HMEs to revamp oxygen delivery

Sunday, September 26, 2004

September 27, 2004

ALEXANDRIA, Va. - In response to the 2005 Medicare oxygen reimbursement cuts, 58% of homecare firms plan to significantly re-engineer their oxygen order fulfillment processes, according to a study released by AAHomecare Friday.

But about three-quarters of those suppliers say it’s not likely that they will significantly reduce wages as a result of the reimbursement cut.

This is one of the many findings of the American Association for Homecare (AAHomecare) 2004 Financial Performance Survey Report – an annual survey of financial and management practices of homecare companies, based on data from the previous year’s operations.

This 15th annual Survey Report includes special topics covering responses to oxygen reimbursement rates and Medicare competitive bidding requirements in addition to information about revenue growth, accreditation, ownership, industry profits, accounts receivable management, billing productivity, inventory and purchasing management, HR, and the home infusion therapy segment.

Key findings in the survey this year include:

- 2005 Medicare Oxygen Reimbursement Rate Cuts: As of December 2003, only 35% of firms indicated that they had developed plans for addressing the Medicare oxygen reimbursement cuts. Another 36% of responding firms stated that they had "sort-of" developed a plan while 29% of respondents had not developed a definite plan.

- Hospital Ownership: Hospital ownership of firms was 28% in 2003. In past surveys, the proportion of hospital ownership has ranged anywhere from 25% to 35%, putting this year's results at the lower end of the range.

- Accounts Receivable: In 2003, overall Accounts Receivable Days Outstanding (DSO), averaged 74 days – the lowest reported in over five years. The percentage of receivables over 120 days remained high at 25%.

- Acquisition Revenue Impact: The 11% of participating companies that reported making an acquisition had an overall growth rate of 17% (higher than the industry average of 10%). But their average growth rate for continuing business remained at 9%, closer to the industry average.

The entire study can be purchased by visiting the AAHomecare website,, or by calling Nick Burton at (703) 535-1882. The cost is $250 for AAHomecare members, $500 for non-members.