'We've reversed our loss picture'

Tuesday, November 24, 2009

CLEBURNE, Texas – Provider Tom Hafford says he plans to turn a six-digit loss last year into a six-digit gain this year after making some hard decisions.

Hafford, president of Texas DME/Mobility Dynamics in Cleburne, Texas, has downsized his product mix (from a full line of DME to primarily wheelchairs and disposables) and his payer mix (from Medicare to primarily Medicaid, private insurance and cash). He’s also downsized from four locations to one and from 38 employees to 19.

“We’ve restructured to focus on our core competencies and profit centers, reversing our loss picture completely,” Hafford said. “We needed to stop chasing our tail with another 100 full-line DME providers in our area.”

Hafford estimates wheelchairs and disposables now comprise about 95% of his business and DME about 5%. He estimates Medicaid, private insurance and cash now comprise about 95% of his payer mix, and Medicare about 5%.

While Hafford has been deemphasizing his Medicare business for years, he sped up his efforts when reimbursement for most DME was cut 9.5% on Jan. 1, 2009.

“We’ve seen various price freezes and coverage criteria changes over the years, but that was the straw that broke the camel’s back,” he said.

The specter of national competitive bidding re-starting in 2011 didn’t help, either, Hafford said.

“A provider has to get in very deep into a market to win bids,” he said. “We did that last year and won a couple of things, and it was a total waste of time and money.”

Hafford, who’s involved in the Greater Texas Rehab Providers Council, says he doesn’t know of any wheelchair providers who are seeking out Medicare business right now.

“They’ll do it if it comes to them, but they’re not soliciting it,” he said.

While the past year has been tough, Hafford feels like a new man with the weight of Medicare off his shoulders.

“When it becomes unprofitable, you can’t just keep doing it,” he said. “It’s foolish to pay them for the privilege of doing business.”