Arizona Home Care Hooks Up the Latest in Home Medical Technology

IT'S NOT A QUESTION OF IF PATIENT MONITORING PRODUCTS will be a lucrative niche for home medical providers, according to Ridge Smidt, chief executive officer of Phoenix-based Arizona Home Care. It's a question of when.

Indeed, Smidt is convinced that this latest category of home medical technology to hit the market could become an important revenue source for the HME industry.

"Rural Arizona has a major problem with delivering care as well as with the unavailability of nurses. Now throw [the prospective payment system] into the mix, and the quality of clinical care at home is becoming strained," Smidt says. "I know nurses at [disease management companies] who feel that business in the industry is growing and that [home monitoring] is a direction that industry as a whole would go."

So Smidt took the plunge and signed a multiyear supplier agreement with a manufacturer of HMT.

An Early Adopter

The HMT he carries allows him (or a home health agency he rents it to) to monitor just about any medical condition, including congestive heart failure and diabetes. "Home medical technology is going to have to be administered by somebody," Smidt says, "and HME providers are well poised to do so if they see it and are willing to invest."

Smidt also sees a market advantage in being an early adopter of this technology. "One of the nicest things is that the HME dealers who decide to get into this now will almost instantly own the market," he says. "They're not going to call on a physician or [HHA] and then as they're leaving the office see a competitor walk in behind them offering the same product. You can dominate the market right from the start."

This could be the first step in a host of new opportunities for HME providers, Smidt predicts. "Who knows where this technology will be in a few years?" he asks. "And is nursing going to be prepared for that technology - or are they going to increasingly turn to medical equipment providers? [Carrying HMT] has the potential to open other opportunities we might not know even exist or haven't thought of yet."

A Clinical Assist

Already today, Smidt says offering home monitoring equipment will allow him more clinical involvement, which will in turn help him cultivate better relationships with clinical players such as nurses and physicians.

HMT gives HME providers "something that physicians are going to want, patients are going to want and HHAs are going to want," Smidt says. "It's difficult to go in and say that your oxygen equipment or wheelchair or hospital bed is any different from the guy's down the street. [But this HMT] distinguishes you as an HME dealer. When a case goes to the nursing department and a nurse is deciding where [to get] a wheelchair, you want to be the provider she thinks of. And if you have become more involved with the clinical side by educating nurses and physicians on this monitoring equipment, you are going to come to mind."

The Learning Curve

But with every opportunity comes hard work. With respect to HMT, that hard work is in education. "Clinically, you have to be able to explain the product, and financially you have to be able to explain the product," Smidt says. "[Managed care organizations] now have two to three years of education in this area due to their involvement with phone triage disease management, so you're not starting from scratch, but we have a good year to year-and-a-half of showing what it can do.

"Financially, it's amazing that a lot of health plans don't know what their patient costs are or have difficulty putting their hands on baseline information," he continues. "Still it becomes pretty obvious that this can save hospital days and thus money.

"It's really a self-fulfilling prophecy," says Smidt. "If we put in enough time and energy up front to educate, then I think it will sell. But I don't see it happening just because I signed a contract and have the equipment on my shelf."

Every opportunity also involves risk. Although Smidt says HMT will have an immediate impact on rural areas because of PPS, it could be two or three years before the market matures. And getting in on something so soon can be risky.

The Prospects

"I'm betting that HMT is eventually going to be [a major market]," Smidt says. "Am I a year or two early? That's the question. When you're out front, things come up that you don't or can't see."

One of Smidt's primary concerns is that he had to pay a premium to get involved now - and that the technology will be a lot cheaper in three years. "I go out and do all the education, and then a year later other people buy the machine at a 20 percent discount without having to spend all the time I did in education and marketing."

To offset this potential competition, Smidt plans to place more than 2,500 home monitoring units during the next five years, which could generate $6 million in annual revenue. Not bad.