Finance

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Wednesday, June 30, 2004

The best O2 system for you
with Richard Glass
R. Glass

Q. We currently service oxygen patients with concentrators and compressed gas for portability. In the last year we have lost several patients to competitors because we don’t offer liquid. How should we evaluate what type of equipment to provide going forward?

A. A simple way to analyze the cost of an alternative system is to calculate the anticipated monthly operating cost savings (typically reduced oxygen and delivery costs of servicing portability versus a traditional system) per month and divide those savings by the additional upfront purchase cost of the alternative system. The result will be the number of months required to recapture your investment in the additional cost of the system. At a minimum, you should plan to recover the additional cost sooner than the expected life of the equipment.

The increase in direct marketing to patients and physicians is a trend that will continue and probably accelerate. You need to evaluate if you want to participate in this segment of the market and, if not, how you will respond when your existing patient base reacts to someone else’s advertising.

No single system will be the most appropriate answer for all patients. The most successful providers we work with are offering all of the systems depending on the particular patient and circumstances. And they are spending more time educating referral sources and patients about the new options available and where each may be the best solution.

Richard Glass is the President of SRA, specializing in the growth and sale of HME/Respiratory companies. 800-813-4984.

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