Rising gas prices create business challenges

Thursday, May 19, 2011

YARMOUTH, Maine - HME providers already struggling with audits and decreased reimbursement are up against another foe this summer: escalating gas prices. 

Provider Ken Wells said he's facing a 44.6% jump in spending for gasoline this year over last year, mostly due to a rise in gas prices. He's looking at different computer programs to help him improve delivery routes.

"We want to make sure we're using our vehicles as efficiently as possible," said Wells, one of the owners of Florence, S.C.-based Tucker-Wells Medical. 

Wells isn't alone. As of May 20, gas prices are, on average, $4 per gallon, up $1 from last year at this time, according to AAA's fuel gauge report. And hopes aren't high for relief in the near future. 

Like Tucker-Wells Medical, Lexington, Ky.-based Grogan's Healthcare Supply is also looking for ways to reduce delivery costs to offset increases in gas prices. Grogan's has switched most of its delivery vehicles to diesel to get more miles per gallon.

"It hurts everywhere," said Alan Grogan, president. "With some customers, you can increase price or increase delivery fees, but for the reimbursed piece, there's not a lot you can do but eat it."

Misty Easter, the DME coordinator at A Turning Leaf in Lebanon, Ore., recommends that far-flung patients visit other providers closer to their homes to keep the company's delivery costs down.

Even providers who don't make deliveries are affected. Sally Thompson, manager of ostomy products for Klein's Medical Equipment of Cuyahoga Falls, Ohio, said her company's drop-ship distributor raised its flat rate for postage by 50 cents. Another distributor raised its free-shipping minimum from $250 to $350. Thompson plans to order supplies less often and encourage patients to stock up to reach free shipping minimums. 

At the end of the day, higher gas prices are just part of doing business. Ary Van Harlingen, president of Shaw & Ott Medical Supplies in Mansfield, Ohio, said his company tries to control costs on a daily basis, regardless of gas prices.

"It has an impact, but in reality, is it going to bankrupt us?" he said. "No."