest and most seamless shoes in our product line. In fact, even our younger employees are proud to wear our orthopedic shoes because they like the way they look, regardless of whether or not they have diabetes.”
In order for HME providers to be relevant and competitive in the diabetes market, they need to provide faster, less expensive products and seamless delivery, says Ed Ferro, market manager for Teaneck, N.J.-based Aetrex.
“Higher quality products are important, but pricing must be in line to offer margins adequate to maintain the business,” he says. “More educational programs to facilitate certification requirements is a must.”
Todd Cullen, director of marketing for Edina, Minn.-based Arkray, agrees that one of the market’s key challenges is providing a cost-effective means of managing diabetes.
“With annual medical expenses for people with diabetes growing twice to three times that of the general population, steps need to be taken to lessen the effect this is having on patients’ pocketbooks,” he says. “Arkray is engaged in reducing the cost of managing diabetes by partnering with our physicians, pharmacies and skilled nursing facilities by providing better patient outcomes and quality of life at a significantly lower cost.”
Self-management education is an integral part of diabetes care, in tandem with professional medical treatment, Cullen says. Arkray provides customers with the educational tools and programs to help them manage their diabetes and reduce the overall related healthcare costs, he says.
Arkray officials consider the company to be more than just a diabetes supplier and actively seeks partnerships with its providers in offering patient care, Cullen says.
“We are always looking to partner with like-minded individuals, groups and businesses that align with our core values,” he says. “Together we can help educate and motivate the masses about this disease, because it touches all of us directly or indirectly.”
In order to position themselves as diabetes specialists, HME providers need to differentiate themselves and become a preferred resource for clinical referral sources, says Cindy Skerjanec, marketing director for Westminster, Colo.-based CareTouch.
“Physicians want to ensure the best care for their diabetic patients and want to know that the HME provider is working alongside them toward the same goal,” she says. “One way to accomplish this is for HME providers to engage in consistent, timely outreach to their diabetic patients.”
Through its automated phone system, live call team, e-mail and Internet, CareTouch is designed to give healthcare providers a simple, patient-focused way to stay in touch, build, and manage patient populations.
“We are communication specialists—CareTouch merges technology with a live, multilingual call staff for consistent patient outreach,” Skerjanec says. “Patients diagnosed with diabetes are often apprehensive and require regular, personal attention. There is a special need that providers must fulfill in these circumstances—not only does the provider need to make sure their patients have the supplies they need in a timely manner, but they need to provide reassurance and comfort to their patients to help them through the process.”