Consolidation and tough love


Each year, we file a Freedom of Information Act request with CMS for the number of providers who provide each of six product categories: oxygen concentrators, CPAPs, hospital beds, blood glucose strips, power wheelchairs and standard wheelchairs.

This data, and much more, appears in the State of the Industry Report that we publish each December. (Look for them under the resources tab of our website.)

We’ve been collecting this data for years—well, 10 years to be exact. I just rifled through my stack of State of the Industry Reports from years past, and there it is in the inaugural version in 2005, when Jim Sullivan was editor.

While the recent year-to-year decrease in the number of providers for oxygen concentrators doesn’t look so bad—6,862 in 2014 vs. 7,491 in 2013 vs. 7,942 in 2012—the decrease over 10 years is another matter.

As I said, there were 6,862 providers in 2014. Compare that to 10,839 in 2004. That’s about a 37% decrease.



It’s much the same story for the other product categories that we have tracked over this 10-year span.

Hospital beds: 7,444 in 2014 vs. 12,484 in 2004

Power wheelchairs: 2,075 in 2014 vs. 6,716 in 2004

CPAPs: 6,628 in 2014 vs. 8,243 in 2004

Standard wheelchairs: 7,665 in 2014 vs. 13,722 in 2004

This decrease in the number of providers may be by design (driven by CMS through programs like competitive bidding), but don’t let that make you think you can’t control whether or not you’ll be one of the X number of providers that supply oxygen concentrators in 2015.

I’m reminded of a Health Affairs blog that our publisher Rick Rector forwarded to me about the future of the home health industry under value-based reimbursement (vs. fee-for-service reimbursement). This transition in reimbursement is resulting in a tremendous consolidation in the number of home health agencies. The author of the blog, John Marchica, argues that there are 12,000 HHAs today and less than half will probably be around by 2018.

Marchica doesn’t mince words in describing the role of HHAs in their own demise.

“Beyond dabbling in a handful of bundled payment experiments, few home health care companies have made an effort to be part of the discussion about value-based care,” he writes. “Not a single one has taken the lead.”

So what does it take to be one of the HHAs, and I argue HME providers, left standing?

“What the VBR initiative means for home health agencies is clear and is part of CMS’s stated objectives: weaker providers without the technology and other means to keep costs in line and quality under control will go out of business,” he writes.

Marchica issues this challenge to HHAs: “I believe CMS is telling the industry: innovate or die. Figure out a way to change how you do business that fulfills the Triple Aim.”

Do you accept the challenge?