LifeGas: UPS of oxygen

Thursday, August 31, 2006

NORCROSS, Va. - When it comes to developing a non-delivery model for home oxygen therapy, LifeGas debuts a program this month that not only pushes the envelope but also licks, stamps and mails it.
With O2Shield, the medical gas distributor will contract with an HME to do everything associated with setting up a patient on oxygen: buy the equipment, deliver it, instruct the patient on how to use it and supply portable refills. By assuming these back-office duties, LifeGas allows the provider to do what he does best: market to referral sources, bill payers and supply clinical oversight, said LifeGas President Mike Walsh, who bills his company as the UPS of oxygen.
"Delivery is the most expensive part of being a supplier and a weakness of many HMEs," Walsh said. "Their strengths are selling, patient care and reimbursement."
LifeGas, which is set up to offer the service in the eastern half of the United States, will charge provider customers a flat monthly fee based on the number of patients serviced. As in any business based on volume, the fewer the patients, the more LifeGas charges per patient.
With providers dealing with a 36-month cap on Medicare oxygen reimbursement, competitive bidding and other challenges, LifeGas execs see a ton of opportunity in a program that reduces risk, capital expenditures, employee salaries and benefits, and offers a predictable revenue stream.
What's more, Walsh said, with the company's economies of scale (it's a subsidiary of industrial gas giant Linde Gas) and delivery expertise, "we are confident that we are going to be the low-cost model of supply."
Nevertheless, the question remains: While providers have begun to migrate slowly to a non-delivery model, does O2Shield push the envelope too far, too fast?
"It's interesting, but I would have some concerns," said Gary Sheenan, general manager of Cape Medical Supply in Sandwich, Mass. "We bill ourselves as an industry that offers service as an advantage to payers and patients. The more services we outsource, the less we are able to make that argument."
When it comes to patient service, LifeGas must be as good if not better than what the provider can offer, Walsh said. If that's not the case, the program will fail.
So far, beta tests with providers large and small have been great, he said.
"What they sell is our service model, in terms of predictability, the right driver to the home," Walsh said. "They are still going to have to excel on the therapist side."