Idustry in 'the shakeout phase'

Friday, September 26, 2014

Provider consolidation, a “shakeout” of companies serving the marketplace through mergers, acquisitions and closings, has been dramatically reducing the number of players in the HME industry.

Yet this trend should not be viewed with alarm, but as a natural progression in a maturing business climate, says Chris Kinard, director of corporate systems development for Columbia, S.C.-based LifeHME.

Kinard refers to The Consolidation Endgame Curve, a four-stage lifecycle that plots the entry, progression and growth of players in a marketplace. He sees HME as being between Stage 2 and 3, a phase known as “the shakeout.”

“Years of scale have produced large numbers of providers with little or no variance in products, services or value,” he said. “As a result, increased demand has produced niche providers and progressive business models and trends. During the shakeout, such providers are presented with three possible outcomes—growth, mergers and acquisitions, or exit. It is apparent that all three are happening in this industry.”

Looking ahead, the endgame curve trajectory will inevitably yield market renewal and/or decline, he states. In either case, Kinard maintains that the opportunity for home care is only going to increase.

“As an industry, HME must make the most of consolidation, proving our value and fulfilling our respective roles in the continuum of care.”