Forget the beef, where's the fat?

Thursday, August 31, 2006

In "The World is Flat," Thomas Friedman's landmark treatise about how information technology is breaking down market barriers around the world, the New York Times columnist occasionally casts a wistful glance at the "fat" in our world. By some lights, the referenced fat --societal customs, bureaucracies, old-fashioned methodologies--is tantamount to inefficiency. The sooner it's dispensed with the better. By others, however, that fat is what makes life delicious. Indeed, Friedman points out, the tastiest cut is always well marbled.
I've been thinking about Friedman's fat as I look at the changes in store for the home oxygen benefit. In late July, CMS surprised the HME industry with a proposal to pay for oxygen on a modality-specific, as opposed to modality-neutral, basis. What that means, in short, is that you'll get more money for providing a high-tech oxygen solution, and less money if you keep on trucking as a supplier of concentrators and portable gas.
A caveat, here, before we wonder whether this promises vast changes fast. An August 2007 report by Wachovia Securities estimates that a mere 2% of the oxygen market is currently onto high-tech oxygen. Seems unbelievable, given all the press about the HomeFill, iFill, Inogen, FreeStyle, etc., over the past few years. But there, in lieu of anything else, you have it.
This plan is the latest breathless blow to suppliers who've yet to find their footing in a market buffeted by a 36-month cap on home oxygen, the nightmare yet-to-come-true of an even earlier cap, and never mind what competitive bidding is likely to do to reimbursement. The Braff Group's Dexter Braff put it recently: "None of these changes are subject to Darwin's survival of the fittest test before there's some kind of external mutation imposed on them."
So much so fast. Do you plan for the cap? And if you do, what does that mean under competitive bidding? And now, what does it mean if the capped concentrator is competitively cut and then congressionally chopped?
All of these measures, it would appear, are fired by an impulse to remove inefficiency (i.e. services, old-fashioned technology) from the system. That, of course, and the desire to save money. But there seems to be something headless at large in the land. Congressional cost-cutters, seemingly inspired by what they see in cyberspace, seem hell-bent on an Internet-pricing or Bust policy.
Where's the beef, they keep asking. Where's the fat may be a more appropriate question. In the world of the home oxygen supplier, the fat is the service tech who chats with the patient; the call to the office for more gas; the visit by a respiratory therapist. Those days, by hook (oxygen cap, competitive bidding) or by crook (modality-specific reimbursement) seem on the verge of extinction. How tasteless.