No Rest for the Wary

Competitive bidding took a big bite out of the profitability picture for hospital beds in the nine Round 1 bid areas — an average 36 percent drop from previous Medicare allowables, according to figures from the Centers for Medicare and Medicaid Services.

With another 91 cities to be added to the program in Round 2, HME providers are looking to minimize costs, increase efficiencies and branch out into cash sales to maintain profitability and offset revenue that could be lost in the sector. According to manufacturers, some are also migrating toward specialty markets (such as bariatrics) or expanding into reimbursable products like therapeutic support surfaces they may not have explored.

Looking at a Cash Alternative

Adjustable beds provide a "luxury alternative" for consumers and an opportunity for cash sales, says Bed Groce, CFO of LaFayette, Ga.-based Flex-A-Bed, a long-time manufacturer of adjustable beds.

Groce says the 42-year-old company's sales through HME providers have done well even in the bad economy, in contrast to its other sales channel, furniture stores, which have suffered. He notes there is particular interest in the market for high-low beds that can be raised or lowered vertically. The company's "Hi-low" and "Premier" models come in 17 sizes, including dual queen and dual king, and some also offer optional massage.

"We don't market the product as a medical bed, but it does have medical benefits for people suffering from problems such as hiatal hernias, acid reflux or circulation problems in the lower extremities," says Groce, who adds that the adjustable beds work well with various lifts.

He points out that an HME provider's typical customer demographic is a great match for adjustable beds.

"It's a way to take somebody who doesn't quite need a hospital bed and give them something that makes them more comfortable," he says. "A lot of people come to us because they don't want to put their loved ones in a hospital bed."

On the other hand, a lot of consumers "don't know there is an alternative out there," Groce continues. "You have to have a commitment to put them on the sales floor and to train salespeople on the benefits of the product. The thing about adjustable beds is that if you have one sitting on the show floor, sometimes they sell themselves. But the store and personnel should be committed."

The payoff, says Groce: "There are tremendous margins in adjustable beds."