<em>HomeCare</em>'s 2009 Forecast Survey shows reality setting in as providers face the cap and the cuts.
Thursday, January 1, 2009

Headed once again into a year with incomplete information on which to base their business plans, home medical equipment providers are preparing for the worst but hoping for the best. As they deal with the realities of the 36-month oxygen cap, CMS' post-cap payment regs and a 9.5 percent reimbursement cut, buying intentions for providers participating in HomeCare's 2009 Forecast Survey even show an optimistic increase.

More providers than in last year's survey said they will purchase the most popular products on the HME shopping list: manual wheelchairs, beds, ambulatory aids, bath safety products and nebulizers.


 2009 2008 %Change
Manual wheelchairs 77.2% 70.1% +10.1
Beds 72.9% 66.7% + 9.3
Ambulatory aids 72.1% 66.5% + 8.4
Bath safety products 71.6% 64.7% +10.7
Nebulizers 70.6% 64.3% + 9.8

On the other hand, only 37 percent think their revenues will increase this year, while 33 percent believe they will remain at 2008 levels. Another 30 percent are expecting revenues to fall.

While the credit crunch is definitely on providers' middle-of-the-night worry list, it's topped by the cut, the cap and the constant battle of keeping costs under control. Most providers, (72 percent) ranked the 9.5 percent cut as their biggest challenge this year, and many said the oxygen cap would gouge their business. Thirty-eight percent, in fact, rated the cap's impact on a 5-point scale as a "5," and another 16 percent called it a "4."

In a telling sign of the industry's continuing changes, almost a quarter of the survey respondents (24 percent) said they plan to leave the business, the same percentage found in the previous two years' studies. The other 76 percent said they are ready to ride it out in HME's morphing landscape.

But when it comes to exactly how they plan to do that and remain viable, providers reported a number of different paths to growth or simply to maintaining current profit levels. Most said they are counting on increasing efficiency (65 percent), and many said they are changing their oxygen delivery model (38 percent); changing their product mix (28 percent); and specializing in a particular niche (27 percent).

Most said they plan to grow primarily by adding more patients (65 percent), doing more referral marketing (56 percent) and entering new product areas (49 percent).

As for the effects of a new administration, respondents were split: 24 percent expect a positive effect and 23 percent expect a negative effect. Eight percent said they think there will be no change at all, and 44 percent said they don't know what will happen.

"No one knows where we are going," said one provider.

"You just fight back harder, grow your business, expand and deal with it," said another.

And from a third: "I'm hoping that the new president and Congress will revamp CMS and start from there."

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About Accreditation

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About Oxygen/Mobility

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About Company Revenue

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About Operations

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About the Future

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

2009 Product Shopping List

(Ranked by percentage of HME providers who intend to purchase)

1. Manual wheelchairs — 77.2%
2. Beds — 72.9%
3. Ambulatory aids — 72.1%
4. Bath safety products — 71.6%
5. Nebulizers — 70.6%
6. CPAPs/Bi-levels — 69.6%
7. Oxygen concentrators — 63.4%
8. Bariatric wheelchairs — 59.3%
9. (Tie) Bariatric products — 59.1%
(Tie) Lift chairs — 59.1%
11. Pulse oximeters — 57.8%
12. Oxygen conserving devices — 57.5%
13. Portable oxygen systems — 54.5%
14. Power wheelchairs — 52.7%
15. (Tie) Incontinence — 51.2%
(Tie) Scooters — 51.2%
17. Support surfaces — 50.6%
18. Compressed gas regulators — 49.9%
19. Seating and positioning — 49.1%
20. Sport/lightweight wheelchairs — 47.3%
21. Diabetes prodoucts — 45.3%
22. In-home oxygen fill systems — 44.8%
23. Nutrition — 44.5%
24. Compression hosiery — 43.7%
25. Sleep products — 42.5%
26. Ramps — 40.2%
27. Wound care — 39.4%
28. Orthopedic softgoods — 38.9%
29. Urological/ostomy — 38.4%
30. Skin care — 34.5%
31. Hot and cold therapy — 30.2%
32. Pediatric respiratory — 24.0%
33. Orthotics/prosthetics — 23.3%
34. Pediatric mobility — 22.8%
35. Continuous passive motion — 26.6

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

Biggest Challenges

What are the biggest challenges facing your company in 2009?

  1. 9.5% reimbursement cut on Round One bid items — 72.1%
  2. 36-month cap on home oxygen rental — 60.4%
  3. Keeping costs under control — 46.5%
  4. Medicare DME rental cap — 36.3%
  5. Keeping up with legislation/regulation — 32.7%
  6. Medicaid cuts — 29.9%
  7. Paperwork/administrative activities — 28.9%
  8. Claim denials — 26.3%
  9. Industry's damaged reputation due to fraud and abuse — 24.6%
  10. Accreditation/quality standards — 23.8%

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

Alternatives to Competitive Bidding

What do you suggest as an alternative to competitive bidding?

"5-10% cut in reimbursement"

"A blue-ribbon panel comprised of members from CMS and stakeholders (HMEs, manufacturers and patient groups) who will consider appropriate rates of reimbursement"

"Accreditation"

"Across-the-board cut to all covered items"

"Attack fraud and abuse and we won't need competitive bidding."

"CMS just needs to come up with a fee schedule, then providers can either participate or not, but it would give the little guys an even playing field."

"CMS needs to improve its own efficiency and look at cuts in other areas that are the largest part of its budget."

"CMS should set a reasonable fee schedule and allow all accredited providers to participate."

"CMS tried to implement a very complicated competitive bidding process and failed. They should just extend the 9.5% cut to other product codes and stop the waste."

"Come to a fair price for what we do and make it across the board. Go after the fraudulent dealers and punish them effectively."

"Correct the flaws at CMS' end that allow so much fraud and we could achieve significant savings there."

"Cut Part A benefits as well as physicians."

"Have Medicare stop paying for items less than $100."

"How about just letting the American way of competition and capitalism work like it always has."

"Improve quality and focus on outcomes and disease management."

"Let the market seek its own level with accredited companies only."

"Make the 9.5% reduction permanent."

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.

About this Survey

Data were collected Nov. 5-21, 2008. Of 319 companies participating, 51 percent operate a single location. Sixty percent reported revenue of $3.5 million or less, while 16 percent indicated revenue of $25 million or more. Thirty-eight percent of respondents' companies employ 10 or fewer people, while 14 percent employ 100 or more. The largest group of companies is located in Jurisdiction C (41 percent), with 16 percent located in each of the other jurisdictions (A, B and D). Nine percent of participants reported nationwide operations. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures.

2009 Forecast Survey

Read Braving the Storm to find out what HME experts think HME providers can do to best deal with the uncertainties of this new year.