ANSWERS TO YOUR INDUSTRY QUESTIONS With all of the cuts in Medicare, managed care pressures, competitive bidding and just plain old competition, how can I protect my business from bad deals?

ONE OF THE reasons we tend to rally around industry organizations is that we believe in strength in numbers. From a national perspective that is certainly true, making it imperative that providers participate in and support their national organizations. But while every provider is ultimately affected by what happens in the national market, the local or regional markets are where providers' long-term successes or failures will be determined. Every provider must effectively balance revenue opportunities with service profitability. If a provider has a 65 percent market share but loses money on every service transaction, it cannot stay in business for long. It is better to say no to unprofitable pieces of business than to take on contracts containing financial arsenic.

The best, and perhaps only, way to know the good contracts from the bad is to use the tool of Activity-Based Costing. It is the only way for a company to really understand its costs of service and to negotiate responsibly with payers. Evaluating contractual relationships without knowing service costs is like a poker player's betting the farm before he even picks up his cards to look at them. Activity-Based Costing is one of a handful of tools that will help providers find success by managing their businesses as a whole and not just revenue and collections. It is not too late for every provider to resolve to implement Activity-Based Costing and enjoy its benefits well into the new millennium.

-Answered by Lynn James Everard, C.P.M., A.P.P., Principal, The Weeks Group, 6123 N.W. 45th Ave., Coconut Creek, FL 33073; 888/430-6919; fax: 954/570-3321; e-mail: econserve@mindspring.com; Web site: www.weeksgroup.com

Because Medicare pays for only home medical equipment, can providers charge for oxygen cylinders used for portability outside the home, i.e. trips to the doctor, church, shopping, etc.?

IN ORDER TO qualify for oxygen, the patient must need it primarily for use in the home. In other words, a patient who needs oxygen only for work or travel would not be covered. But this does not mean that a beneficiary must use the oxygen exclusively in the home. There is no prohibition against using any covered durable medical equipment, prosthetic or orthotics supplies items while not at home.

However, if a beneficiary is using a greater than necessary quantity of oxygen, (e.g., using oxygen in a way not prescribed by the physician or using the portable system when the stationary system could be used) patient education may be needed.

-Answered by Region B Durable Medical Equipment Regional Carrier, AdminaStar Federal, P.O. Box 7078, Indianapolis, IN 46207-7078; 317/577-5722; Web site: www.adminastar.com