Use ‘The Force’ to evolve in growing market
If you’re anything like my family, making a visit to the local cinema to watch the new Star Wars film was a must-do. My three boys were fascinated with the movie and characters, just as the original Star Wars had captured imaginations a generation ago. Based on the enormous box office numbers, it’s still a great time to be in the Star Wars business, just as it was when the original movie premiered in 1977.
The original Star Wars debut coincided with the beginning of the modern DME business. The Health Care Financing Administration launched a DME demonstration project in 1976 that helped lay the ground work for the evolutions in wheelchairs and home oxygen, among other assistive technology used outside institutional settings.
The 38 years between Star Wars’ first and most recent editions brought tremendous growth in HME. There are some surprising statistics for this time period regarding demographic changes in the U.S.
There were 24 million Americans 65 and older in 1977. Today there are 48 million. That’s an increase of 24 million seniors in a span of 38 years. But in the next 15 years, we’re going to add 26 million more seniors. There will be 3 million more people over 85 in 15 years, five times the number than when Star Wars originally debuted.
In 1977, 13% of America was obese. Today 36% of Americans are obese and by 2030 that will likely reach to nearly half the U.S. population. Fourteen million more Americans have diabetes than in 1977. Sadly, on many measures of health, our society is much worse off today than back in 1977.
Today, approximately 90% of our population has health insurance coverage of some type. Perhaps surprisingly, that’s about the same level of coverage as there was back in 1977. But in between, the insured rate dropped to less than 80%. There are 16 million more people with a third-party payer, as compared to a few years ago, which is a huge win for healthcare providers of all types.
It’s also worth noting that seniors still are not asking, “How soon can I move to the nursing home?” There are very few markets with this type of growth built into the next two decades.
Just as Jedis must combat the forces from the dark side, we in HME face daunting challenges. Reimbursement rates continue to decline, payers are narrowing open panels, and restrictive regulatory requirements cut into our business. HME suppliers must make changes in order to thrive. New revenue sources are needed—from capturing more market share of key referral sources, to offering compelling solutions beyond equipment, to adopting new products and technologies, to implementing cash business, to targeting more cost-effective operations. Make no mistake: These required changes will involve more tough decisions and some pain. But there will be a payoff. Investors are actively buying up HME assets and operations; they see the long-term opportunity.
The Star Wars franchise is alive and well, with even more movies to come. Our HME industry is also alive and well. Sure we face immense challenges, but the future is bright for those willing to mimic Luke Skywalker and persevere, adjust and evolve to meet the needs of the rapidly growing market.