Providers rise to Medicare's many challenges
FT. WAYNE, Ind. -- Even with all the news about the HME industry's M&A frenzy, there's no shortage of providers taking the necessary steps to survive and thrive in today's challenging reimbursement climate, say industry consultants.
"People are rising to the occasion," said Wallace Weeks, president of The Weeks Group in Melbourne, Fla. "That is why we still have this industry. Otherwise, it would have died in some legislation years back."
Indeed, the industry's 2004 M&A activity tallied 90 deals, up from 86 in 2003, according to the Braff Group, an M&A firm. That figure, however, is dwarfed by the number of NSC suppliers who identified themselves as HMEs last year: 22,907. That number does not include roughly 49,000 pharmacies that also have active Part B supplier numbers.
Tom Feichter, the owner of Pharmacare Homecare, an HME in Indiana, is, as Weeks said, one of those rising to the occasion.
"We can be a whole lot better than what we are doing," said Feichter.
Whether it's buying "hundreds of thousands of dollars" in concentrators from the vendor who offers the best price or determining how to boost his company's sales closure rate, Feichter's looking for a competitive edge.
"We are trying to establish department by department, product line by product line, the strategies that will make us different," he said. "We're examining the business from top to bottom."
To determine his market share and growth potential, Feichter's begun to collect utilization data for respiratory services. He intends to do the same for his other product lines.
"We're going to know if we are increasing sales, penetrating markets and gaining market share," he said. "I can't go to a banker [and ask for money]and tell him 'I think there's a 10% growth rate. I need to tell him, 'Here are the statistics from Medicare.'"
If he doesn't make the necessary changes, Feichter said, Pharmacare won't survive when competitive bidding hits his area, probably in 2009.
Ancor Healthcare Consulting President Michael Barish said he's seeing more companies, like Pharmacare, re-engineering their companies. That means determining how to reduce labor costs, operate more efficiently and better manage inventory, Barish said.
"Before there were a lot of companies that were proactive, but now it is either make the change or they are not going to survive," Barish said.