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On the Editor's Desk

by: Liz Beaulieu - Monday, June 30, 2014

I get quite a few things in my email inbox that aren’t quite the right fit for HME News. As I often have to explain to this PR person or that PR person, our niche in health care is pretty specific: home medical equipment.

I usually give these emails a quick read-through, anyway—what can I say, I’m a reporter and therefore curious.

Such was the case today, when I got a press release from a group called the American Society for Quality or ASQ. It bills itself as a “global community of people dedicated to quality who share the ideas and tools that make our world work better.” Pretty lofty stuff.

For its latest projects, the ASQ polled 300 of its members in the healthcare quality profession on their priorities, hurdles to cost-cutting and opportunities for belt-tightening.

It’s not surprising that reducing hospital readmissions topped the list of priorities. Others include:

•    Implementing patient care coordination programs; and
•    Redesigning the healthcare delivery model to include alternatives to physician delivery of primary care.

Hurdles to cost-cutting include:

•    A model of reimbursement that favors sick care over health maintenance; and
•    Fragmented, uncoordinated patient care.

Opportunities for belt-tightening:
•    Better implementation, distribution and acceptance of preventative medicine to keep patients healthy longer, reducing demand.

You’ve probably noticed a trend in the findings that I’ve included here. They’re all priorities/hurdles/opportunities that I believe HME providers can help with.

While not something we’d write a story about in HME News, I thought these findings were worth reading about and sharing with you.

Thinking about how to make the world work better may be a lofty goal, but definitely one worth pondering.

by: Liz Beaulieu - Tuesday, June 24, 2014

It’s only the fourth day of summer, but at HME News headquarters, we’re already thinking fall. (Which is a shame, really, because summers in Maine are so, so short!)

Why? Believe or not, we’re gearing up for our pre-show (September) and show (October) issues for Medtrade.

Most years, the show issue features a special report. This year’s topic: the changing shape of the HME industry.

As part of the report, we plan to focus on three major ways in which the industry is changing:

Consolidation (During a presentation at Medtrade Spring earlier this year, Craig Hittle of Somerset CPAs said the number of HME providers will consolidate to about 8,000 from about 10,000. I believe my memory is serving me correctly here. If not, Craig, let me know!)

Scope (HME providers are shifting to more of a post-acute care mindset and business model. This is one of my soapboxes as you’ll see here and here and here.)

Data/technology (HME providers are looking at billing and operations as more than a way to process claims and fill orders. They’re using them for analytics and business management.)

Among the questions that we’ll be asking a mix of industry leaders, attorneys, analysts, providers and vendors: How are consolidation, scope and data changing the shape of the HME industry from a big picture perspective? How are they changing how providers do business more specifically? What opportunities and challenges exist in each of these areas? How are providers reacting to these opportunities and challenges? How do these changes affect how HME is perceived by the outside world…by CMS, by lawmakers, by consumers? What will be the end result of these changes five, 10, 15 years down the road?

We also plan to profile two providers that are leading the pack in one or more of these areas.

Stay tuned.

by: Liz Beaulieu - Friday, June 13, 2014

In short: Probably not, says Dexter Braff.

In this latest sneak peek of The Braff Group M&A Insider, we take a look at sleep provider deal trends.

Here's a specific breakdown of the non-private equity vs. private equity transaction volume:


Non-PE: 1

PE: 0


Non-PE: 1

PE: 0


Non-PE: 0

PE: 0


Non-PE: 0

PE: 0


Non-PE: 3

PE: 0


Non-PE: 4

PE: 0


Non-PE: 5

PE: 0


Non-PE: 6

PE: 1


Non-PE: 7

PE: 5


Non-PE: 3

PE: 1


Non-PE: 7

PE: 2


Non-PE: 8

PE: 10


Non-PE: 1

PE: 3

Commentary from The Braff Group:

This month, we take a deep dive into the sleep sector: labs, diagnostics, CPAP and supplies. Based upon proprietary data collected and analyzed by The Braff Group, deal flow in sleep (driven largely by private equity) clearly peaked in 2012 and subsequently plunged in 2013. More telling, when we looked at individual buyer activity, we saw that though quite a few have been active at one time or another, none have executed a sustained acquisition strategy. Rather, their consolidation efforts have been limited to one or two years, followed by quiet periods. So what do we make of this? Buyers have long targeted niche segments in the HME arena to establish clear differentiation in a crowded market—supplies, complex rehab, mobility and sleep. But in sleep, with greater fixed costs, high clinical intensity and growth constrained by number of beds, the market has been particularly difficult to consolidate and scale. Moreover, to a large extent, lab and diagnostic suppliers have not been able to parlay their clinical excellence to capture a disproportionate share of the profitable supply business. As such, our sense is that the CPAP replenishment business has largely moved from the sleep category to supplies—akin to diabetes—which have a very different warehouse/customer management/delivery business model. So is the traditional M&A market for sleep dead? Probably not. But rather than large-scale roll-ups, we will likely see more local provider and strategy-specific type transactions.

by: Liz Beaulieu - Wednesday, June 4, 2014

Every year around this time, there are a lot of balls up in the air at HME News.

And to keep them all up there, we need your help juggling.

The most time sensitive: the HME Excellence Awards. The deadline to apply for the awards is this Friday, June 6. We’ve received about half the number of applications this year compared to last year. This makes me sad. It has been a rough couple of years in the HME industry, and I’d like to think that those providers that are still out there doing the good work and fighting the good fight would want to celebrate that. (What makes me smile: For the first time, we received a letter of support from a manufacturer for one of the applicants!) Plus, it’s not a time-consuming process—the application is only one page! An added bonus: the three winners of the awards (first, second and third place) will receive free registration to the HME News Business Summit, Sept. 7-9 in Minneapolis!

Go here to fill out the HME Excellence Awards application today.

Speaking of the Summit, another ball in the air is the Financial Benchmarking Survey. We reveal the results of the survey and feature an analysis by Rick Glass during a lunch-time session on the second day of the Summit. The survey results are one of the few good ways that HME providers can compare how they’re doing to their peers. Unlike the awards application, the survey is not one page, but the intel you get will make it worth your while. Like with the awards, we’ve received about half the number of surveys this year compared to last year at this time. The deadline is July 3.

Go here to fill out the Financial Benchmarking Survey today.

Last but not least, the final ball in the air is the aforementioned Summit. Registration is open and unlike the awards and the survey, we have more attendees signed up this year compared to last year at this time. I like to think that the Summit continues to build on its reputation for having the most unique, forward thinking educational program for HME providers—and this year is no different.

Go here to sign up for the Summit today.

I’d like to give a shout out to all the industry leaders, like state association leaders Rose Schafhauser and Carol Napierski, and Medtrade, for helping HME News spread the good word about the awards and survey. It’s greatly appreciated!

And I promise my next blog won’t be so advertorial.

by: Liz Beaulieu - Thursday, May 29, 2014

Here's a sneak peek at The Braff Group Insider for the June issue. (Also, I want to apologize for misspelling peek in my last sneak peek...I hate it when I do that.) This graph breaks down transaction trends for the HME industry from 2009 through the first quarter of 2014. See a pattern?













Commentary from The Braff Group:

Based on proprietary data collected by The Braff Group, the 45-degree ramp up that began in 2010 has clearly reversed direction. Fifteen months past the five-year peak reached in Q4 2012, the downward trend is unmistakable. The good news is that while the market is down, it is not out. We continue to field calls from potential buyers and sellers alike. But the energy that characterized the 2010-2012 run-up has been tamped down by caution fueled by competitive bidding, shrinking margins and runaway audits that squeeze cash flow. All things considered, absent a major and unexpected development, we anticipate that over the next 12-18 months, the market will begin to level off at plus or minus 10 deals per quarter. 

by: Liz Beaulieu - Friday, May 16, 2014

You’ll notice that a number of sessions at this year’s HME News Business Summit look outward for answers.

They explore topics like: What are the latest efforts to alter health care reform? How are researchers shifting care for patients with costly chronic conditions? How are acute-care organizations changing their makeup, and how are they putting a premium on outcomes?

Rest assured that, while these sessions look outward, they also tie tightly back in to HME.

On the changing makeup of acute-care organizations, for example, Tom Sayre will dig into the critical role of HME providers in bridging care across continuums. Sayre, whose job is to help Catholic Health Initiatives better align itself with post-acute care providers, says, “If we’re at risk for a life or an episode, we need to figure out how to engage other providers in meaningful ways.”

The goal of these sessions: to move HME providers beyond the industry-specific conflicts of competitive bidding, and get them thinking more globally about health care.

This is what, we believe, will position them to make the kinds of business decisions that will carry them forward.

In today’s tumultuous healthcare environment, this is more important than ever, because no healthcare organization, not even hospitals, can go it alone anymore.

It’s time to be part of something bigger.

See you in Minneapolis.

Liz Beaulieu, editor

by: Liz Beaulieu - Friday, May 9, 2014

We’re putting the finishing touches on the June issue this week (June!), and as I was proofing pages, a few things that I read really resonated with me.

Neither is earth-shattering, but both are worth highlighting here, in case you don’t read the issue cover to cover (I mean, I hope you read the issue cover to cover, but I’m a realist).

The first came from Michael Blakey of DMEevalumate. We know all too well the predicament that providers are in when it comes to documentation (maybe nightmare is a better word for it). Amidst it all, Blakey challenges providers to put themselves in the shoes of doctors for a minute:

“You go to college for four years, attend med school for four more years then add three to seven more years of fellowships, residencies and specialty training. After 10-plus years of education, you are asked to detail patient information by a DME provider, who has little or no scientific background, so that they can tell you if your prescription is correct or not.”

Well, when you put it that way…this is a party neither providers not doctors want to attend.

Blakey advises providers to take the following tack:

“Letting physicians know that you understand their plight can go a long way: Explain that you are not trying to do their job, you are simply trying to obtain the medical justification for DME in the correct narrative format.”

Blakey says until CMS holds physicians directly responsible for incomplete paperwork, providers will have to continue playing the uncomfortable role of messenger.

It’d be nice, as Blakey intimates, if CMS were the messenger, but in the absence of that, providers should get comfortable with the phrase, “Don’t kill the messenger.”

The second came from Jim Hollingshead of ResMed. We know all too well the predicament that providers are in when it comes to reimbursement (this may require a worse word than nightmare). But Hollingshead says providers aren’t doing themselves any favors.

“We’ve done extensive research and found that HME communication about resupply has a big impact on a patient’s behavior, and that resupply enrollment is most successful when conducted at the initial set-up. Two-thirds of patients we surveyed who infrequently changed their supplies weren’t give an option to join a resupply program by their HME, but more than half of them would like to have that choice.”

If you’re a sleep provider and giving patients the option to join a resupply program isn’t part of your intake process…well, I don’t know what to tell you.

See these comments on pages 10 and 22, respectively, of the June issue.

And, as always, there’s more where this came from.

by: Liz Beaulieu - Tuesday, April 22, 2014

All the buzz on the Hill today: Jonathan Blum is leaving his post as director and principal deputy administrator of CMS.

Blum, as those in the HME industry are well aware, has been the face of CMS’s competitive bidding program. During his five-year tenure, we’ve seen the program grow from nine to 100 cities.  We’ve also seen the agency put the wheels in motion to expand the program nationwide in 2016.

In an internal memo, CMS Administrator Marilyn Tavenner said Blum’s accomplishments were “too many to list” but include the introduction of competitive bidding for medical supply purchases.

Blum is off to pursue “new opportunities.” His last day is May 16.

Provider Gary Sheehan had this to say about Blum’s departure on twitter: “This is good news: Man responsible for horrific implementation of bidding program leaving CMS.”

I’m sure that tweet got more than a few re-tweets.

In honor of Blum’s tenure at CMS, here are a few memorable quotes about or from him that have appeared in HME News:

“He made it very clear to all of us that he feels competitive bidding is a great thing and it’s doing what it’s supposed to do: Patients are getting what they need and providers aren’t getting hurt,” said provider Patrick Naeger in 2012 after Blum attended a town hall-style meeting at the Washington County Memorial Hospital in Potosi, Mo.

“He did ask for suggestions for how to make it better,” said Sean Schwinghammer, executive director of the Florida Alliance of Home Care Services, in 2011 after Blum visited Orlando, a Round 1 competitive bidding area. “He seemed really intrigued by some points. Still, I would never want to play poker with the man.”

“We take the PAOC (Program Advisory Oversight Committee) very seriously and we’ve learned from the past,” Blum told attendees of the AAHomecare Washington Legislative Conference in 2010. “The online bidding system is smoother, and we are not aware of any significant concerns.”

“This shows us that we can see dramatic savings while also assuring that we continue to have the local presence and the small business presence to give us great confidence that beneficiaries continue to have choice of DME supplier,” Blum said during a conference call in 2013 to announce the payment amounts for Round 2.

“The tracking work we’ve done to date has given us great confidence that we can expand the program rapidly to more parts of the country,” Blum said in 2012 during a conference call to announce a “recompete” of Round 1.

“All of the contracted suppliers are currently in good standing with Medicare,” Blum said in 2010 about the Round 1 contract suppliers. “They meet state licensure requirements; they meet re-enrollment requirements, quality and financial standards; and they are accredited.”

by: Liz Beaulieu - Tuesday, April 15, 2014

Here's a sneak peak at The Braff Group Insider for the May issue. This graph breaks down M&A activity by the nationals and non-nationals over a 10-year period.

Commentary from The Braf Group:

Based upon proprietary data collected and analyzed by The Braff Group, it is clear that during the peak years of 2004-2005, the nationals accounted for more than half of the HME deal flow. And then the Deficit Reduction Act, which included the oxygen cap, was passed in 2005. Almost immediately, the nationals abruptly and dramatically exited the market. Since then, local and regional providers, as well as rehab, supply, and sleep consolidators, have completely remade the market to the multi-faceted, multi-focused, multi-player environment that exists today.

Here's a specific breakdown of the number of deals by each group:


Nationals: 64

Non-nationals: 35


Nationals: 55

Non-nationals: 44


Nationals: 13

Non-nationals: 49


Nationals: 1

Non-nationals: 50


Nationals: 2

Non-nationals: 37


Nationals: 3

Non-nationals: 50


Nationals: 2

Non-nationals: 56


Nationals: 9

Non-nationals: 62


Nationals: 5

Non-nationals: 101


Nationals: 4

Non-nationals: 54

by: Liz Beaulieu - Friday, April 4, 2014

For years, HME providers have been trying to teach physicians what they need to include in their chart notes, often to no avail, says Sarah Hanna, president of ECS Billing & Consulting North.

But the transition to ICD-10 may be the thing that finally gets through to them, she says.

“How a physician gets paid corresponds to a diagnosis procedure code,” she said. “Well guess what, to prove medical necessity for an ICD-10 code, which is more specific, you have to chart in a way that proves all these different characteristics of that ICD-10 code. Hello, we’ve been trying to do this for years.”

Where providers have often felt like the only ones out there educating physicians about proper documentation, now revenue cycle management companies and other groups tied into physician payments also have a vested interest, Hanna says.

“This should help us in the long run,” she said.

Discharge drama

Speaking of rude awakenings, discharge planners in hospitals are finding out real fast that they can no longer discharge patients with HME without a detailed written order signed by a physician, says Sylvia Toscano, owner of Professional Medical Administrators.

“They ask, ‘What’s changed,’” she said. “A lot of times we talk, talk, talk, but it only becomes an impact when they can’t dispense.”

Once discharge planners know the real impact of the change, which went into effect Jan. 1, there are still challenges to overcome.

“We’re hearing a lot of, ‘The physician has already done the rounds and isn’t due to come back around for awhile,” she said. “The patient can’t get the DME; it’s creating some access issues.”

Bigger ticket, bigger pain

No one’s happy about the suspension of the assignment of new appeals to the administrative law judges (ALJs), but perhaps least happy of all are complex rehab providers, says Kelly Wolfe, CEO of Regency Billing and Consulting.

“The people looking at these claims at the earlier levels don’t always know what they’re looking for, because they don’t see many custom chairs, so most providers will try to turn it around at the ALJ,” she said.

But with the suspension, that’s no longer an option, Wolfe says.

“These are big-ticket items—we have one provider who has $127,000 wrapped up,” she said. “Now there are businesses that are being forced to close their doors.”