New Kids on the HME Block

As Winston Churchill said, “Attitude is a little thing that makes a big difference.” That is certainly true for those who choose to purchase or start a home medical equipment business. In an industry that is fighting for fair reimbursement, respect for its role in home health care and security for independent provider businesses, many may wonder why anyone would choose to enter the HME industry in this environment.

Basically it comes down to numbers, says Wallace Weeks, president of Weeks Group, a consulting firm in Melbourne, Fla. He says investors see a large customer base that is accessible with financially sound payers.

The sheer number of potential customers is what attracts entrepreneurs from other industries seeking an opportunity, says Marc Rose, president of Paragon Ventures, a mergers and acquisitions firm based in Philadelphia.

Additionally, Rose says there is also a spirit of entrepreneurship within the industry that drives people to own their own business. With the desire and ability to create a business model that can achieve success, they are entering the industry with fresh ideas and excitement, allowing these entrepreneurs to grow their businesses and become leaders in their markets.

Their attitude could be contagious, says Weeks. “Many of these new companies that are coming in are doing things differently than the incumbents. They have found new solutions to the same problems or have found new ways of delivering those solutions,” he says. “The lesson to be learned is that there are a lot of ways to be in this business, and you don't need to get too embedded in the way you have been doing business in the past.”

Most often, new HME business owners are not jaded by the events of the last several years. In fact, they probably have an advantage because they don't have to “redefine their machine,” says Weeks.

“They can define a new business model or a business around the current environment, whereas our incumbents in the industry have to revise their businesses, which is more risky than it is to start a new one from scratch,” he explains.

However, it is important to realize that by no means is the HME industry a cash cow. The impact of the Medicare Modernization Act is not yet fully understood, and the uncertainty has made some wary.