Going out of business: Part of life these days

Wednesday, September 30, 2009

A country in recession. Tight credit markets. A 36-month cap on oxygen and an across-the-board cut of 9.5% on most Medicare product categories. Add it all up and it's no surprise that some providers are shutting their doors.

For those left standing, that's good and bad, say the 64% of respondents to the September HME NewsPoll who have seen competitors go out of business in the past year.

"It's been positive in that more business was gained," wrote one provider, "but negative in the respect that the customers wanted the same pricing that was provided by the other company."

Besides increased business, other positive aspects of losing a competitor included picking up their inventory at 25% of cost and hiring quality employees.

"My competitor going out of business allowed me to expand my mastectomy and stocking business by hiring one of his employees," wrote one provider. "I also gained long-term ostomy and enteral customers."

Another positive: Picking up a former competitor's patients. But that depends on the patient,  caution providers. Oxygen patients, for one, are particularly problematic, they say.

"I am unsure if it is a plus or minus," wrote one provider. "We (acquired) dozens of oxygen patients that have limited months left on their cap. Some were turned away by other DMEs and we were a last resort. I should have turned them away but I just couldn't."

Of the 128 poll respondents, 62% said that the loss of competition has had a positive impact on their own business, but the taste is often bittersweet.

One provider has seen four competitors close in recent months.

"Sadly, competitors going out of business has impacted us positively," she wrote. "More people are out of jobs and, competitor or not, that means people are hurting."

Not all providers are closing their doors; some are simply exiting unprofitable niche markets or dropping Medicare as a payer.

"We had a pharmacy quit billing Medicare," wrote one provider. "Now, their prices reflect cash-only payments. Customers want (us to match) the cash price but want us to bill Medicare."

Jim Greatorex is another provider who expects to benefit from the reimbursement and economic downturns. And like others in the same boat, that's good and bad, he says.

"We have had our biggest competitor for rehab leave the industry," wrote the president of Black Bear Medical in Portland, Maine. "Also, a supplier who was providing supplies in the assisted living/long term care setting decided to no longer provide disposables. We will most likely grow 15% to 20% this year, but it's a hard way to grow."  HME