Frankly, it doesn't seem like the best time in the world to open up a home medical equipment company. Reimbursement is down and dwindling. Legislative mandates are becoming more onerous. And then there's CMS' competitive bidding project, which is set to roll out in 10 large MSAs around the country.
Despite the circumstances, however, at Lutheran Services in Iowa, it's about need. So early last fall, when Diana Hanner discovered a health need that LSI wasn't filling, the program administrator came up with a plan to do something about it.
Filling the Gap
For many years, the Des Moines-based non-profit agency has sponsored a home health care program that provides nurses, therapists, home health aides, social workers and even pediatric home health care specialists to residents, most of them low-income, in eight Iowa counties.
LSI also offers adoption and foster care services, early childhood programs, refugee resettlement help, residential treatment for those with behavioral and mental disorders and services for those with disabilities.
The question was, where were their clients getting their HME? “In this area, we don't have a national provider. Many providers have pulled out,” Hanner, a registered nurse, says.
It made sense to Hanner that LSI become an HME provider. “We were already in the home, we were helping with case management, and when you think of that, you think of continuity of care,” she says.
With a background as a consultant specializing in home care agencies, Hanner had a nodding acquaintance with HME (she also has a son who uses a wheelchair, which is what propelled her into nursing in the first place). Still, she didn't know much about the business side of the industry.
That didn't stop her. She studied up on the industry, worked with an accountant and came up with a plan for an HME division to present to the LSI board. That was in July. By August, the plan had been approved, and in November, Mobility Solutions opened, dedicated to the goal of providing “individuals and their loved ones with individualized care and equipment to help them lead active, healthy lives in their own homes.”
Like LSI, Mobility Solutions is a non-profit entity. It provides aids to daily living, walkers, wheelchairs, hospital beds, some modular ramps and most other HME except respiratory.
Already, the HME division has made a difference in client care. “It wasn't until we teamed up with [HME] that we learned how far we could take that care,” Hanner says.
Mobility Solutions has been a surprising financial success, too, bypassing everyone's expectations. “I only forecast about $10,000 a month in revenue, but just with referrals, we're over the $200,000 mark [in five months],” Hanner says.
“In two-and-a-half years, we will have covered the cost to set up the business — billing software, equipment. Generally, it takes seven years to recoup the cost of a startup. I know we'll make it a lot sooner than that. We'll make it because we don't have huge expectations for profit.”
And Mobility Solutions will make it without uptown digs or even a retail store. “It's not a retail shop; it's just an office,” says Hanner. “Of course, [clients] can come in and look at the products, but that's not our main focus. Our focus is to do the assessments in the client's home.”
The business shares space with LSI's new Refugee Community Center. To say that the place isn't fancy is probably an understatement. “It's in a building that was ruined by a sewer backup years ago, so it was a pretty icky building,” says Hanner, noting that local contractors helped whip it into livable shape. “But being in social services, we have to be in the area of the people we serve. It's probably the poorest area in town.”
Still, the new HME is meeting a big need. “There are probably four [other HME providers] that I would consider to be competitive with us. Each one has its own special niche,” Hanner says. “I would say that our niche is that we are nonprofit and faith-based. We have huge partnerships with the Lutheran churches in the area.”
The churches help support LSI, and one of the aspects of providing HME that delights Hanner and the LSI board is that “it's our way to give back to our funders, the people who give to our … programs: [We can say], ‘Let us help your family member.’”
However, since LSI serves all people, regardless of religion, nationality, gender, age or sexual orientation, Mobility Solutions is reaching out to everyone. A television ad for lift chairs and scooters has helped draw people in. “We had four referrals off that commercial last week alone,” Hanner says.
The new provider's business is mainly Medicaid with some Medicare, private pay and a few insurance contracts. But while the people it serves might be low-income, their needs can be very sophisticated.
LSI's rehab staff, which was already in place, has proven a big boon, according to Hanner, who says Mobility Solutions does a lot of custom wheelchairs. “Our rehab staff is really knowledgeable about seating and positioning,” she says, adding that the staff's reputation with vendors has helped the fledgling HME when it comes to ordering high-end equipment.
Overcoming Stumbling Blocks
As positive an experience as opening Mobility Solutions has been, Hanner is quick to point out that it has not been without its problems. “We're a social service agency. We provide a service. This is the only part of our service that is retail. We've never done this before,” she says. And since HME is not traditional retail when coupled with Medicare, Medicaid and insurance, there were a few miscalculations.
“I really missed the boat with how long it takes to get paid,” Hanner says. “It's hard to wait for Medicare and Medicaid to pay,” she adds. “You have the huge amount of cost out there before you have your money.”
Because of LSI, which has annual revenues of about $22 million, and the fact that she was conservative in her revenue estimates, the payment delay hasn't been as troublesome as it might have been for a private individual starting the business.
But billing HME — well, that has been a huge challenge, Hanner relates. “Our biggest learning curve is, ‘How do we bill this?’” she says.
Since her office support is only part-time, the home health care biller is learning to be a biller for HME, she says. “We looked at the cost-effectiveness of outsourcing our billing, but we need to learn to do it the right way the first time around,” Hanner says.
Always one to meet a challenge head-on, she has set up a mini-trade show to help her staff with the learning curve. “We have 11 vendors coming,” she says. “One vendor is going to provide [physical therapy and occupational therapy] training, and someone else is going to talk about Medicare billing.”
She's also grappling with HME software. “I wanted to get the software under control and then get accredited,” Hanner explains. Because LSI won't face competitive bidding in the first round, “that's going to buy us some time to be accredited,” she says.
In the meantime, Hanner believes HME can make a huge difference to those LSI serves and already, she has big plans for helping those clients expand their horizons.
“My plans are to tap into resources,” she says, noting that she hopes to use the services of a resident grant-writer to capture existing state waivers for home and vehicle modifications.
She is also trying to muster monies to handle copays for people for whom it is a hardship. Because, in the end, Mobility Solutions, like LSI, is all about helping those in need. “Our mission is to serve people,” says Hanner.
