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by: Mike Moran - Wednesday, January 27, 2010

While skimming The New York Times this morning, I learned that Lawrence Garfinkled died last Thursday. That wouldn’t have meant anything to me except that the headline caught my attention: “Lawrence Garfinkel, Dies at 88; Fought Smoking.”

Because the HME industry is so heavily invested in respiratory therapy, any thing related to smoking—the cause of most respiratory ailments—interests me.

Garfinkel’s obit got me thinking about my own experiences with smoking.

I never smoked regularly, but as a kid I used to every now and then steal a cigarette or two from my mother’s or father’s pack. Stealing from my father was easy. He left his cigarettes on the counter with a pile of change and his keys. When no one was in the room, I’d tap out a couple of butts from his pack and quickly exit the house, meet up with a friend or two, and go smoke them in the woods that bordered our neighborhood. To steal from my mother required a little more stealth, and created much more anxiety. She kept her cigarettes in her pocketbook, and it required a little more time to open the snap, pull out the pack, snag a few butts, put the pack back, snap the snap closed and then get the hell out of Dodge.

Whether stealing cigarettes from my mother or my father, the trick was to estimate how many I could take and not be caught (I never was). I would not steal from a pack that was nearly full or empty. I felt most secure stealing from a pack with 13 or 14 cigarettes left because a missing butt or two would not be conspicuous.

Sometimes, instead of stealing from a pack of cigarettes, I would sneak into my father’s jeep or my mother’s station wagon, and fish out some stubbed out butts from the ashtray. Neither of my parents smoked their butts down to the filter, but they didn’t leave too much tobacco either. So finding a half-smoked cigarette felt like hitting the motherload. My friends and I much preferred my father’s butts, which unlike my mother’s, were not tattooed with lipstick.

Occasionally, our neighborhood bully, Neil Booth, his hulking figure only a few feet away, would terrorize me into walking the neighborhood in search of smoke-able butts on the ground. Neil was a regular smoker by the time he was 10. He and a bunch of older kids often bought cigarettes at 3 cents apiece from Bud Stoddard, an old man on our street who could get away with this kind of commerce back in the late 1960s. As I think back on it now, Bud probably had COPD. His chest wheezed and rattled with every breath, and he regularly spit yellow, gooey phlegm balls out over his porch railing. Sometimes one would hit the railing, and like a banana slug, slide down a post to the porch floor.

For whatever reason, while I dabbled with smoking, it never hooked me. In part, I think, that’s  because I looked up to my father, who gave up the habit when he was about 30. Unfortunately, a few years later he developed terminal skin cancer and, with nothing to lose, began lighting up again.

My mother smoked until she was 55, but has been tobacco free for 15 years. She is a little on the nervous side and cigarettes helped bring her some peace. It took a lot of courage for her to quit—she wanted to set a good example for her grand kids—and I admire her for doing so.


— Mike Moran

by: Mike Moran - Tuesday, January 26, 2010

Okay. I admit it: I watch American Idol. And the most memorable moment so far this season has been 62-year-old Gen. Larry Platt, singing his original composition, "Pants on the Ground." This infectious and very funny little ditty has been viewed more than 4 million times on YouTube.

Now you can see an HME cover version, created by Mark E. Smith, Pride Mobility's Consumer Research Manager.

"In living with a disability, and in my professional roles, I've learned that mixing humor and disability goes a long way toward overall awareness and acceptance," Smith said. "And, when one ties humor and disability in with pop-culture, as we have with this video, it creates an immediate connection between the mainstream and those with disabilities in very positive ways."

— Mike Moran

by: Mike Moran - Thursday, January 21, 2010

Do you remember Lynn Everard? He worked in the HME industry as a consultant back in the late 1990s. I always enjoyed talking to Lynn. He was articulate and smart. But one day he up and left the industry, frustrated because HME providers failed to show much interest in his specialty: activity based costing (ABC).

Lynn came to mind the other day while I was talking to another industry type. This guy, sounding a little like Lynn, said he'd just about had it with HME providers, who have yet to show much interest in his retail product. I won't divulge any more about this product, but I do think it's got great potential to drive cash business. To me, it seems like a no-brainer (as did Lynn's believe in ABC), but I'm not a provider.

Below, I'm rerunning the exit interview I had with Lynn in October 2000. That was so long ago that HME News did not even have a Web site! If we had, I'd include the link here and not the story.

Hindsight is 20/20, but it is clear now that Lynn was onto something. Providers who know their costs are much better off today than those who do not.

-- Mike Moran

Consultant gives up on HME industry

COCONUT CREEK, Fla. -- After giving it his best shot for the past six years, HME business consultant Lynn Everard, a frequent speaker at Medtrade and a regular presence at other industry events, has called it quits. The reason? Providers haven't embraced his areas of expertise: supply chain management and activity based costing (ABC), a cost analysis method that allows a company to determine the cost of all its business activities. ABC is key, Everard maintains, if a provider wants to know what he can and can't afford to continue doing. Everard now plans to target long-term care and medical distribution, with a special emphasis on e-commerce. "I can't do it anymore," Everard told HME News during a recent interview in which he had some harsh words for HME providers. "I hope that they'll succeed, but I can't help them. They don't want to help themselves."
HME News: No offense, but a lot of people might say that your comments sound a little like sour grapes?
Lynn Everard: I have been hesitant to say anything for that reason. What I say isn't going to change anything. These people aren't looking for solutions. They are looking for excuses. Everyone knows that Medicare was originally created as an entitlement programs for senior citizens. I don't think Washington ever intended it to be an entitlement program for healthcare providers. But I see most people acting as if what's really going on is that they are losing their entitlement.
HME: Sounds like you think the industry spends too much time and energy on Medicare reimbursement issues.
LE: I do. I think working on reimbursement issues is really working against themselves. Providers don't have any control over reimbursement. If you are worried about the government, make your business so you are not dependent on the government. They send all this money to Washington and it gets spent and what do they have show for it?
HME: What about increases in the CPI and other give-backs the industry has won since BBA '97?
LE: Big deal. What's happened is that this industry has become an industry of victims. And we're victims because we are losing our entitlement. The reason everyone got so upset about competitive bidding is because they were going to have to compete for business. They don't want to do that. Well, hey, that's how it is in the rest of the world. Get used to it.
HME: What's your recipe for success?
LE: Most of these companies, if they implemented activity based costing, they'd know what contracts worked and which ones don't, and they could get out of the ones that don't instead of believing that if they just get enough revenue they'll be (OK). It doesn't work. They ought to look at the cost of everything, not just the cost of the product. The cost of the product is almost insignificant compared to the cost of managing that product from one end of the acquisition cycle to the other. If you look at what's happening in the rest of the world, supply chain management is becoming the number one method that companies are using to shore up their profit margins.
HME: What happens if providers don't do this?
LE: They will no longer be able to operate and they will close or be acquired.
HME: Where else do you think providers err?
LE: They thrive on the notion of giving the best customer service. It doesn't matter if it is efficient customer service just as long as it is perceived to be good -- whatever that is.
HME: Are you suggesting that providers de-emphasize service?
LE: No. I'm suggesting that service be tied to determining need. Right now service is based upon how can we make someone happy. And of course who they are trying to make happy generally floats back and forth between the patient, the payer and the physician. And they are trying to make them all happy at the same time. They are not getting paid to make them happy all at the same time.
HME: What's the bottom line to all you've said?
LE: The bottom line is that there are going to be successful companies but the only person who can fix your business is you. The government can't do it. It's not their job. It's not AAHomecare's responsibility to do it, no matter how many dollars in dues you send them. It is your responsibility. You either fix it or you get out. I've told a number of people over the past six months that they should be less worried about reimbursement and more worried about what Apria's doing to create a business model that you can't compete with no matter what your reimbursement is. That is the critical question. It's not the reimbursement. It's what's your business model?

by: Mike Moran - Tuesday, January 19, 2010

I have been thinking about Dr. Tom Petty off and on for a week or so, ever since I learned that he died on Dec. 12. I didn’t know Dr. Petty very well, but we did talk several times by phone, and I always enjoyed those talks. The father of long-term oxygen therapy took LTOT seriously, but not himself.

Every time I called Dr. Petty or he called me, he would say: “Hi, Mike. This is Tom Petty.”

I, of course, called him Dr. Petty. But in his mind, he was Tom.

Joe Lewarski, vice president on Invacare’s respiratory division, referred to Dr. Petty as “a good example of a passionate, committed individual.”

Long-time friend Patrick Dunne, described Dr. Petty as “very humble, and at the same time very brilliant.”

Humility. Passionate commitment. Great achievement.

That is not something you see everyday.

— Mike Moran

by: Mike Moran - Friday, January 15, 2010

Invacare is taking very seriously a healthcare reform proposal that, if enacted, would cost the company an estimated $12 million to $14 million a year. Check out this document the company filed with the Securities and Exchange Commission Jan. 7.

The U.S. Senate and the U.S. House of Representatives each recently passed health care reform legislation that includes a new tax on medical device manufacturers, such as Invacare Corporation (the “Company”). The Senate version of health care reform would impose a yearly sales-based tax on medical device manufacturers intended to raise $2 billion in tax revenue annually beginning in 2011, and $3 billion in annual tax revenue beginning in 2017. The tax would be not be deductible by the manufacturer and the amount of tax payable by a manufacturer would be determined based on market-share.

While this legislation has not yet been finalized, if the Senate version of the proposed medical device manufacturer tax becomes law, the Company will have to begin accruing expense for the new tax in 2010. Based on the Company’s interpretation of the Senate proposal, the Company estimates that the new tax could result in an impact to the Company of approximately $12 million to $14 million annually.

The Company continues to actively lobby members of Congress in an effort to make the proposed legislation less onerous on medical device manufacturers, and, until the legislation is finalized, there can be no assurance that the tax may not be eliminated, modified or delayed. However, the Company is evaluating all of its available options to offset the impact of the proposed tax on the Company’s financial results, including possible price increases or cost-reduction actions such as shifting more production overseas, reducing employee benefits or research and development expenditures. In anticipation of the proposed tax becoming law, the Company has already taken steps to suspend Company matching contributions under its 401(k) retirement plan, suspend merit pay increases for management employees and freeze new hiring.

In accordance with its historical practice, the Company intends to disseminate its guidance for 2010 performance in its fourth quarter earnings release, which is scheduled to be issued on or around February 4, 2010.

For more on this, you can read a story we posted to Dec. 31.

— Mike Moran

by: Mike Moran - Monday, January 11, 2010

Apria’s former CEO Jerry Jones (remember him?) offered some words of wisdom for HME providers during a telephone conversation I had with him recently.

“HME companies need to understand that their world is not the only one that is going to be changing,” said Jones, who is now the chairman of LifeCare, a $70 million, 18-branch HME in Southern California. “Everyone else in the healthcare system’s world is going to change fairly dramatically, and they are going to have needs that maybe they haven’t had in the past. HMEs have got to figure out how to tap into them.”

Specifically, providers who plan to survive well into the future must get creative. For example, Jones said, they could:

-   Develop new referral sources. These could include senior centers, outpatient surgery centers, dialysis centers and adult day care.

-   Determine what seniors need and then fill those needs. For example, taxis don't always cut it. Some seniors need sedan car services to get to and from appointments. They also need help with activities of daily living such as shopping and moving furniture.

-   Partner with pharmacies to help seniors manage their medication.

-   Help seniors travel by taking them to the airport, meeting their planes, picking up their luggage.

-   Anticipate problems related to competitive bidding and provide solutions. This could mean subcontracting with winners to provide equipment maintenance, 24-hour service response and clinical services.

In short, Jones said: “Figure out what you are good at and open up your eyes. You’ve got clinical support. You have distribution. You have the ability to bill third parties. There are people beside homecare patients who need those services.”

— Mike Moran

by: Mike Moran - Thursday, January 7, 2010

As far as I’m concerned, 2010 arrived not a moment too soon. For the last two weeks of 2009, my wife’s father, Bob, lay in a local hospital, unable to eat, a tube running up his nose and down into his stomach and a permanent port in his left breast, through which he received liquids, nutrition, and a variety of other stuff.

My mother-in-law, Karin, slept on a cot next to Bob’s bed, driving back and forth to our home for a shower and for a break from the deadly dull hospital routine. We also played host to my wife’s brother, sister-in-law, 5-year-old nephew (very active and loud) and Bob’s dog, Turbo (the name says it all).

Given Bob’s grave situation, it’s of minor importance, but I must note here that I’m claustrophobic, have two kids, a wife and a dog of my own.

Bob—everyone calls him Bob, even my kids—was diagnosed with pancreatic cancer exactly one year ago. He went through chemo and radiation, and by last summer the cancer was in remission. But a week or so before Christmas, his stomach, which doctors operated on last year, stopped discharging food into his small intestines. There was a blockage and everything that went down eventually came up.

During his two weeks in the hospital, Bob’s spirits sank very low. All he wanted to do was go home with his wife, be with Turbo and eat and drink normally.

The doctors eventually diagnosed and cleared the blockage—a logjam of pills, of all things (if I'd known that, I could have snaked them out myself or given him a shot of Drano)—and two days after the procedure they sent Bob home.

Once again there is a smile on his face.

The moral of this story is that there really is no place like home.

Bob knows this. His family knows this. HME providers and all their patients know this.

Someday the majority of people in Washington will know this, too. I just hope they don't have to go through what Bob went through to learn this valuable truth.

— Mike Moran

by: Mike Moran - Monday, January 4, 2010

We ran a story last month on how some misguided VA medical centers still refuse to contract with HME providers who are not accredited by JCAHO. The bottom line here is this: The VA can contract with HMEs accredited by JCAHO or by any other accrediting body approved by CMS. That is the law.

In response to that story, Tom Cesar, president of the Accreditation Commission for Health Care (ACHC) sent me this email, which adds further insight into this issue. I found his experiences with the VA interesting and I think you will, too. — Mike Moran

Dear Mike

I read your article this morning regarding the VA and found it very interesting. I have been battling this issue for eleven years. Below is a brief history, started in 1998, of the effort and results of our endeavor to level the playing field with the VA.

There are currently a number of VA Medical Centers that have contracts with ACHC accredited companies. ACHC has been accrediting home care providers for the VA to meet their vendor contract requirements for several years.  After two years and eight ACHC customers being denied access to vendor contracts with VA Medical Centers, in June 2000, I wrote the Under Secretary for Health for the VA, Dr. John Garthwaith. The attached responses from his Chief Quality Director, Dr. Perlin, and General Council clearly state that there is no system-wide policy or requirement to only use JCAHO for vendor contracts.  Progress was made at that time and some ACHC accredited customers were then able to get VA contracts.

In 2002, I met Dr. Tom Edes, Chief of Home and Community based programs, at a conference. He asked ACHC to put together a cross-walk comparing ACHC, JCAHO and CHAP. Later that year, a crosswalk was forwarded to an Accreditation Workgroup that he set-up to compare the standards of the three companies. (See his e-mail response: crosswalk of ACHC, JCAHO and CHAP)  After the workgroup determined that all three were equal, Dr. Edes invited Terry Duncomb from CHAP and me to sit on a panel with Mary Ann Popovich from the JCAHO. All three accrediting organizations educated VA nurses and physicians about their programs at the 2003 VA National Home Care Conference in New Orleans. (See Dr. Edes thank you letter for the presentation 9-4-03)   During the same period, I again asked Dr. Edes if there was any reason that a VA Medical Center should deny ACHC or CHAP customers a vendor contract. His response was consistent with Dr. Perlin’s (See VA update for his comments) So, ACHC customers have competed with JCAHO and CHAP for VA health care provider contracts for the past number of years.

However in 2006, we had a couple of ACHC customers again hear these words from VA contracting officers saying, “The VA only accepts JCAHO accredited companies for contracts”.  ACHC certainly understands that the VA system is very large and communications can break down, but we decided that we needed something definitive from the top of the VA to clear up the matter again. Under Secretary for Health, Dr. Michael Kussman was contacted by one of our consultants. He did not agree with this exclusionary practice and had Deputy Under Secretary William Feeley issue a memo (see contracting and Accreditation 4-07) In Feeley’s memo he specifically mentions ACHC in the text and warns of inappropriate restriction of trade.  In addition to the memo, on 4-27-07 during a conference call to leadership at the VISN level on page 4 you will find a statement to the same effect read by Fred Downs.

We still occasionally run into some resistance from a contracting officer and use all of the above to hopefully open the way for our customers to compete for a VA contract. I thought this information might be of interest to you in light of your article.

by: Mike Moran - Thursday, December 31, 2009

I generally don’t make New Year’s resolutions. I mean, what’s the point?  I can make and break a resolution in June just as easily as I can in January.

So that’s what I do. I make resolutions all year long. This increases my chance of success and failure, but in the end I think I'll come out ahead, or a least that is my hope.

Here is a nice New Year’s quote from the poet Edith Lovejoy Pierce:

We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called "Opportunity" and its first chapter is New Year's Day.

I wish you all the best in 2010.

— Mike Moran

by: Mike Moran - Thursday, December 17, 2009

You know what I hate? I hate to write something for HME News and then for some reason never publish it. Occasionally, and this really burns me, I'll interview someone for a half hour,  get some great information and use it as the basis for a story, only to have the person call me up a while later and say: "All that stuff we talked about earlier, that's just between you and me. Don't write a story. Okay?"

When that happens, I'm like, "What? Are you serious? Listen you knucklehead: I didn't spend a half hour on the phone with you just so you could get something off your chest. This ain't no therapy session, pal. I've got a paper to fill."

Of course, I don't really say that. It's all in my head. What I say out loud is something like: "I hate you, and want to rip your eyes out."


Anyway, this all leads to, in a round about fashion, to two of the things I detest most: waste and clutter. When I write something, I hate not to run it: That's waste. And often times, when I don't run something, it just sits in a folder on my desktop taking up valuable space: That's clutter.

With that in mind, here are two short stories I wrote last summer. They never made it into HME News because we've had a ton of essential news—from health care reform to PECOS to oxygen reform to complex rehab to etc.—that ate up most of our space and relegated these little guys to the sidelines.

That was unfortunate but necessary. Sometimes the little stories are the ones I like most. They are not always stories you have to read, but they are often stories you ought to read. That's how I feel about these.

Dead men walking

When you consider what providers have gone through this year—a 9.5% reimbursement cut and the oxygen cap, for starters, and competitive bidding on the horizon—the wreckage so far has not been all that bad.

There’s been no wave of bankruptcies or providers going out of business. But it could be just a matter of time before that happens, said Carl Will, senior vice president, North American Homecare, for Invacare.

“You probably have a lot of people who are dead men walking and don't even realize they are dead yet,” he said.

That’s because it takes four to six months before reimbursement cuts begin to affect provider cash flow. With that in mind, the number of providers going out of business should pick up this fall, he said.

(Will turned out to be more clairvoyant than I think he may have realized. Check out this story we ran in November.)

Cash, check or credit card

When it comes to Group 3 power wheelchairs these days, the old high-performance bases are becoming a thing of the past. The current reimbursement won’t support such robust offerings, said Tim Pederson, CEO of WestMed Rehab in Rapid City, S.D.

Given that, it’s critical that manufacturers do everything possible to make Group 3 wheelchairs that enhance a provider’s margin—and that goes beyond pricing, Pederson said.

“It has to not just be trouble free, but easy to service,” he said. “Batteries need to be accessible. The motors need to be accessible. There are a lot of things at play here.”

As for customers who want a Group 3 wheelchair more appropriate for yesterday’s reimbursement than today’s, Pederson knows exactly what to say.

“That’s why we have the ABN,” he says. “If someone want bells and whistles, we’re happy to provide them, but it’s cash, check or credit card.”

— Mike Moran