All DME All the Time

Dallas Jackson and Wendy Wigmore Jackson, RN, know that government reimbursement rarely goes up. Coupled with a relentless commitment to personal service, that simple truth has guided the husband-and-wife owners of Jackson Medical Supply, a three-store HME operation on the eastern edge of Northern California's San Francisco Bay area.

Predicting whims in Washington is never an easy task, but home care providers who wish to stay ahead of the game must be nimble, creative and patient. When grumblings about competitive bidding grew louder, the Jacksons responded by adding to their base in Vacaville with two additional stores (Woodland and Vallejo). The new locations served patients in areas where the giant chains were not doing the job, say the Jacksons, who distinguished themselves with the mom-and-pop approach.

Back then, their dependence on Medicare hovered around 20 percent of overall revenues. Since that time, the number has crept up to 30 percent. It's still low enough to offer peace of mind, but Wendy acknowledges the figure is more than they would prefer.

So far, the long arm of competitive bidding has not ensnared the Jacksons. However, Round 1 bid prices released in early July average out to a 32 percent cut across the affected categories. The couple agrees such a cut would greatly impact their business, but even under such conditions they both believe they would find a way to survive.

"Currently, we do very little in scooters through Medicare," says Wendy. "If and when those prices went nationwide, we probably would stop doing [power wheelchairs] through Medicare and only do cash-basis chairs. The amount of work it takes to do a PWC for Medicare is long, tedious and time-consuming. Unfortunately, the customers in need of power mobility are the ones who are going to suffer the most."

The problem is that competitive bidding is not the only concern. Higher taxes amount to yet another cut in pay, and it's a variable that Wendy and Dallas are already incorporating into their 2011 business plan.

"You have to know your competitors and your marketplace, but you always have to anticipate what government is going to throw at you," says Dallas, who worked in Northern California's financial district for many years before finding his true passion in the DME world. "Government policies can knock the wind out of you if you don't plan ahead. Next year taxes are going up 25 to 30 percent because they are taking away some of the Bush tax advantages. Some mom-and-pops are going to be taxed at the highest rates, because even little companies make more than $250,000 a year."

For the Jacksons, most of the money eludes their pockets and gets funneled right back into the business. "One of the keys of our success is that right from the beginning pretty much all our profits went back into our company," says Wendy. "We are always upgrading things. We upgraded by buying two stores … along with new computer systems."

When the 9.5 percent reimbursement cut hit the home care world in January 2009, the Jacksons worked around it by increasing volume and focusing more on walkers and hospital beds. The cut did inflict some pain, but Wendy responded by negotiating vigorously with vendors. "We are not the biggest company on the block," she says. "But I play hardball, and in return we are loyal."

Elimination of the first-month purchase option for power mobility is yet another obstacle that all mobility providers must soon deal with. The new policy is causing the Jacksons to rethink their inventory. "Your biggest concern is your capital outlay, and it goes back to working with vendors," says Dallas. "Most of the power chairs are lightweight, and they are good for inside, but they are made from materials that are easily broken and scratched. They have plastic parts. Someone can have one for two weeks and it looks like six months, and under the new rule we will have to replace the parts."

The Jacksons are looking to carry sturdier models that can take everyday abuse and hold up over a long period.