healthcare

Opportunities in HME

building blocks

CMS’s Office of the Actuary has published their National Health Statistics for 2016 (they always run about a year behind.)  A few interesting statistics in there about HME:

  • The annual growth rate across all HME categories will average about 6% a year for the next several years.
  • Unit growth and demand will result in total HME spend five years from now (2022) being nearly 30% greater than the HME spend in 2017.
  • The increase in HME spend in 2018 over 2017 – in terms of total dollars spent – will be a greater increase than in any year in the past decade.
  • Looking at 5 years ago vs 5 years from now, to gain perspective, shows Medicaid as the payer source that will have grown the most, by a fair margin. Private health insurance grows proportionately as well.  Medicare shrinks in proportion.  Said another way, Medicaid and private health insurance become more important to HME providers than they have been in the past.

Yes, those serving the HME space face many daunting challenges, there isn’t much argument over that.  But we do so in a market that is growing in dollars and growing much faster than almost every other segment of our economy.  Shifting sands are requiring us to change, to do things differently, to re-prioritize and to focus.   But opportunities abound.

 

Flip phone anyone?

download

Allow me to take you back to your first flip phone.  Remember how awesome it was, sexy, cool and high tech.  You were stylin’ and current, and you probably had a skip in your step.  Times change.  Seventeen years later, there are very few flip phones still in the USA.  Thanks, Apple.

Another hot item in Y2K was the oxygen concentrator accompanied with portable tanks.  OK, it wasn’t really a hot item, but it was dominant in the market.  In 2017, Inogen is going to sell about 45,000 portable oxygen concentrators (POCs) for cash through its direct-to-consumer channel.  POCs, theirs and many others like it, are dramatically superior for the user versus the alternatives.  Most people on oxygen are not offered a POC and don’t know the existence of the technology.  Despite that, POCs are approaching 10 percent market share and are the fastest-growing segment of oxygen therapy.  There are several lessons therein that should not be lost as you move into 2018.

  1. Be exceptionally good at your core. You don’t sell 45,000 POCs for cash in 2017 without being exceptionally good at it.  At its core, being “exceptional” is about disciplined and proven processes, methods and execution.  Whatever your core may be, that is where you must be exceptionally good.  The rest can be outsourced.
  2. Compelling products that solve problems move the needle. There have been many innovative new products launched and new technologies unveiled in recent years that impact your market and your customer base.  But, usually it is easier and safer (short term) to hang onto the base and cling to what you know.  Compelling products that are better for the customer have great power to drive your business.  A little scouting and you’ll be able to find several that fit your business.
  3. Patient-centricity matters. Health care has traditionally been physician-centric, not patient-centric.  Patient-centricity is a mindset and one that health care providers would be wise to adopt.  Offering POCs direct to the consumer was abnormal when it began in 2009.  But, thinking about the patient and how to meet their desires in the best way possible, patient-centricity, led to a successful direct-to-consumer model for POCs.  There are many similar opportunities in our market yet untapped.  To find them we must think beyond just want the doctor ordered to thinking about what can give the user a higher quality of life.
  4. Patient-pay is an exciting market. It’s good to be on the right side of mega-trends.  Patient pay in health care is a huge growth area over the next decade.  Those with the means will reach into their own pocket for a superior solution.  The POC, the stand-up wheelchair, the tool that eases pain are a few of many possible examples.  To capitalize you must offer the solution to your customer, and you must be adept in articulating the benefits and have the courage to ask for the sale.  And, please avoid the “they don’t have the money” mindset, after all they aren’t carrying a flip phone, are they?
  5. “New” should be part of your plan. A minimum of 5% of your annual revenues should come from “new.”  “New” can be new products or categories or referral sources or channels or payers.  You must regularly introduce new revenues into the business or it is likely to atrophy.

The HME space will grow significantly over the next five years.  Unit volumes vary among categories, but 7-10 percent growth in unit volume is a fair expectation.  Those rates of unit growth represent an extremely attractive market.  Serious problems will remain, notably continued compression of reimbursement, particularly for commodity items; narrowing participation panels brought on by payer consolidation; and non-traditional competition.  Every market has its challenges.  Selling flip phones in the U.S., as an example, certainly has its limitations. On the whole, HME remains a very compelling place to be.

TOP 12, EVENTS IN THE HISTORY OF WHEELCHAIRS AND THE PEOPLE WHO USE THEM – #1 – #12

 

 

Wheelchair Image

I offer my list of events in the timeline of wheelchair development, the acceptance of people in chairs and key milestones which forged people’s perceptions of wheelchairs and the people who use them.  Please join in the conversation – what’s on your list?

Image of Wheelchair Ramp

#1. Americans with Disabilities Act.

In 1990, Congress passed the comprehensive civil rights law addressing the rights of people with disabilities.  The ADA prohibits discrimination based on disability and requires reasonable accommodation to the disabled.  The original bill was introduced in the Senate by Iowa’s Tom Harkin and was signed into law by President George H.W. Bush.  The ADA has had a profound impact on workplaces, schools and public spaces – but not without controversy.  In the big picture, the ADA has brought millions with disabilities out of the shadows and into the mainstream leading to much higher quality of life for those with disabilities and a richer life experience for all.

Image of boy in wheelchair

#2. Superman in a wheelchair?

In 1995, actor Christopher Reeve, best known for his role as Superman, was paralyzed in a horse-related accident.  Reeve was a quadriplegic.  His fame and his determination to advocate for those who required the use of a wheelchair brought tremendous visibility to the cause.  In particular, Reeve’s efforts revealed the importance of complex rehab technology used in wheelchairs and the way it enabled users to pursue a high quality of life despite being confined to a wheelchair.

Image of couple in wheelchair

#3. Marilyn Hamilton and the Quickie Wheelchair.

In 1979, Marilyn Hamilton and two partners launched the Quickie wheelchair, a revolution in lightweight and fashion-forward chairs. Due to a hang-gliding accident, Hamilton became a T-12 paraplegic, but wasn’t willing to surrender her active lifestyle to partial paralysis. This Quickie chair was designed with an active lifestyle in mind but also, for the first time in a wheelchair, introduced a focus on design and visual appeal, in addition to enhanced freedom and movement. The Quickie represented wheelchairs and wheelchair users going on the offensive against paralysis – living an active, quality life regardless of any limitations. All the elements of the Quickie would be enhanced over time, but it was Hamilton’s vision that ignited a very big change.

Image of Student in wheelchair

#4. Judy Heumann overcomes bias and adversity to teach school.

Our Country’s treatment of people with disabilities has come a long way since Judy Heumann was forced out of school in the 1950’s. Her crime? She was confined to a wheelchair. With the help of persistent and dedicated parents, Judy got an education, graduated from college and qualified to become a teacher. She was very bright, articulate and caring. But the Board of Education refused to grant her a license to teach school because she had the audacity to be confined to a wheelchair. Her struggle ignited a passion to fight for the rights of people with disabilities and her efforts were instrumental in creation of two landmark laws, the Individuals with Disabilities Education Act (1975) and the Americans with Disabilities Act (1990). Today, people would not imagine this blatant discrimination, but in that era it was commonplace, which is why her battle to overcome it is in my top 10.

Person in wheelchair playing tennis

#5. Wheelchair developments make life more accessible

The ability to fully participate in the regular activities of life may be the holy grail for wheelchair users.  Recent engineering and technology advances have opened up the world to people using wheelchairs in a way that was never before possible.  One of the best examples is the standing powerchair, a product greatly enhanced and mainstreamed in recent years by Permobil.   Standing chairs offer clear health benefits such as pressure relief, advantages in bowel control and respiratory function.  But perhaps more importantly, standing and moving are life-changing.  Standing allows reach, function and social interaction which removes many barriers and equalizes in a way not before available to a wide range of wheelchair users.

Image of US Capitol

#6. Reduction in Reimbursement

Around the dawn of this century, Congress and bureaucrats from Medicare began a fifteen year run of reducing Medicare and insurance reimbursement for wheelchairs. This took various forms, including many steps to restrict access to wheelchairs and power mobility equipment and to reduce the amounts paid for wheelchairs. The effects of this multi-pronged effort was a reduction in the curve of innovation, a downgrading of the equipment available to wheelchair users and significant reduction in the number of people able to improve quality of life through wheelchair products. Some of this policy change was driven by a dramatic escalation in direct to consumer advertising which, on the positive side, made millions of people aware of how wheelchair technology could enhance their quality of life, but many payers and regulators took a negative view of the significant increase in the number of people using such medical devices. Bizarrely, Medicare, by policy, covers power wheelchairs used “inside the home” only. Policies created by the bureaucrats at Medicare don’t have to make sense, and often don’t.

Mobile Wheelchair Image

#7. Invacare’s First Power Wheelchair.

Invacare, led by maverick Mal Mixon, launched its first power wheelchair (the Rolls Arrow) into the marketplace in 1983. The chair was user-centric and was equipped with electronics, which were advanced for the time. That chair was the first of many advancements in power chairs brought to the market. More and better chairs would come, but this one spurred the market, drove innovation and led to a much greater focus on the needs of the wheelchair user.

Vote Buttons Image

#8. The 2016 U.S. Senate election in Illinois.

This contested election was between two candidates who are physically disabled, both of whom regularly use a wheelchair. Tammy Duckworth lost both her legs and partial use of her right arm in the line of duty after a helicopter she was piloting was shot down in Iraq in 2004. Mark Kirk, the incumbent Senator, suffered a massive stroke in 2012 leaving his left side partially paralyzed. Both candidates, understandably, downplayed the presence of their disabilities. Nonetheless, it is impossible to deny the historic nature of this race. Duckworth won the election and now represents Illinois in the US Senate.

image of couple in mall shopping

#9. The use of wheelchairs becomes “acceptable” in Popular Culture.

Pop culture is often a signal of changing societal norms and conventional wisdom. In the decade beginning in 2006, there was an emergence of people with disabilities, specifically those using a wheelchair, in our pop culture. A few of the key inflection points were:

* The hit TV show, Glee, which prominently featured a character in a chair.

* American Girl actively marketing a wheelchair accessory in its doll line as well as the first of its doll girls who had a disability.

* Barbie launching a wheelchair accessory.

* The ABC show Speechless, in which one of the characters uses a power chair and assistive speech technol

Presidential - Wheelchair Image

#10. Woodrow Wilson is first US President to rely on a wheelchair.

Wilson was a visionary president who ended the First World War and set in place strategic and diplomatic measures, which ultimately led to sustained peace and prosperity across the globe. Deteriorating health in the latter part of his presidency resulted in Wilson’s reliance on a wheelchair. Both the norms of the era and the limitations on media allowed his wheelchair usage to be largely concealed from the public. A protégé of Wilson’s would later become President and he also required a wheelchair for mobility. Franklin Roosevelt, like Wilson, concealed his wheelchair usage. The longer-term impact of Roosevelt was an acknowledgement and acceptance of people in wheelchairs – but it started with Wilson.

Image of woman in wheelchair with daughter

#11. Jeff Minnebraker builds the first ultra-lightweight wheelchair.

In 1975 Minnebraker built a chair to specifically fit his body, disability and lifestyle. In the 1970’s and early 1980’s, University of California-Berkeley was the hub of an independent living movement. People with mobility disabilities leveraged that hub to integrate into a community. Minnebraker’s Berkeley Power Chair emerged from that community. It never became a commercially available product, but it was an important breakthrough establishing means to meet the needs of the wheelchair bound person demanding an increasing level of independence.

Couple in wheelchair hugging

12. Color in wheelchairs

Color has nothing to do with function, so why would it be a top 12 development in wheelchairs?  For people who rely on a wheelchair to get around, the chair is their car, their desk and their house in many ways.  It’s the place they spend most of their time.  And it’s a first impression.  Just as Steve Jobs brought color to the computer, which then led to advances in style, color in wheelchairs has done the same.  This is especially important for children confined to a wheelchair.  We all have an innate need to belong, and in this context color can help.

 

Forced Consolidation Damaging Healthcare

Image of Elderly person's hands on cane

Flawed federal government policies are forcing a dramatic consolidation of healthcare providers across the nation.  This consolidation is greatly reducing competition among providers, reducing patient choice and severely limiting patient access to needed healthcare.  The most significant consolidation is occurring in homecare and home medical equipment, where government policies have been particularly aggressive in forcing consolidation.

SEE BELOW FOR COUNT OF LOST MEDICAL EQUIPMENT STORES BY STATE

In the past three and a half years, the number of home medical equipment suppliers and the number of locations has declined by 38%.  This is a staggering downsizing of suppliers in any environment.  This consolidation is even more egregious when considered in the context of a growing population of seniors brought on by the aging of the baby boom generation. The frail elderly and the disabled are the populations which rely upon home medical equipment suppliers to maintain quality of life.  Consolidation is occurring across the healthcare continuum.  Over the past five years, hospital system consolidation has occurred at higher rate than in any other five year period in history.  Over the three year period from 2012 to 2015, 12% of all physicians in the US went from an independent practice to being employed by a health system.  That’s 46,000 docs consolidating into health systems in just three years.

Drilling deeper into the home medical equipment consolidation provides a clear correlation between federal policy on the inaccurately named competitive bidding and consolidation.  In the 10 most populous states, where competitive bidding is focused, there was a 47% reduction in the number of HME suppliers over three and a half years.  In the fifteen lowest population states, where competitive bidding was largely absent, there was an 18% reduction in suppliers over the same period.  That tells us that a combination of federal policy changes and economic realities caused a significant consolidation, 18%, in home medical equipment suppliers.  But further, competitive bidding alone, the most deeply flawed of policies, caused a consolidation of nearly 30% of supplier in impacted areas.  And to be clear, that’s a consolidation over a very short window of 42 months.

Consider this, New Jersey, California, New York, Illinois and Connecticut each lost over half of their HME locations in just 42 months.  In the 15 least populated states, more than 200 HME business locations have shuttered in this same short period.  That means over 200 rural communities lost their access to a medical equipment supplier.

Competition is good for the consumer, it gives them choice and it forces competitors to provide exactly the things consumers want in order to win their trust and their business.  Consolidation eliminates competition and eliminates patient choice.  It has robbed patients of local access as many communities that once had access to providers no longer have that local access.  We must all advocate for reversal of federal and state policies which force consolidation and harm providers and patients.

Store locations LOST in just 42 months

Large States

California                  734
New York                  656
Texas                          493
Florida                       387
New Jersey               288
Illinois                       392

South

Tennessee                169
Alabama                    58
Mississippi                54
Arkansas                    55
Georgia                      291
South Carolina         84
North Carolina         29
Virginia                       115

Industrial Midwest

Michigan                    236
Ohio                            262
Wisconsin                  76
Indiana                       95
Minnesota                76
Iowa                            45

Great Plains

Nebraska                   28
Kansas                        59
South Dakota           9
North Dakota           3

Pacific Northwest

Washington              69
Oregon                       56
Idaho                          24
Montana                   15