Oxygen study sets provider benchmarks

Friday, November 30, 2007

SCOTTSDALE, Ariz. - Industry consultant Tom Williams e-mailed a 31-question survey to 4,300 HME providers this past summer (339 or 9% responded) to find out how they viewed new technology designed to reduce oxygen deliveries. Some of the data surprised him. Specifically:
* 80% of the respondents said they make, on average, two or more oxygen deliveries (liquid or gas) to patients each month. This indicates that portable oxygen concentrators and transfilling concentrators, which are intended to increase patient freedom and decrease provider deliveries, still do not enjoy widespread adoption. Currently, 50% of all Medicare oxygen patients in the United States (650,000) are considered moderately to highly ambulatory, but only 12% use non-delivery technology.
* Of the HMEs who offer non-delivery technology, 20% do not titrate patients on these units. They believe, it appears, that the proprietary conserving devices that come with the units accommodate all patients right out of the box. They do not, said Williams, managing director of Strategic Dynamics, which provides market strategies/research and medical equipment testing.
Williams conducted the benchmarking survey--The Good, Bad and Ugly: Survival Strategies in Home Oxygen Delivery--with HME News and presented the results at the HME News Business Summit in Boston Sept. 9-11.
"While it surprised me that more people have not adopted non-delivery technology, there are certainly reasons for that," Williams said.
For starters, the acquisition price is higher than traditional technology, and some providers might feel they can't afford it--even if it promises to reduce a company's overall operating costs. Some providers also may prefer to see how new technology performs over time before investing in it.
That said, "if we see this in a year or two, there has to be other factors in play," Williams said. With reimbursement declining, providers who don't figure how to reduce deliveries are headed for "disaster." There may be "perfect conditions" where a business model based on concentrators and cylinders or liquid oxygen makes sense, but "the average provider must go with non-delivery technology to survive" reimbursement cuts and national competitive bidding.
The survey queried providers on, among other things, how much competitive bidding will impact revenue (57% said it would reduce revenue by more than 10%; 9% said it would have no impact); do they have a formal written policy for the evaluation of new oxygen technology (28% said yes); and their mix of oxygen patients (50% ambulatory, 25% nocturnal, 25% homebound).