To expand or not to expand, that is the question

‘We will be first in line to take their business over’
Friday, January 15, 2016

YARMOUTH, Maine – HME providers are torn between expanding their businesses and maintaining the status quo, according to respondents to a recent HME Newspoll.

“While it would be our endeavor to continue our 31-year growth and leadership in the home ventilation DME industry, CMS's ventilator rate reduction of 43% in California will devastate any potential plans to grow the company,” wrote one respondent. “Our advisers are telling us we should strongly consider leaving the industry.”

Of the 48% of respondents that said they do plan to grow in 2016, 38% said they plan to open a new location; 34% said they hope to have a bigger location; and 28% intend to merge with another company.

Now that competitive bid pricing has been rolled out nationwide, opportunities abound for companies looking to merge or buy.

“With the cutbacks in the rural areas, which is where we are, we believe one or more business will want to merge or close their doors,” said Don Dobbins, president of Heritage HME in Wichita Falls, Texas. “We will be first in line to take their business over.”
But expansion is not limited to opening or expanding locations or merging, pointed out one respondent.

“We're expanding by adding several new product lines, the majority of which will be sold outside of CMS's reimbursement,” said the respondent. “I expect a 25% to 30% increase in sales as a result of these additions.”

Still others are waiting to see how the Round 2 re-compete shakes out before making any big decisions.

“Everything for 2016 hinges on the upcoming round of competitive bidding, so we are in a holding pattern right now,” wrote Lori Sears, owner of Home Medical Supply in Lapper, Mich., who hopes to add new cash lines of business.