Strategy:
Consider Carefully Before Dumping Medication Business
Published on Thu Nov 18, 2004
If you say goodbye to furnishing unit dose meds, your patients may say goodbye to your other business lines too. Small suppliers may find themselves in a Catch 22, where they'll lose money if they continue furnishing respiratory medications and lose money if they don't.
The Medicare reimbursement cut to average sales price plus 6 percent and a $57 monthly dispensing fee isn't enough to cover many smaller provider's costs (see story, p. 323). But exiting the business line isn't such an easy decision. Suppliers that turn their respiratory medication business over to another provider may see their patients' more lucrative business go to that company as well, experts warn.
Suppliers risk losing clients who are current oxygen patients if they quit furnishing their respiratory medications, predicts Wayne Stanfield with Home Care Pharmacy Inc. and Prince William Home Medical in Man-assas, VA. Patients' nebulizer business could also go to the new company, says Jeff Wills with CV Medical Solutions Inc. in Oklahoma City.
And if suppliers build a relationship with respiratory med clients, the patients could have more durable medical equipment needs as time goes on, such as hospital beds and wheelchairs, notes Harold Davis, respiratory specialist for VGM Group's Nationwide Respiratory division. When providers are deciding whether to continue furnishing unit dose meds, they have to consider whether staying in the business "will pay off bigger as time goes on and the patient's needs increase," Davis tells Eli.
Because furnishing unit dose medication will be financially feasible only for volume providers, suppliers won't be able to refer patients to their local neighborhood pharmacy to take over their prescription. Instead, suppliers will probably have to refer patients to national pharmacies that have ties to durable medical equipment companies.
Once those nationals - i.e., Lincare, Apria, American HomePatient or Rotech - get the respiratory medication business, they'll be sure to pursue the patients' other DME-related accounts as well, especially oxygen, experts predict.
"These patients are easily swayed," worries Sam Clay of Kirkpatrick's Pharmacy and Clay Home Medical in Petersburg, VA. "It's a real problem for small providers."
"It's very frightening," says Stanfield, who plans to shut down his home care pharmacy but keep his DME company going. Independent suppliers "will be really hurt by this."
Suppliers will have to crunch the numbers and decide if they should risk medication patients' other business to drop the respiratory medications business, says Wills, also chair of the American Association for Homecare's Home Medical Equipment/Respiratory Therapy Advisory Council. This decision is "being discussed in many boardrooms and offices in small to medium companies" right now, he notes.
"The decision to use inhalation drugs as a break-even or loss leader is one that each provider will make on their own," notes Joseph Lewarski, president of [...]
