The 2002 HomeCare survey was mailed Oct. 31, 2001, to 1,200 home health care providers, of which 361 responded. Who are these providers?

Of the participants, 78.1 percent are home medical equipment companies, 9.7 percent are pharmacies or chain drugstores with HME, 6.9 percent are specialty home care companies such as women's health boutiques or pediatrics companies, and 1.1 percent are general retail businesses.

Participating providers represent companies operating in every region of the nation, with 30.2 percent from the South, 26.9 percent from the Midwest, 20.2 percent from the Northeast, 14.1 percent from the West and 4.2 percent from the Mid-Atlantic. Eight percent of the participants identified themselves as a national or international company.

Of all of the companies, 39.9 percent are accredited, 36 percent are not accredited and 2.2 percent have applied for an accreditation survey.

Comparing participants by size, 18.6 percent have annual revenue of less than $750,000, 11.4 percent report revenue between $750,000 and $1 million, 12.7 percent between $1 million and $1.5 million, 7.8 percent between $1.5 and $1.99 million, 6.1 percent between $2 million and $2.9 million, 6.1 percent between $3 million and $3.9 million, 12.2 percent between $4 million and $9.9 million and 12.5 percent above $10 million.

As for physical size, 14.4 percent of survey participants have retail showrooms that occupy less than 500 square feet, 24.9 percent occupy 500 to 1,000 square feet, 14.4 percent occupy 1,001 to 2,500 square feet and 6.9 percent occupy 2,501 to 5,000 square feet. Only 1.9 percent of participants have showrooms that are larger than 5,000 square feet, while 31 percent said they have no showroom at all.

REIMBURSEMENT TOP CHALLENGE IN HME

Reimbursement issues topped the list of challenges providers expect to face this year. Sixty percent of survey participants said government reimbursement cuts will be their biggest challenge in 2002, up from 45 percent in 2001. Managed care contracting was cited by 37.4 percent of participants as their biggest challenge, while 26.6 percent identified local HME competition and 23.8 percent named hospital-based HME competition.

“I think that reimbursement probably always has been at the top of providers' list of challenges,” says Joe Groden, president of JG Consulting in Rochester, N.Y. “There's pressure on companies to make a profit, and naturally, reimbursement issues are important to the profits of many companies.

“However, it may be that the number of providers who see managed care as a challenge has gone down,” Groden continues. “Some providers have realized that they had to pay a little more to get quality [service] and some may have stopped contracting with managed care altogether.”

Some experts predict that as government reimbursement cuts and managed care contracting issues become more of a headache, providers will seek other opportunities for income.

“Many dealers are starting to recognize that there are opportunities beckoning to them other than third-party business,” says Shelly Prial, director of government services for HPS Healthcare Management in Melbourne, Fla. “They are not walking away from third-party business, but they are spending more energy developing cash sales and niche markets. I have been preaching this and am delighted to see how many dealers are beginning to recognize they are entrepreneurs as well as merchants.”

“Providers will have to look at other sources of revenue,” says Jerold Cohen, president of Caesar Cohen Limited, a consulting firm in Woodbine, N.J. “There's only so much they can cut and still be able to provide services, and some providers who offer extra clinical services will start looking at different ways to maintain quality service that still lies within the reimbursement parameters.”

Presenting less of a challenge to providers, but making the list nonetheless are staff issues such as retention and training (17.5 percent), national HME competition (11.9 percent), mail-order HME sales (10.5 percent), Web-direct HME sales (7.2 percent) and quality patient care and service (6.1 percent).

Which of the following will be your biggest challenges in 2002?

Activity	% of Providers
Government Reimbursement Cuts	60.1%
Managed Care Contracting	37.4%
Local HME Competition	26.6%
Hospital-based HME Competition	23.8%
Staff Issues (Retention, Training)	17.5%
Nation HME Competition	11.9%
Mail-Order HME Sales	10.5%
Web-direct HME Sales	7.2%
Quality Patient Care/Services	6.1%

MANAGED CARE

Revenue

What percentage of your 2001 revenue came from managed care payers or plans?

Revenue % of Providers
Zero	42.8%
0.1 to 5 %	15.2%
6 to 10 %	12.1%
11 to 15 %	4.1%
16 to 20 %	9.0%
+20 %	16.8%

Growth

What percentage of your 2002 revenue will come from managed care payers or plans?

Revenue % of Providers
Zero	42.1%
0.1 to 5 %	14.3%
6 to 10 %	13.1%
11 to 15 %	5.6%
16 to 20 %	6.7%
+20 %	18.2%

THE SLEEP MARKET

PROVIDERS are less involved with the sleep disorder market this year than they were last year. According to the survey, involvement in the sleep disorder market has declined by 9.7 percent, from 77.3 percent in 2001 to 67.6 percent in 2002. Stay tuned for HomeCare's April Sleep Supplement for more information on this sector of the home care industry.

What is your involvement with the sleep disorder market?

Activity	% of Providers
Get equipment referrals from local sleep labs	46.0
Sell sleep disorder/therapy equipment	41.6
Send customers to local sleep labs for studies	16.6
Plan to do in-home sleep studies in the next 12 to 24 months	5.3
Do in-home studies for local sleep labs	4.7
Not involved in the sleep disorder market	32.4

PRIVATE INSURERS

Revenue

What percentage of your 2001 revenue came from private insurers?

Revenue % of Providers
Zero	13.1%
1 to 5 %	15.5%
6 to 10 %	20.7%
11 to 15 %	9.7%
16 to 20 %	18.3%
+20 %	22.7%

Growth

What percentage of your 2002 revenue will come from cash sales?

Revenue % of Providers
Zero	11.9%
1 to 5 %	16.3%
6 to 10 %	19.0%
11 to 15 %	10.7%
16 to 20 %	17.1%
+20 %	25.0%

CASH SALES

Revenue

What percentage of your 2001 revenue came from cash sales?

Revenue % of Providers
Zero	23.1%
1 to 5 %	39.7%
6 to 10 %	15.9%
11 to 15 %	5.5%
16 to 20 %	2.4%
+20 %	13.4%

Growth

What percentage of your 2002 revenue will come from cash sales?

Revenue % of Providers
Zero	20.6%
1 to 5 %	43.6%
6 to 10 %	13.5%
11 to 15 %	5.2%
16 to 20 %	3.2%
+20 %	13.9%