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by: Mike Moran - Wednesday, December 26, 2007

Now that Philips Electronics has acquired Respironics for $5.1 billion, there's all kinds of speculation that the other key manufacturers in the sleep market might be ripe for the picking. News of the Respironics deal last week boosted the stock of both ResMed and Fisher & Paykel significantly. If you don’t own these stocks individually, maybe they are part of your 401k or IRA accounts. If you are out of luck in both cases, remember, there's more to life than money.

Here's some of what’s the being tossed around in the mainstream media about the sleep market and the Respironics deal:

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Just Like Heaven full movie NEW YORK (Associated Press) - Shares of Respironics Inc. hit an all-time
high Friday, Dec. 21, after Dutch conglomerate Royal Philips Electronics NV bid $5.1 billion for the respiratory medical device maker. The news also pushed shares of rival ResMed up sharply.

Respironics shares rose $12.21, or 23 percent, to close at $65.32, having
hit a new high of $65.54 earlier in the session and approaching the $66 per
share buyout offer from Philips. The purchase price represents a 24 percent
premium to Respironics' closing price Thursday.

The deal shone a brighter spotlight on competitor ResMed, which saw shares
rise $6.10, or 13 percent, to $53.09. The stock has traded between $38.34
and $56.16 over the last 52 weeks.

"We view the acquisition as good for Respironics, a positive for ResMed, and
a signal that M&A is still alive and well in medical technology," said BMO
Capital Markets analyst Joanne Wuensch, in a note to investors.

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And…

Dec. 24 (Bloomberg) -- Fisher & Paykel Healthcare Corp., the New
Zealand-based maker of breathing masks to treat sleep disorders, rose to a
three-month high in Wellington after the takeover of a rival stoked

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speculation about more mergers.

The Auckland-based company jumped 3 percent to its highest since Sept. 20, after Respironics Inc., the world's largest manufacturer of the breathing devices, was acquired by Royal Phillips Electronics NV for $5.2 billion in cash.

Fisher & Paykel has about 7 percent of the market for products to treat
obstructive sleep apnea, a condition thought to affect as many as 12 million
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Americans. It is among a handful of companies with U.S. Food & Drug
Administration approval to sell OSA devices, along with Respironics and
Poway, California- based ResMed Inc.

``They definitely could be a takeover target because the OSA market is very attractive with its high growth,'' said Stephen Walker, who manages the equivalent of $107 million at Walker Capital Management Ltd. in Auckland, including Fisher & Paykel shares. ``The Respironics acquisition ups the valuations of the sector to anyone else interested in it.''

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ResMed, which is the second-largest maker of sleep apnea products after

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Respironics, surged the most in more than two years on the New York Stock
Exchange after JPMorgan Chase & Co. analyst Alexander Smith said it may also generate takeover interest. It climbed 6.5 percent on Australia's stock
exchange today.

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by: Mike Moran - Friday, December 14, 2007

The news out there is bad, but it's not all bad.

While the New York Times ran a biased expose (Nov. 30) about how Medicare pays too much for oxygen, the Missoulian (Missoula, Mont.) ran a more balanced article on the home respiratory industry, and NBC News ran a two-part series (Dec. 10, 11) that spotlighted Medicare's huge fraud problem ($60 billion a year), CMS's inability to control it, and the fact that these brazen criminals give all honest Medicare providers (not just HMEs) a black eye.

The HME industry really needs to take advantage of reports like those run by NBC Nightly News and the Missoulian. Show them to lawmakers and regulators; express your outrage; demand that something be done--something that targets the crooks not the entire industry.

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Can you believe it? $60 billion a year! It's enough to turn your stomach. I wonder how much that would decrease if CMS invested, for example, an additional $3 billion into program intergrity efforts and other strategies to combat fraud and abuse? I bet the pay back would be significant. So significant, I suspect, that Congress would not have to cut oxygen reimbursement for standard concentrators by 40% (as they are now contemplating) to eliminate a 5% cut to physician reimbursement in 2008.

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by: Mike Moran - Friday, December 14, 2007

The Government Accountability Office (GAO) released a report today that shows doctors and other Medicaid providers owe billions in unpaid taxes. The GAO has been investigating federal tax abuse since 2003, and this is the fifth report that the agency has forwarded to the Senate’s Permanent Subcommittee on Investigations.

Torn Curtain video The GAO found that more than 30,000 Medicaid providers, about 5% of those paid in fiscal year 2006, had more than $1 billion in unpaid federal taxes. Medicare providers had another $1 billion. The report cites examples of those providers using the savings to subsidize multimillion-dollar homes and fancy cars and boats. It also cites patient abuse and other violations.

While the GAO report doesn’t name home medical equipment providers, specifically, it cites violators in the homecare and home health services fields.

The mainstream media Motel Hell and Congress took to the report’s steal-from-the-poor-to-pay-for-the-rich theme like fishes to water, as they probably should. Sen. Norm Coleman, R-Minn., told USA Today: “These doctors are supposed to be serving the most needy. Instead, they are cheating taxpayers in order to line their pockets. These are not your everyday tax cheats. These are healthcare providers that receive billions from Medicaid every year.”

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Hopefully, you're not a homecare provider who has some explaining to do.

Liz

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by: Mike Moran - Wednesday, December 12, 2007
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If you’ve got any pull with a U.S. representative or senator, you better reach out to them ASAP and explain why they should vote against deep cuts to Medicare oxygen reimbursement.

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As of this morning, the Senate Finance Committee was considering legislation that would cut reimbursement for stationary concentrators by 40% to $120 a month and a provision to cut reimbursement for traditional portable oxygen tanks by 15%. It doesn’t include a cut for new non-delivery technology: portable oxygen concentrators and transfilling concentrators.

The House of Representatives wants to reduce the cap on Medicare oxygen reimbursement from 36 to 18 months.

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These cuts are all part of a Medicare package being crafted to help lawmakers avoid cutting Medicare reimbursement to doctors by 5% beginning Jan. 1.

One provider told me that while in Washington yesterday, he saw a lot of doctors walking around and they didn’t look worried. That’s not good news for HME providers.

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If it was me, I’d call, fax or email all my representatives and encourage my patients to do the same. Explain why these cuts are bad for patients and the industry.

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12:01 movie download I know it’s the holiday season, but if lawmakers pass these drastic cuts to oxygen reimbursement and President Bush signs off on them, there won’t be much to celebrate for HME providers.

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by: Mike Moran - Friday, December 7, 2007

NBC Nightly News bumped its two-part report on Medicare fraud from Dec. 5 to Dec. 12 and 13. Looks like the story will include a close but balanced look at the DME industry.

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The New York Times Nov. 30 article on Medicare oxygen reimbursement—an article the industry found biased and often inaccurate—has generated numerous letters to the editor and industry reponse.

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Click on the following links to see what people are saying:

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Invacare
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This Web posting seems to raise questions about how sleep labs should bill for testing.

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Here’s an interesting story about a hospital-based HME with almost $100,000 in unpaid bills.

by: Mike Moran - Wednesday, December 5, 2007

Tune into NBC Nightly News this evening, Dec. 5, for a report on Medicare fraud and abuse by correspondent Mark Potter. Unlike a New York Times story that ran Nov. 30, this report looks like it might be fair and balanced. Potter places the blame where it belongs: on the crooks, not legitimate HME providers.

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To get a first-hand account of what Potter found while reporting on fraud, click here To Kill a Mockingbird trailer

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by: Mike Moran - Monday, December 3, 2007

I received an interesting email Friday in regards to the story in the New York Times, “Golden Opportunities: Oxygen Suppliers Fight to Keep a Medicare Boon.” If you haven’t read it, the Nov. 30 story is a long, biased article on how Medicare pays too much—according to the industry’s critics—for home respiratory therapy. To think that the New York Times would publish such a dumbed-down, unbalanced account of what really happens inside the HME industry really surprises me. But maybe is shouldn’t. This wouldn’t be the first time a Times reporter wrote fiction masquerading as objective, factual reporting. Remember Jayson Blair? This once venerable paper does not have the credibility it had 10 or 15 years ago, and the industry should not fail to point that out.

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Anyways, I digress. Here’s what the email said:

“In a strange way, this negative article planted by our opponents and the high level of attention and effort we are receiving in DC is actually a misdirected compliment to us as an industry. Only after long and consistent grass roots lobbying combined with traditional lobby work have we finally made an impression in DC. Five to seven years ago we barely got much response on the hill. Now look at us...this article makes us sound a more powerful lobby then tobacco or the teacher's lobby.”

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Well said. Can you believe that over the past two months both National Public Radio and the New York Times have devoted significant coverage to the tiny HME industry? Unfortunately, a lot of that coverage has been bad, focusing on fraud and abuse and the perception that Medicare pays way too much for home oxygen.

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The Death and Life of Bobby Z video Nevertheless, the fact that opponents have gone to such lengths to smear HME providers says much about the industry’s lobbying and grassroots advocacy efforts. The people who have taken part in these efforts have done a very good job. It’s thanks to them that the HME industry has arrived as a player in the healthcare continuum. If you are not a player, a threat to other special interests, you don't turn up on the front page of the New York Times.

As bad and misleading as the Times story was, it also presents an opportunity to set the record straight. These kinds of articles spur debate, and don’t come around too often.

The key now is to hit back hard: keep the story alive but spin it to the industry’s advantage. Remember what happened to John Kerry in the 2004 presidential election? He got smeared over his service record in Vietnam, took his time returning fire, and never recovered.

If the industry can find some way to seize the day—to use the Times' story to convince legislators and the public that HME/homecare is part of the healthcare answer and not some shadowy villain—this could get interesting.

by: Mike Moran - Friday, November 30, 2007

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The New York Times took it to the HME industry today with a front-page story that started out like this:

Golden Opportunities
Oxygen Suppliers Fight to Keep a Medicare Boon
By CHARLES DUHIGG

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Medicare spends billions of dollars each year on products and services that are available at far lower prices.

Duhigg’s been working on the story for a month or more and it appears to be as damning as industry watchers had expected. And with Congress considering additional cuts to the Medicare DME reimbursement, it couldn’t come at a worse time.

The story does quote industry supporters (Invacare’s Joe Lewarski; Peter Kelly, president of Pacific Pulmonary Services; VGM President Ron Bendell; and Sen. George Voinovich, R-Ohio), but overall it slams the industry as a bunch of greedy entrepreneurs who apply political pressure to reap excessive Medicare payments. Not surprisingly, Duhigg crafted his story so that industry supporters, while surely not intending to, come off as more defensive than sympathetic.

For the industry, this is going to require some major damage control.

by: Mike Moran - Thursday, November 29, 2007

I hope this is not an omen of things to come. A story on the wires today reported that Anthem Blue Cross and Blue Shield has unveiled a new barebones health insurance plan that, among other things, does not cover durable medical equipment.

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The plan offers catastrophic coverage and is intended for employers struggling to offer benefits to their workers because of the rising cost of premiums. Anthem said the plan's premiums are up to 70% cheaper than those for a full-range preferred provider organization plan.

Of course, it doesn’t cover “visits to urgent-care centers or for durable medical equipment such as wheelchairs that commonly are covered in more comprehensive plans.”

This is just more evidence that our nations’ healthcare system needs a serious overhaul. Until that occurs, expect HME to be under continuous attack from the bean counters. When it comes to lobbying for industry interests, there will be no rest for the wear any time soon.

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by: Mike Moran - Wednesday, November 28, 2007

This strikes me as kind of odd, but maybe it is not. In a recent poll

, we asked providers the following question: Do you use special events like World COPD Day and Breast Cancer Awareness Month to promote your business and product offerings?

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How many do you think said they did?

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A. 90%

B. 75%
C. 25%
D. 9%

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Granted, the results probably do not qualify as statistically valid. Sixteen providers logged onto the poll but only 11 answered it. Of those 11, 10 said they did no marketing around special events like World COPD Day.

Ten out of 11 do nothing. Huh (duh?). I would have expected, at a minimum, that the results would have broken down 50/50. It seems logical that providers would take advantage of such an obvious opportunity to promote their business and services, to draw public attention to these chronic disease states and the HME therapies available. Doesn't that sound like a good thing to do?

Like I said, this is not a statistically valid or scientific study, but it is, nonetheless, troublesome. It reconfirms that a lot of HME providers don’t understand the new consumer-based healthcare paradigm. In case you haven’t heard: Consumers want information that helps them make decisions. If you’re not tapped into this, you’re missing a great opportunity.

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Good Luck Chuck hd The days of simply relying on referral sources for business are gradually diminishing in importance. As reimbursement declines, the industry must offset that by growing the market. You do that by educating consumers about COPD and other chronic disease states—sleep disordered breathing and obesity, for example. You’ve got to believe that a lot Medicare beneficiaries as well as younger folks have these chronic diseases but, for a variety of reason, have not sought medical help. One reason, I suspect, is because they don't know help exists; they don't know what products are available, who makes them or who provides them. Do you think the pharmaceutical industry would allow this situation to continue? No way. They’d start licking their chops over all the business to be had.

The bottom line: Cultivate referral sources but also grow the market. Feed the pipeline.

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