Today's home medical equipment providers are a hardy bunch, to say the least. Despite facing in 2002 an economy that was leveled alongside the Twin Towers and the Pentagon, and in 2003 the looming threat of national competitive bidding for durable medical equipment and an inherent-reasonableness regulation, HME providers remain optimistic about the industry.
According to HomeCare's annual Forecast Survey, HME providers continue to predict increased revenue for 2003. Of the 374 providers who responded to this year's survey, only 3 percent expect their companies' revenue to decrease, while 10 percent expect revenue to remain static, and a whopping 84 percent forecast increased revenue. Of those who predicted a revenue increase, more than one-third foresee an increase of between 6 percent and 10 percent, and another third expect an increase of between 11 percent and 20 percent. Nine percent predict a revenue increase of more than 25 percent.
Which home care markets will drive this added revenue? Count on the usual suspects: respiratory; mobility; and beds, mattresses and pads were picked as the top three markets. Of the respiratory products, oxygen concentrators and CPAP/bi-level devices are the biggest revenue producers, with liquid oxygen systems replacing sleep therapy devices at number three this year. On the mobility side, manual and power wheelchairs continue to be the biggest revenue-producing markets for HME providers.
Of course, revenue always influences providers' purchases. At the top of HomeCare's Purchase Intentions list this year are manual wheelchairs; ambulatory aids; bath safety products; beds, mattresses and pads; nebulizers; and oxygen concentrators. Look familiar? Other notable markets on the list are bariatrics products — interest in which increased by 9 percentage points, from 32 percent to 41 percent — and computer hardware and accessories, which increased 11 percentage points, from 26 percent to 37 percent. Home ventilators and sleep diagnostic products, which didn't make the list in 2002, broke into this year's top 35.
Providers Cutting Costs
Despite the additional interest in certain product markets, some providers will limit the number of products they buy, as a way to cut costs. Twenty-six percent of survey respondents say they'll buy products less frequently this year, compared to 22 percent last year.
More than 50 percent of providers say they'll concentrate buying with fewer vendors, while almost a quarter of providers will cut costs by buying cheaper products and increasing computerization. But there's a bright side to the cost cutting: 22 percent of providers say they're not cutting costs at all, up from 18 percent of providers last year.
Amid the optimism, challenges remain. Last year, 60 percent of providers said government reimbursement cuts were their biggest challenge. This year, three-quarters of providers surveyed cited reimbursement cuts as their biggest challenge.
Other challenges include managed-care contracting, hospital-based and local HME competition, and, creeping up the list, national HME competition.
Who's Wired?
Computer usage among HME providers continues to increase. Most of the providers surveyed — about 80 percent — say they use their computers to engage in financial activities and generate financial reports. Three-quarters of providers use computers to process claims or submit claims electronically. And an increasing number of providers — 56 percent, compared to 44 percent in 2002 — are using computers to track customers and perform marketing activities.
The number of HME providers who have access to the Internet continues to rise. Ninety-six percent of those surveyed this year say they have Internet access either at home or at work — 73 percent have Internet access at both locations. Eighty-four percent of providers use the Internet to check e-mail, while 74 percent research products online. More than 50 percent of the providers surveyed say they research vendors and medical issues via the Internet. Additionally, more providers are buying products online — 45 percent this year, compared to 40 percent in 2002.
Survey Methodology
The 2003 HomeCare Forecast survey was mailed Oct. 15, 2002, to 1,200 HomeCare subscribers, of whom 374 — or 31 percent — responded. Eighty percent of respondents represent HME companies, 12 percent represent pharmacies or chain drugstores with HME, and 7 percent represent specialty home care companies.
Comparing participants by size, 18 percent have annual revenue of less than $750,000, 12 percent report annual revenue between $750,000 and $1 million, 11 percent between $1 million and $1.5 million, 6 percent between $1.5 million and $2 million, 12 percent between $2 million and $3 million, 5 percent between $3 million and $4 million, 10 percent between $4 million and $10 million, and 14 percent above $10 million.
Top-Ranking Products for 2003
(Ranked by percentage of HME providers who intend to purchase them)
| Rank | Product | |
|---|---|---|
| 1 | Manual Wheelchairs | 76.5% |
| 2 | Ambulatory Aids | 74.1% |
| 3 | Bath Safety Products | 72.2% |
| 4 | Beds/Mattresses/Pads | 72.2% |
| 5 | Nebulizers | 71.1% |
| 6 | Oxygen Concentrators | 62.6% |
| 7 | Patient Lifts | 59.9% |
| 8 | CPAP/Bi-level Devices | 59.4% |
| 9 | Portable Oxygen Systems | 59.4% |
| 10 | Oxygen Conserving Devices | 57.5% |
| 11 | Lift Chairs | 57.0% |
| 12 | Scooters | 53.7% |
| 13 | Power Wheelchairs | 53.5% |
| 14 | Incontinence Products | 52.4% |
| 15 | Support Surfaces | 51.3% |
| 16 | Pulse Oximeters | 49.7% |
| 17 | Compressed Gas Regulators | 49.2% |
| 18 | Wound Care/Pressure Sore Prevention Products | 48.9% |
| 19 | Seating and Positioning | 47.1% |
| 20 | Home Nutrition Products | 46.0% |
| 21 | Orthopedic Soft Goods | 46.0% |
| 22 | Diabetes Products | 43.6% |
| 23 | Urological/Ostomy | 43.0% |
| 24 | Bariatrics Products | 41.4% |
| 25 | Computer Hardware and Accessories | 37.7% |
| 26 | Hot and Cold Therapy | 35.6% |
| 27 | Aspirators | 34.2% |
| 28 | Sleep Disorder treatment | 33.7% |
| 29 | Pediatric Respiratory | 33.4% |
| 30 | Skin Care Products | 32.9% |
| 31 | Liquid Oxygen Systems | 31.6% |
| 32 | Apnea Monitors | 30.5% |
| 33 | Orthotics/Prosthetics | 30.2% |
| 34 | Home Ventilators | 29.4% |
| 35 | Sleep Diagnostic Products | 27.8% |
