TIME TO RETHINK THE HME SERVICE MODEL

Back in 1999, as an industry consultant, I wrote a special report for HME News called “Lessons from Polk County.” In 2001, I left home care to re-enter the hospital world. But in May of 2011, I returned to home care as director of procurement at Univita Health, where I served until October of 2014. In January of this year, I re-entered the consulting world through my company Valumatrix, LLC. Today, I see DME companies as heroes in health care who help patients live independently in their own homes, and as Dorothy said in the Wizard of Oz, “There is no place like home.”

But I also see an industry that for all of its efforts just cannot seem to get the government and insurance community to recognize its enormous value in helping keep patients out of the hospital. Instead, the focus is on the cost of widgets and how to save another nickel off of the cost of a $1,000 item even though, when that item is used correctly and consistently by the patient, it will save tens of thousands of dollars in prevented hospital readmissions.

And I see an industry that swallows hard with each new cut in reimbursement, but continues its steadfast commitment to giving its patients nothing less than stellar service and outstanding care.

Today, when we look around, we see that our ranks are thinning as more of our friends and competitors have sold or closed their doors. This industry faces many challenges, but there is one in particular that is rapidly becoming our Achilles Heel. For many—and perhaps most—DME providers, the revenue model no longer financially supports the service model. And that is rapidly catching up with us. So one of those models needs to change. We have tried to change the revenue model, but without mounds of solid data to make our case and a massive re-education campaign targeted at our government and health plan customers, that is not going to happen soon enough. So that means changing the service model. It means looking at what we deliver to our patients, how we deliver it, how soon it really has to get to them, and what we really need to do in terms of set up. Our revenue model is based on us being a delivery service, not a patient care organization. If you don't believe me, check out the DME HCPCS from CMS or any state Medicaid program and see how many codes there are just for specific patient care services. Or how many codes include the word “service” in the code description. They might assume it, but they don't include it. In other words, they are not paying for it. The UPS driver won't take your patient's walker out of the box and set it up, and right now our revenue model is based on us being UPS or some other carrier. So at least for some products, we will need to adapt and rethink our service model.

One of the places where we invest beyond our level of return is in servicing patients who are being discharged from the hospital and who are in need of a walker. If we service a large metropolitan area, we just cannot have a neb closet in every hospital. Yet we have to get a walker to a patient within four hours of discharge per our agreement with the health plan. That means a very costly extra trip or a costly reroute of a driver who already has too many deliveries for his shift. We have no way to make up for that extra cost, but we bite the bullet and eat the cost. This is where we need to get creative. Not every item really needs to get to the patient the day of discharge. So why not engage the payer community in a discussion over which products really need to get delivered within four hours of discharge? Or can we find alternative delivery methods that won't cost us as much as doing it ourselves. We need to ask every question that we have believed for decades that we already knew the answer to.

Some of the people reading the last few sentences may be feeling a lump in their throat or tightness in their chest. But let's be clear about something. This is not about giving up or questioning past decisions. Rather, it is about looking forward and understanding that not every product requires the same level of patient support.

It is also about focusing our efforts on those products where the services of a technician or therapist are absolutely essential to the well-being of the patient.

And it is those products where we need to start to create our value proposition to the health plans and to the government. And when we do that, we will have leverage in the marketplace that we have not had in many years.

Lynn Everard is managing director of Valumatrix, LLC, a consulting, strategy and content company committed to helping clients meet the challenge of managed care. He can be reached at 954-647-3554 or leverard@valumatrix.net.