Survival of the fittest

The world according to Tom Inman A top provider looks everywhere for savings NEWPORT NEWS, Va. - There may be some HME providers out there who have not begun changing their business model to accommodate Medicare's new reimbursement cuts, but Tom Inman isn't one of them. Whether it's purchasing new respiratory technology to decrease his delivery expenses, converting to a more streamlined paperless office or improving his truck routes by investing in a GPS system, the president of Virginia Home Medical is leaving no stone unturned in his efforts cut costs. “It's not a question of trying anymore,” Inman said. “You have to do it.” Last month, we talked with the 2003 HME Excellence Award finalist to get his take on what providers need to do to survive in the current environment of dwindling reimbursement. HME News: Is there a key to operating in this environment? Tom Inman: You've got to know your fixed costs and then build your model around them because you have enough variable costs. If I know my fixed costs (labor and oxygen), I can do a profit analysis by patient and decide on what my options are to continue to serve that patient. What technology can I use to reduce my costs so that I can break even or make a profit? Now I know where to look to cut my costs. I'm not making a blanket policy decision that typically upsets 80% of our patients or is inappropriate for them. I'm also not spending way too much money to put out equipment that is overkill. Why give a (transfilling concentrator) to a guy who only uses three portables a month? HME: You mentioned that a lot of your oxygen patients pick up their own cylinders. How do you get them to do that? Inman: It depends on how your CSR and your respiratory therapy staff sells it. They can say, ‘Ma'm, we'd be more than happy to delivery it, but if you are going to be out, we're not going to tie you down for four hours. Come in at your convenience. We're here 9-5.' Does the patient want to sit there and wait, or say, ‘I'm going to be out anyway, and I'd rather drive five minutes out of my way and get the tanks while I'm out.' HME: As you begin to change your oxygen delivery model, whether it's using transfilling concentrators, 5 to 1 conserving devices, or new liquid units, how do patients respond? Inman: You are going to find patients who say, ‘I don't like that. I want what I had before, and I want you to deliver my tanks twice a week.' It is, ‘Excuse me, ma'm, but here is Lincare's number. I'm done.' I can't afford to lose $200 or $300 a month on a patient simply because the patient is going to dictate how I deliver service. In the past, that is something we just rolled over on. For the first time in this industry, I think the provider may well end up dictating the level of service the patient will get. And if some joker wants to go and deliver someone tanks three times a week, have at it. HME: You said you are fairly close to “pulling the trigger” on a paperless office system. Why is that? Inman: It's about the workflow: No data entry. No physical retrieving of data. You are only dealing with a piece of paper once, which means you don't have all this filing to do all the time. It's a labor issue. HME: As far as Virginia Medical goes, the future looks much different than the past. Inman: I think there is the possibility in this industry, and I think it has happened some, that we'll we get to the point that we have our costs down and know what we can do and what we can't do. The ball park figure is that it takes you $50 to get a vehicle to someone's house. Medicare oxygen reimbursement is going to be slightly over $200, that is if you have portable and if you collect the coinsurance. If you see that patient four times a month, delivering portables once a week, why are you in this business?