HMEs: price trumps product quality

Thursday, March 31, 2005

YARMOUTH, Maine — For many providers, buying DME items has become a question of quality versus price. Is buying a less expensive brand to save money worth the risk of getting a lesser quality device?
The answer for many is yes. According to results of last month’s HME News poll, 73% of 140 respondents said they have switched to less expensive brands to counter the Medicare FEHBP reimbursement reductions that began Jan. 1, 2005.
Manual wheelchairs, nebulizers and glucose strips were among the products most likely to see a switch, according to the results.
“We provide one specific glucose monitor that costs less than many others, yet has great features and an excellent warranty. It also allows us to make some profit while meeting our patients’ needs,” said Andy Ingram, president of Home Assist Medical Equipment in Laurinburg, N.C. “The diabetic supplies area was our least profitable until we made this decision. Now, with nebulizers we have done the same thing — found an excellent, lower cost device with a five-year manufacturer’s warranty.”
“It’s no longer jut a matter of quality over cost. As long as the equipment meets the therapeutic value of the patient’s treatment, it does not matter whether the product is a quality American- made product, name brand or mad in Angola,” said Robert Arado, executive vice president of Caremed Respiratory Services in Tampa, Fla. “Pricing as the primary consideration is slowly taking over the industry. I get a chuckle from dealers that claim they can refine operations even more to remain profitable. These dealers were never truly streamlined in their operations. Some of their elaborate or new changes many of us have had in place for the last 10 years.”
Many respondents to the poll disagreed, however. They said changes made in business operations would be enough to offset the reimbursement pressures created by the Medicare Modernization Act.
“We will continue to scrutinize our operations to find ways of cutting operating cost, which is preferable to cutting services or switching to less proven product lines,” said Mars Alderson, financial manager at Walla Walla HomeMedical in Walla Walla, Wash. “Streamlining delivery schedules to outlying areas is currently one of our major focus points.”
In contrast, many companies pointed to services that they cut in order to make ends meet. One company discontinued giving free newsletters and educational material to patients, another eliminated overtime for employees, but most had to limit delivery services.