Providers 'play it safe'

Monday, April 26, 2010

YARMOUTH, Maine – Some HME providers are putting off investing in their companies until they have a better idea what the future holds.

"Our philosophy right now is to play it safe," said Richard Lerner, president of Allcare Medical in Sayreville, N.J. "We're keeping our expenses under control, paying down our debt, and watching to see what happens. We want to be as financially responsible as possible."

Providers cite national competitive bidding; the healthcare reform bill, or "Obamacare" as more than one provider called it; and the possibility of additional cuts to HME as reasons for holding back.

At Allcare, they're not looking to expand into a larger location even though "we're packed in like sardines," Lerner said.

"We have 26,000 square feet and we could easily use another 10,000," he said. "But what happens if we lose our Medicare business? Then, instead of 26,000 square feet, we're going to need 15,000."

Also, Allcare's not looking to spend money on technology, even though, in the long run, it would save them money, Lerner said.

"We were looking at a fax server, but for our needs, it would cost close to $20,000," he said. "We're using a service right now and the monthly outlay is a little higher. But at this point, we don't know if we'll need our own server in the future to the extent that we need it today."

Jim Davidson's hesitant to spend money on technology, too. He needs to upgrade his software platform, but he's not excited about putting up the necessary capital and seeing his per-month costs go up.

"They've revised the pricing two or three times, bringing it down each time, but we're still putting it off," said Davidson, CEO of Foothill Oxygen Service in Colton, Calif. "They're telling me in 2011 they won't be able to support the current platform anymore."

Also, Davidson would like to jump into the home sleep market, but the current climate has dampened his spirits.

"We're not excited about investing the money and personnel right now," he said.

Lerner summed it up this way: "Anywhere where there are capital investments involved, we're holding back where we can. We do what we need to do to function on a day-to-day basis, but, otherwise, we're holding back."