Reggie Rodriguez: A new breed of O2 provider

Tuesday, November 30, 2004

SAN FERNANDO, Calif. - Reggie Rodriguez believes he’s one of a new breed of home oxygen providers who by investing in technology can handle vast numbers of patients with minimal employees, trucks and other overhead.

Rodriguez started his business, O2 Plus, a year ago by investing heavily in Invacare’s Venture HomeFill II transfilling oxygen concentrator, which he uses almost exclusively. He now employs just one driver-tech to service about 200 Medicare oxygen/DME patients spread across three large Southern California counties, including the metropolis of Los Angeles. He can cover that kind of territory with one truck, he said, because the HomeFill allows patients to fill portable cylinders in the home and cuts down on his deliveries.

“It is a changed model of delivering oxygen.” said Lou Slangen, Invacare’s senior vice president of worldwide market development. “Cell phones changed land lines. That is what this is at the end of the day. Three to four years from now you are not going to see trucks delivering oxygen to people’s home. It is history.”

(No good data exists on how many patients a single truck can service. Estimates run from 100 to 250. Generally, the larger the service area, the more trucks a company requires. It stands to reason, however, said industry watchers, that a provider will need fewer truck if he schedules fewer delivery stops.)

Slangen calls the HomeFill “disruptive technology” in the sense that Invacare believes it will displace the traditional model of delivering oxygen. Rodriguez agrees.

“I’m blazing a new trail,” he said. “I knew we would be a success. It has enabled us provide better service. Our guys aren’t making as many stops shuttling tanks back and forth so we have time to go the extra mile for the patient and make sure their expectations are met and exceeded.”

The HomeFill allows a provider to reduce the cost of servicing an oxygen patient by two-thirds, said Slangen. Chad Therapeutic’s Total O2, which competes against the HomeFill, can save a provider anywhere from hundreds to thousands of dollars per patient, per year, said Carla Laureano, Chad’s marketing manager.

Invacare has sold “tens of thousands” of the Venture HomeFill, Slangen said. Chad has thousands of TOTAL O2 units in the field, Laureano said.

Nevertheless, for providers with large fleets of conventional concentrators, purchasing a Homefill II or Total O2 at three-times the cost is an expensive proposition. It’s not always easy to convince them - even with Medicare cutting reimbursement for oxygen in 2005 - that the savings and reduced overhead will more than offset the initial investment.

“It doesn’t make sense to us,” said one provider who asked that his name not be used. “Will I spend that much delivering cylinders to a patient over a seven year period, probably not. And not seeing your customers is not a good idea. You are not going to know if they have a problem, and people are not going to complain until the very end.”

Rodriguez, who has worked in the HME business for 20 years, calls such providers “slaves to the old model.”

“For any company that is starting up, as long as they can bit the bullet on the up-front costs, it makes sense,” he said. “It is better for you patients. There is not one draw back.”