Home Health & Hospice Week

What category does your business fall into?

If you're pitching the right services to the wrong market, it could be game over for your durable medical equipment business.

DME providers must take special care to match their product offerings and business processes to payer types, advises Wallace Weeks, president of the Weeks Group of Melbourne, FL, in a report assessing the impact of the Medicare Modernization Act.

The industry is divided into 12 playing fields based on four different provider types (full-service, low-cost, niche and super-niche) and three payer types (Medicare, managed care and retail), Weeks says in the report

For example, Lake Forest, CA-based Apria Healthcare Group Inc. is a niche player because it's a full-service provider with most revenue coming from managed care, Weeks classifies. Clearwater, FL-based Lincare Holdings Inc., on the other hand, is a super-niche player because it focuses on oxygen services and gets most of its revenue from Medicare.

DME providers will be able to find success on only some of those playing fields, Weeks asserts. For example, he doesn't believe a full-service provider can succeed under managed care but instead must focus on Medicare. On the other hand, a low-cost provider will probably have to work at getting referrals from managed care companies.

"The first thing is to be sure you get on the right playing field," he advises.

A company must also take two steps to improve its productivity enough to absorb the payment cuts facing the industry, according to Weeks. First, a company has to grow its sales but not pass its sustainable growth rate. Second, it has to improve productivity.

"We have to be able to process those sales without adding to the head count of the company," he notes.