IF THE GENERAL HYPE OVER THE Internet applied equally to home care as it does to some industries, nearly every home medical equipment provider might have a Web site today. The reality, however, is that most HME providers cannot yet take advantage of the Web's full potential.

Providers-especially those that rely heavily on third-party payers--are being left on the dock by the refusal of Medicare, Medicaid, and many MCOs and HMOs to accept digital signatures. Customers, too, can be reluctant to buy HME electronically.

So as businesses selling other products and services ride the Internet wave, HME providers are testing the waters cautiously, waiting for the day when their Web sites no longer will be limited to providing free information or promoting select retail items.

One Toe at a Time "I AM A bricks-and-mortar company," says Jim Kissler, president of Norco Medical, a Boise, Idaho-based company with 18 HME locations. "I don't have to be-I'm in a market where I could ship and have a low cost of doing business-but I just don't see the sales opportunity.

"I don't think people are going to want to buy their commodes, wheelchairs and hospital beds or place their orders with us for home oxygen across the Internet any time soon," he predicts. "I don't feel like I've got people beating down our doors to do business on the Internet. It isn't necessary right now."

Yet Norco Medical does maintain a Web site-and has for three years. "I merely provide information about our company: history, product lines and a cross section of our company's background," Kissler says.

The site allows customers, vendors and other service providers to make initial inquiries easily or find more specifics about the company-say, if they were looking for someone to fill an insurance bid. "We get enough hits on our Web site so that I know people are inquiring," Kissler says.

But he's still not rushing to invest more in his site. If anything, as a next step he might give Web readers a little more information. "I think I will have technical applications for our products, product information and account information, in case they want to look at that," Kissler says. "And if I thought I was getting a lot of inquiries across that mode, I would probably expand it to where it actually listed individual products and pricing, which would allow the company or customer to trade with us."

For now, however, Kissler and many other providers agree that getting information to customers is the best focus of their Web sites. The sites then can help users make informed decisions. Web sites also can be great venues to feature the breadth of products available for a particular disability or to promote a company's disease management programs. In some cases, providers say, they even are uploading information about the latest research on treatments for particular diseases.

Getting in the Swim PREPARING ALL OF this information for a Web site isn't without cost-nor is a site guaranteed to attract visitors just because it offers good information.

"Early on, people thought that if you just built a Web site, others would find you, and traffic would materialize, but I don't think that's the case," says Tom Polston, president of Specialty Medical Sales in Lewisville, Texas. "You see enough evidence out there of companies spending so many dollars per thousand customers to reach customers, but then my question is, 'How many of those hits turn into actual sales?'

"There's a lot of noise out there," he says, "and I think you have to spend a lot more money than you ever anticipated to drive traffic to your site."

Just as with any other component of your business, he says, it comes down to making choices about what deserves an additional investment. "We are a small company, and we have to be careful how we divvy up our resources," Polston says.

One way he found to save money is by working with his buying group, Van G. Miller & Associates in Waterloo, Iowa. By partnering with VGM and the Web site development company it bought last year, Specialty Medical has reduced the costs of creating and marketing its site. "If we can work with somebody else who has that brand name and that national presence, it's more than we can do ourselves," Polston says. "They can be of assistance to us in a real economical fashion, and it has got to be a cost advantage."

Beyond cost savings, the VGM connection points to another major benefit of having a Web site: networking opportunities. Many large sites-whether they are hosted by buying groups, manufacturers, trade associations, medical organizations or consumer groups-are receptive to establishing links with other sites so visitors can move easily from one location to another in their search for information. Many sites also feature searchable databases of companies that supply certain kinds of products, services or information. "If a manufacturer gets an inquiry on its site, for example, and we are one of the preferred distributors, the customer can be linked right to our site," Polston says.

Providers should use caution when choosing Internet partners, Polston warns. The mercurial nature of Internet companies means they're here today but might be gone tomorrow. Even established brick-and-mortar companies make very different levels of commitment and investment in their Internet initiatives.

"We have been approached by other companies to build our site, but I have found that these organizations have been fraught with personnel turnover. Or they've merged or been bought out," Polston says. "I would rather be involved with and support a company like VGM that has a national network, understands the market and has its own in-house capabilities."

Is Bigger Better? A GOOD WEB site, the right links and a little marketing effort can grow a national or even international business, according to Vincent DeStigter, president and CEO of Western Health Care Industries in Jackson, Calif.

"The first month, we did $1,000 on our site," he says. "The second month, we did about $3,000. The fourth month, we were doing around $15,000-and we have been as high as $36,000 in a month."

DeStigter concedes traffic and sales have been inconsistent since he opened his Web site in January 1999, but the Internet unquestionably has opened new markets to him. "This really makes me a nationwide competitor legally," DeStigter says. "I kidded one of my friends who has an operation in the Chicago area. I told him, 'I do a lot of business right next door to you.' He asked, 'How?' I told him, 'The Internet.' Right away he got a home page."

A sudden extension beyond your existing markets, however, can pose dangers. "There are some critical issues-specifically fraud and abuse-with Medicare, and I don't want to cross that," DeStigter says. "You have to be careful with diabetic supplies, for example, because you need to have CMNs or 'scripts' in hand. You still need to meet all the rules and regulations.

"Right now, we're looking at the international markets more than we are anything else because there are different rules there," says DeStigter, although he notes that you still must consider issues such as product liability and warranties.

These issues aside, he says, a Web site can open your business to the whole world. "I'm getting a great number of hits from Europe," he says. "I also sell in South America. They can't get the product there, so they call us here, and we ship it FedEx. Whether they are trying to circumvent the manufacturer's distributor or not, I don't know. That's another issue."

Providers with Web sites do run the risk of treading on vendor relations-say, if they sell products into the exclusive territories of other providers or sales representatives. "These are considerations," DeStigter says. "There is some closeness with our manufacturers-and that's where our issues are starting to pop up.

"But," he adds, "these manufacturers haven't told us a thing yet about what we should or shouldn't do in Europe-or even in the United States."

Swimming With the Sharks FORGET ABOUT THE companies already doing business in HME. Big markets and big dollars have many new companies now eyeing the Internet HME prize. Dotcom start-ups that promise specialty megasites are hot commercial properties now, and they want a piece of the health care business. If the Health Care Financing Administration relaxes its rules on digital signatures and electronic payments, these new players might build e-commerce sites that could undercut traditional HME providers.

Ironically, the sheer complexity of the home care business could be the best insurance for protecting HME providers' online business. It's not just about creating clickable boxes. Big sharks are circling, but the threat they pose is limited by the fact that many are staffed by financial or technical people with little HME knowledge. They also lack staff trained in HME sales, service and reimbursement.

For these reasons, the dotcom threat doesn't have DeStigter worried. "We are definitely going to have an advantage," he says. "Dotcoms have no concept of how to handle Medicare. Look at how many dollars we spend every year just doing corporate compliance programs. There are still laws out there-you can't sella concentrator into South Carolina from California if you're not licensed to do it or you don't have 'script' in front of you.

"This is all going to be a barrier to those guys entering the market. I don't care what any dotcom company says, home care is still a local business to a certain extent."

Don White, president of Associated Healthcare Systems, an eight-location HME provider based in Amherst, N.Y., agrees that local companies have a good chance to beat the dotcoms. "The advantage we have right now is the strong service component that we provide," he says. "Respiratory, infusion services and those kinds of things are not the kind of product offerings that are easily adaptable to drop shipping."

On the Internet, the transfer of information might be quicker, but that's all it is-information. It's not goods and services. As providers are quick to point out, once they have the patients' information, they can respond personally the same day, as opposed to a dotcom, which likely would have to ship goods overnight. HME service requirements alone, they predict, always will make e-commerce a complement to, not a substitute for, what traditional providers already do.

Taking the Plunge WHILE THE DAY HCFA relaxes electronic signature rules might be far away-and the day dotcoms figure out HME billing even further-the Internet already is changing the way the world operates.

And for HME providers to stay a vital part of the health care industry, they should start developing the Internet as one of their business tools, no matter how small. Even if they start simply by educating customers and building awareness of their products and services, providers can gain valuable expertise about connecting with customers online.

"I'm not waiting to see what happens next," White says. "As president of this company, I am very much engaged in-and am spending a good amount of time-learning about strategies for using the Internet." He also is working through the American Association for Homecare to drop the barriers that prevent providers from working electronically with physicians.

"As with other innovations, someone somewhere is going to figure out what they can do online," White says. "And when they can do it more effectively than anyone else, they are going to take significant market share. If you're not thinking about it and trying to decide what your company's Internet strategy is going forward, I think you are going to get caught short-handed."

"I can't think of any compelling reason not to open a Web site," says Tom Antone, an attorney with Mintz Levin et al. in Washington and president of the National Association for Medical Equipment Services in 1989 and '90. "It might not be terribly productive for you initially, but I don't think there is any major impediment legally or commercially to opening a Web site.

"I would say, however, that unless your company has an interest in pursuing e-commerce, there's not an immediate reason to do it-although it's important to keep in mind that your competitors either have or will contemplate an e-commerce site."

Medicare has little regulation over the content of Web sites, he says, noting that this is a challenge it will face in the next few years: Should it amend its rules and program requirements to accommodate the Web-and if so, how much? "The impediments to Medicare business are dramatic, mostly because of documentation requirements," Antone says. "You have to have patients send actual signatures, release of benefits, release of information forms, assignment of benefit forms, proof that they received the providers' standards, proof that they actually received the equipment and so on. These are just some of the documentation that requires a patient's actual written signature. And then when you get to the doctors, you've got requirements for written physician signatures on CMNs and orders and other medical necessity documentation."

The great cogs of bureaucracy are beginning to turn already, however, and Antone has hope that HCFA will make the appropriate changes. "In the Federal Register of Jan. 27th, HCFA announced that it had begun 'preliminary discussions' about whether to allow physicians to sign CMNs electronically," Antone says. "That is good news-and we all need to be aware that it may not always be prohibitive to do Medicare business on the Web."

When will these changes come? "According to the notice in supplemental documentation, which did not appear in the Register, the Office of Management and Budget has anticipated to spend up to three years studying the feasibility of allowing electronic signatures on CMNs," Antone says.

Individual states, however, seem to be outpacing the Feds' three-year time line. In some cases, Medi-Cal in California will accept a doctor's electronic signature over the Internet. Similarly, last fall in New York, Gov. George Pataki signed legislation that allows pharmacists in that state to use a fax as a legal document when accompanied by a digitally signed prescription. Before that, a physician could fax a prescription but also had to mail a signed document to the pharmacist.

Until the issue of digital signatures for HME is cleared, Web sites are limited to non-Medicare, retail business. And while there are no regulations to this effect, Antone advises HME providers to disclose this fact on their Web sites so that patients don't assume they will be reimbursed.

"I do suggest this as a precaution if you are a Medicare provider with a National Suppliers Clearinghouse number," Antone says. "Somewhere on the Web site, probably somewhere on the first page, you should print a disclaimer that indicates that the products and services available here on the Web site are not reimbursable by Medicare and perhaps not by other insurers, as well."-D.C.