Q. With the reimbursement cuts scheduled
for 2005, which areas of HME/Respiratory
will mostly likely add value for my efforts
over the next several years?
A. With the continuing attacks on reimbursement
rates for oxygen and respiratory
medications, we see many dealers looking for
ways to profitably diversify their business
model. There are several things to keep in
mind as you consider possible alternatives.
Look first at expanding your services to
other complementary products that share
your same referral sources and expertise. If
you provide oxygen, make sure that you are
positioned as a full service respiratory specialist
by offering CPAPís, BiPAPís, nebulizers
and other respiratory equipment. Also review
your contracts and make sure you have
access to as many of the payors as make sense
for your existing product lines.
In evaluating new product lines, consider
products that provide an uncapped recurring
revenue stream from each patient. Enteral
nutrition is one area to consider. Others
might include various types of supplies (diabetic,
urological, etc). As with any new line
of business, be sure to evaluate where your
referrals will come from and which payors
will be important to any new market segment.
You may also want to consider alternative
operational models like mail order or
drop ship to help you achieve a profitable
scale in some of these areas.
Whichever direction you go, focus your
efforts. The one stop shopping concept is not
one that we have ever seen work profitably.
And donít lose sight of the fact that oxygen
will remain one of the most profitable lines of
business, even after any MMA cuts.
Richard Glass is the President of SRA,
specializing in the growth and sale of HME/
Respiratory companies. 800-813-4984.
Reprinted with permission of HME News from the June 2004
issue. ©2004 United Publications, Inc., Yarmouth, ME.