The economy runs through it
Reviewing the March issue, I couldn’t help but notice how many of our stories refer to the slumping economy. Even our guest columnists weighed in (See next page).
I shouldn’t have been surprised. These are tough times, especially for the HME industry, which faces not only a slumping economy (and all that comes with it, like decreases in lending and spending) but also reduced Medicare reimbursement (courtesy of the 36-month oxygen cap and the 9.5% reimbursement cut).
They say health care is recession-proof, but lately, all I’ve heard from HME providers is that they’re getting hit in the wallet - hard. According to our March NewsPoll, 64% expect their revenues to decrease in 2009 (See results on page 54). Twenty-five percent expect them to increase; 11% expect them to stay the same.
That the majority of providers expect their revenues to decrease this year may have less to do with the economy and more to do with reimbursement cuts, but it’s pretty clear that the two, together, have created a perfect storm.
As a result, providers are scrambling, to say the least. They’re belt tightening, grasping to collect co-pays and struggling to preserve - never mind increase - cash sales (See stories on page 21).
As part of those belt-tightening efforts, 43% of providers expect to lay off staff and/or close branches in 2009, according to the NewsPoll. That’s going to hurt - owners and their employees.
But it doesn’t necessarily have to be that way.
While most providers are focused on reducing expenses, at least one provider’s doing the opposite. He told me recently he’s hiring sales staff left and right. Due to the slumping economy and reduced reimbursement, he figures the only way to make as much money in 2009 as he did in 2008 is to increase the number of products and services he provides. Makes sense.
For providers like this one, who are pursuing accelerated growth, there may be billions in private equity funds to help them along (See story page 45).
Even if providers must reduce expenses, they don’t necessarily have to lay off staff. An industry consultant told me recently of a provider who was considering reducing his workforce. Instead, the consultant suggested he ask his staff to reduce their hours. They took the option, happy to still have jobs.
No doubt providers are under tremendous pressure, and they will be for the forseeable future. But even in their darkest days, providers must remember they have options - the option to grow instead of consolidate; the option to reduce work hours instead of staff; at the very least, the option to leave no rock unturned. They owe that to themselves, their employees and their patients.