In today's economic environment, most Americans are looking for new opportunities and ways to enhance their current business strategies. For home medical equipment providers, that notion may seem daunting. For one thing, national competitive bidding has again become the elephant in the room. Likewise, capped rental for oxygen payments means harmful results for both providers and patients. DME cuts are also having an impact.
However, respiratory experts say opportunity exists — and providers can look to technology to increase their bottom line.
“Despite our industry's constant challenges with government policy and reimbursement, the opportunities in home respiratory care continue to grow. Chronic respiratory disorders, including COPD, asthma and obstructive sleep apnea, are at the center of the health care storm,” says Joe Lewarski, vice president of Invacare Corp.'s respiratory group. “As these disorders continue to grow in both incidence and cost, effective management and treatment in the home becomes even more critical.”
Ron Richard, CEO of SeQual Technologies, points out simply that people are going to need respiratory care going forward and more of it.
“What I look for in business is growing markets and segments of those markets that have sustainable growth. The respiratory market is a large, growing market,” he says. “If you are in home care, you want to take a serious look at it and also look at your current product lines that demand a lot of time and capital that are not contributing as much revenue and profits to your business as respiratory could.”
Technology that Delivers
In all areas of home respiratory care, new technologies continue to be developed to meet the needs of a growing population of patients. Most notably, the request for smaller, more portable devices is on the rise. Not only do patients want to remain active but their physicians want them to as well.
The oxygen market is now punctuated by lightweight, portable devices that offer non-traditional delivery options.
According to Bob Fary, vice president of strategic alliances for Inogen, providing operationally efficient portable devices to oxygen patients is important as larger, heavier equipment discourages ambulation. “This includes small, portable devices that weigh less than 10 pounds,” he explains. “These are the devices that are best for the mobility of the patients and are also endorsed by physicians who have or want healthier, more active patients.”
Richard says HME providers who are already servicing oxygen patients are looking at re-tooling or revamping their operations. “They are adjusting their delivery model to non-delivery or a mix of delivery and non-delivery and are evaluating available technologies that will have an effect on the bottom line,” he says.
Kristin Mastin, director of marketing for DeVilbiss Healthcare, agrees. “All providers should investigate leveraging technology to optimize efficiencies within their business. For example, transitioning to a limited oxygen delivery model with transfilling systems or portable oxygen concentrators can have a substantial positive impact,” she advises.
In addition, the diagnosis and treatment of patients with sleep-disordered breathing continues to increase, making this area attractive to providers. Yet new regulations do require a change in how patients are monitored.
“The sleep market probably offers the greatest opportunity for providers,” says Mastin. “However, the new CPAP LCD requires compliance monitoring of all CPAP users. Providers should focus on creating and implementing an effective OSA patient management protocol.”
The portable nebulizer segment is growing as well due to increased demand from patients. Patients who suffer from COPD and asthma now have the option of smaller portable nebulizers, which have been developed by utilizing cell phone technology.
Portable nebulizers offer several advantages, according to Tim Gordon, director of marketing for Philips Respironics' respiratory drug delivery division. He says providers can offer them as a retail product, enhancing cash sales, for COPD patients who are active and like to travel.
“These patients may have a tabletop compressor for use in their home, but many of them are not keen on taking it with them and a portable device is perfect for them, particularly if they have disposable income to pay for it,” he says.
Gordon also says there is an opportunity for HME providers who want to provide portable nebulizer units that come with an A/C power cord and a car adapter as well as reusable nebulizers, which are reimbursed every six months.
Successful Strategies
To be successful in home respiratory care, providers must take steps to ensure their overall operations are fine-tuned and realistic in relation to their capabilities.
According to Lewarski, before any operational adjustments are made, providers much embrace change. “Strategies and tactics that proved successful in the past may not apply today, so being flexible and open to changing your business model is important as the industry changes shape,” he advises. “Avoid dogma and challenge your company with new ideas.”
Richard's advice includes focusing on a specific sector of the market and becoming an expert on it. “If you do this, you start to get rid of a lot of the disruptions and a lot of the products that are distracting the business,” he explains. “Then, your business is refined and your operations are focused on one or two core parts of the market.”
DeVilbiss' Mastin says in terms of being successful in the sleep market, providers should have a protocol that includes a means to track their average compliance rate for CPAP, which can be used to enhance referrals. “In turn, they can market their program and compliance rates to referrals. Replacement items, such as interface cushions or pillows, are crucial to effective and adherent CPAP usage. In addition, they provide a trailing revenue stream for providers,” she says.
This strategy also works for nebulizer replacement.
“Often providers do not have a systematic way of following up with their patients to make sure they have a reusable nebulizer that offers optimal therapy,” says Gordon. “Getting patients on reusable nebulizers in the home is advantageous for patients and providers.”
In addition, Gordon encourages providers to look at areas of care that overlap or those they have not paid attention to in the past, such as the common need of nebulizers for oxygen patients or children who have exercise-induced asthma.
There are several operational steps providers can take to enhance efficiency and lower costs, these respiratory experts say.
Lewarski urges providers to take advantage of technology and look for ways to eliminate non-value added processes. “Improved ERP software systems, the use of GPS and routing tools as well as the new oxygen technologies may offer your business tools that improve operational efficiency, help eliminate unnecessary costs, improve customer satisfaction and improve your costs and profitability,” he says.
Additionally, looking at costs associated with providing patient care is essential and can be a tough balance, says Richard. “You want to provide good patient care, but there is a cost associated with doing that. There is a risk of over-servicing someone, so analyze your market and make sure what you are doing is really meaningful to the patient and the referral source. Understand what the needs are within the confines and restraints of your budget.”
Richard says he has seen an increase in companies that want to integrate product offerings vertically. For example, companies are interested in the overlap between sleep patients and those with chronic lung disease, which he says could drive more providers to focus on disease management.
“I urge providers to use disease management as part of the care package. If you have a sleep patient who has diabetes, then you should offer diabetes supplies as well,” he says. “You are seeing more overlap in managing comorbidities out of one location, and people are starting to specialize in that model.”
Referral Satisfaction
Providers should work to improve relations with referral sources and patients to increase positive outcomes, both clinical and financial.
“‘Referral’ source is a broad term that includes myriad people who often have conflicting expectations,” says Invacare's Lewarski. “Something important to a physician or therapist may be quite different from the expectations of the social worker or discharge planner.
“Effective communication, education and establishing clear and realistic expectations for the relationship can lead to a mutually beneficial and successful relationship.”
Gordon advises providers to ensure their salespeople are knowledgeable about patients' conditions, treatment options and products. Basically, don't just try to sell a product, sell information and education on the disease and treatment.
“The more knowledgeable your sales force is in this area, the more credible they are going to be with the physician. That is an important fact,” he says.
In terms of oxygen patients, providers can work closer with referrals to improve outcomes by making sure that the devices they provide actually saturate the patients, according to Inogen's Fary.
“Significant numbers of oxygen users who utilize continuous flow concentrators still desaturate at night. Most providers do not have periodic overnight oximetry as a part of their program,” he says. “Working with physicians to ensure that their continuous flow patients are saturating will improve patient outcomes.”
So, whether you are looking to get involved in the respiratory market or are considering expanding the respiratory services and products you currently offer, there is opportunity.
“The demand for home oxygen, aerosol and sleep therapy is increasing, and the home is the preferred environment of care. Although the rules of engagement are changing, the opportunity still remains,” says Lewarski.
Richard agrees. “It is not business as usual. Look at what makes the most sense and what helps you maintain profitability, but make sure you do not cut such corners that you are going to be absent in terms of capability and taking care of patients.”
Experts Interviewed
Bob Fary, vice president of strategic alliances, Inogen, Goleta, Calif.; Tim Gordon, director of marketing, respiratory drug delivery division, Philips Respironics, Murrysville, Pa.; Joe Lewarski, vice president, respiratory group, Invacare Corp., Elyria, Ohio; Kristin Mastin, director of marketing, DeVilbiss Healthcare, Somerset, Pa.; and Ron Richard, CEO, SeQual Technologies, San Diego
