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The data is in: Many HME providers have business models that are destined to fail

The data is in: Many HME providers have business models that are destined to fail

I just finished reviewing the results from the 2010 HME News/Steven Richards Financial Benchmarking Survey. We'll present all of the findings at the HME News Business Summit next month in Nashville, so I don't want to give too much away here. But much of the data that we collected from almost 200 HME providers is bothersome.

For example:

* 38% of respondents said their revenue growth declined in 2009. That's up from 19.7% in 2008

* Half of all respondents are losing revenue or not growing

* On average, 37% of HME provider revenue comes from Medicare. That's down from about 43% in 2008, but Medicare still represents way too much of the average HME's revenue base

*Revenue per full-time employee does not look good, either. In 2008, 52% of providers said that their revenue per FTE was $150k or more. In 2009, only 44% of providers could say that.

The survey includes 54 slides of data, so what I just listed only touches on our findings. But overall, it appears that to survive reimbursement cuts, HME providers are cutting costs but not growing revenue. That's not good. You've got to do both because at some point you're going to run out of things to cut. Then what will yo do?

The bottom line is this:

The bell is tolling. HME providers much shore up their bottom lines now. Cash flow is obviously a critical factor, but providers simply cannot survive with the business model we are seeing in this report.

Mike Moran


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