There are 'no more golden commodes'

Wednesday, January 31, 2007

Years ago, Terry Luft felt his company had to be a one-stop-shop, carrying everything a referral source or patient might ask for. He no longer feels that way. He can't afford to.
When it comes to products, "We are scaling down and saying, 'These are the choices,'" said the president of Central Medical Equipment in Harrisburg, Pa., "It is one or two. We used to have five choices."
While he may still like to offer the "best of the best" (and does when it comes to custom rehab), Luft has, like a lot of providers, begun developing product formularies. It's an economic decision spurred by declining reimbursement. By limiting choices within a particular product category, providers simplify maintenance and repairs, ordering and reduce delivery costs. If they buy in sufficient volume, they often receive better pricing by concentrating their purchasing with fewer vendors.
"We try to repair all of our own equipment so it is less inventory on parts, less training for the techs," said Steve Slater, general manager of Airway Oxygen, a 17-location HME in Michigan and Indiana.
Airway, for example, sells only one brand of lift chair and one brand of scooter. For ostomy supplies, the company offers only two brands, the same for blood glucose meters.
"We tell referral sources, 'We'd be happy to set your patient up with a diabetic meter, and we'll do the training, but we carry two brands and here they are,'" Slater said. "If they choose to go elsewhere, well, there's not that much margin in it."
As Slater pointed out, there are "no more golden commodes."
Both Slater and Luft, in addition to limiting product offerings, look to buy reliable equipment at a good price. But if reimbursement shrinks anymore, that may not be possible.
"We'll all be in the same boat," Slater said. "We'll all buy it from China, and if it breaks, we'll either give you a new one or you can fix it yourself because you own it."