Competitive bidding took a big bite out of the profitability picture for hospital beds in the nine Round 1 bid areas — an average 36 percent drop from previous Medicare allowables, according to figures from the Centers for Medicare and Medicaid Services.
With another 91 cities to be added to the program in Round 2, HME providers are looking to minimize costs, increase efficiencies and branch out into cash sales to maintain profitability and offset revenue that could be lost in the sector. According to manufacturers, some are also migrating toward specialty markets (such as bariatrics) or expanding into reimbursable products like therapeutic support surfaces they may not have explored.
Looking at a Cash Alternative
Adjustable beds provide a "luxury alternative" for consumers and an opportunity for cash sales, says Bed Groce, CFO of LaFayette, Ga.-based Flex-A-Bed, a long-time manufacturer of adjustable beds.
Groce says the 42-year-old company's sales through HME providers have done well even in the bad economy, in contrast to its other sales channel, furniture stores, which have suffered. He notes there is particular interest in the market for high-low beds that can be raised or lowered vertically. The company's "Hi-low" and "Premier" models come in 17 sizes, including dual queen and dual king, and some also offer optional massage.
"We don't market the product as a medical bed, but it does have medical benefits for people suffering from problems such as hiatal hernias, acid reflux or circulation problems in the lower extremities," says Groce, who adds that the adjustable beds work well with various lifts.
He points out that an HME provider's typical customer demographic is a great match for adjustable beds.
"It's a way to take somebody who doesn't quite need a hospital bed and give them something that makes them more comfortable," he says. "A lot of people come to us because they don't want to put their loved ones in a hospital bed."
On the other hand, a lot of consumers "don't know there is an alternative out there," Groce continues. "You have to have a commitment to put them on the sales floor and to train salespeople on the benefits of the product. The thing about adjustable beds is that if you have one sitting on the show floor, sometimes they sell themselves. But the store and personnel should be committed."
The payoff, says Groce: "There are tremendous margins in adjustable beds."
Reconsidering Support Surfaces
Mitch Yoel, executive vice president of business development and government affairs for Drive Medical, Port Washington, N.Y., has seen the therapeutic support surfaces market from three perspectives: as a clinician, later as a provider and now as a manufacturer. "Many DME providers are doing Group 1 and Group 2 support surfaces by accident. They get an order for a Group 2 surface, get the paperwork in order and deliver it.
"Competing on service is an effective way to get more business in some categories, but not the best way to sell Group 2support surfaces," says Yoel, who believes the category can be another natural, and profitable, extension of a successful bed business for providers looking to make up revenue. But it takes more than a reactive or transactional approach; providers should progress beyond the role of "order fillers."
"You have to match the right product to the right patient. You have to understand the advantages and disadvantages of these products and serve as an equipment expert for the referral source," says Yoel. "You can't just be an order filler but should become a consultative salesperson."
For example, asking a few additional questions, combined with expert product knowledge, enables HME providers to encourage a dialog that helps them truly match the product to the need rather than just meeting the code.
"One product won't solve every patient's pressure needs," Yoel states.
Another key to growing business is reaching out to the right referral sources. That means setting up relationships with a certified wound and ostomy care nurse (CWOCN). "They are the gatekeeper, if not the direct referral source, for Group 2 products," he says.
To build the business, providers should consult with their referral sources about the problems they run into when ordering support surfaces. "Then try to solve these problems," Yoel says.
"Reach out to some of the manufacturers to ask for product demonstrations and about what value-added services a manufacturer can provide, such as education, training, participation in an in-service with a potential referral source or co-marketing." He notes that both the provider's customer service and sales team should understand how support surfaces can complement other orders that come in.
Yoel urges providers to look for opportunities to cross-sell Group 1 products with hospital beds and patient lifts, etc. For example, the medical justification for Group 1 surfaces is similar to the justification for a hospital bed, he points out. "It's actually hard to find diagnoses that will quality for a hospital bed and not for a Group 1," he says.
Getting the Documentation Right
The only involvement of support surfaces in the Round 1 rebid of competitive bidding was Group 2 surfaces in the Miami bid area. The resulting single payment amount ($319.75) roughly cut the average allowable in half, which "prices $3,000 mattresses out of the market" and suggests a move to more mid-range products if the category is included when the bid program expands to other areas, says Yoel.
Another reimbursement consideration is the stringent documentation required for Group 2 surfaces. According to a report from the Office of Inspector General, Medicare spent more than $109 million on Group 2 support surfaces in 2007, and 86 percent of the claims did not meet coverage criteria. Providers need to ensure they have the needed documentation before supplying a Group 2 product, Yoel says, including documenting a comprehensive ulcer management plan.
"Many providers are scared of the category because of the documentation requirements," says Yoel. "The other side of the coin is that the criteria are very specific and cut-and-dried. The challenge is to obtain documentation from the medical records to support the sale."
In addition to documenting the type, size and location of wounds, the comprehensive care plan should include patient and caregiver education, regular assessment by a medical professional, appropriate turning and positioning, appropriate wound care, management of moisture and incontinence and nutritional assessment and intervention.
But the medical community is paying attention to pressure sore prevention, Yoel says, and so should HME providers. It's an opportunity both to help customers and increase sales.
He adds that the need for education in the support surface market even extends to the proper use of terms. For example, he says, the term "low air loss" is often misused as a general term for the category. However, the term has a specific definition and doesn't describe the majority of Group 2 support surfaces, many of which use alternative pressure (including some with air-loss features).
Consumers Want Easy Operation
Nancy Prossick, marketing manager of long term care for GF Health Products, Atlanta, sees a move in sleep surfaces toward more intuitive operation. For example, Graham-Field's AltaDyne Sensor Plus is a Group 2 surface that automatically configures the air pressure based on a patient's weight. Sensors on the alternating pressure mattress make it as firm or soft as necessary for each patient.
"Family members taking care of the patient don't need to know the settings," says Prossick.
As far as additional sales, she says, mattress covers can help to reduce shear so that the user moves with the mattress rather than against it. "People say they only want the cheapest product, but if you have added features and benefits that make it a better product, they are willing to pay for it," she says.
Prossick agrees that educating the sales force is important for HME providers. Salesmen should be able to explain to customers the features that differentiate various beds or support surfaces — why one might be more expensive but worth the price. "It's about education," she says.
In non-powered surfaces, Prossick notes an interest in foam mattresses that can be rolled up for easy shipping.
Pressure ulcers resulting from pressure, shear and/or friction can cost up to $70,000 to heal. Pressure ulcers are also a direct cause of death for 8 percent of paraplegics and 60,000 acute care patients annually. The total cost to the health care system has been estimated at $11 billion.
