How Oxygen Providers Can Implement Business Practices for Today’s Funding Environment

Oxygen providers continue to weather the deleterious effects of rising costs and falling reimbursement rates, while the next round of competitive bidding looms. It’s a difficult time, and there is no telling how bad it might get before getting any better.

Therefore, there is little argument that caps, cuts, competitive bidding and documentation pressures are causing providers to rethink and refocus their business practices, not only to survive but, most importantly, to continue to give patients the highest quality of care possible. Unfortunately at this time, there seems to be more problems than solutions.

Caps are creating problems for oxygen patients who go back and forth between different locations.

“Being in Florida, we get patients coming from up north,” says Sam Jarczynski, President, Rx Stat Inc. “The provider up there says go and have a good time, but when patients come down here we can’t take them on as new patients.”

Another example: “We continue to care for patients as if they weren’t capped out,” says Jarczynski. “Medicare requires you to service that patient. But I’ve got a patient who went to Maine and she is deep into her cap and we are trying to service her with a POC and her disease state is progressing. She needs liquid oxygen and we are having a hard time finding a provider up there who will take her on.

Unfortunately, what it comes down to is looking at everything you do and seeing where you can be more efficient, says Jarczynski. That includes cutting your service level in order to stay competitive in business.

“You have to look at your entire operation and look at the efficiencies you can implement to keep some of your costs down,” says Jarczynski. “Mailing certain things can be cheaper than delivery. Calling the patients instead of going out to visit them is another. If you deliver cylinders, deliver once a month instead of once per week or if you can do it every two months, even better. Look at everything you do. Look at your employee costs. Are they working or are they sitting around? As long as you are practicing lean business practices you will be ok. If you’re not thinking about those sorts of things you are going to have problems. Reimbursements are going to continue to go down and costs will go up.”

Jarczynski says that in the long-term you will see more patients moving to POCs and home fills to cut down on delivery costs, which continue to creep skyward.

“The problem is a lot of providers already have the infrastructure in place with cylinders and trucks, so it’s vey hard to switch over to a nondelivery model,” he says. “I think nondelivery is the wave of the future but the transition into that will be difficult for a lot of people. We are about 80% nondelivery.”

Incremental costs to keep in mind regarding POCs include batteries are not covered by Medicare and since POCs are often moved, they are more susceptible to being damaged by being dropped or bumped.

The current rigorous documentation standards demanded by Medicare are also adding to the stress of oxygen providers. But as difficult as it might be, Jarczynski warns that not complying to those demands now could really harm your business later.

According to Jarczynski, rigorous documentation demands are hurting providers who are doing it correctly because they are asking healthcare professionals for information that other providers are not asking for. Therefore, it’s easier for healthcare professionals to work with those providers not asking for the documentation.

“I was talking to a doctor the other day who said I could give this to three other providers in town who are not requesting the documentation that we are requesting,” says Jarczynski. “And that’s a tough action to overcome. You have to say, ‘Look if they are not asking for it now they are going to be asking for it later and it’s going to be for 100 charts at once because they will be subject to an audit. There is no way around it.’ We were the first to bring it to the physicians and say we have to have charts that show continued need of oxygen, nebulizer or CPAP and the physicians are pushing back on that. They don’t want to provide it. But if all the providers were asking for it, it wouldn’t be a problem. It’s just because there are providers who don’t ask for the documentation.”

“Companies are already doing a lot of what they should be doing to cut costs,” says Jarczynski. “I suggest providers belong to VGM or Medgroup, which can help reduce their cost and get a lot of good information. They are up on auditing strategies. They offer seminars and webinars on how to be more efficient. We belong to both. Also, belong to your state medical equipment association because they tend to be more up on the rules than a lot of the local organizations. Providers should be contacting government officials about legislation to repeal competitive bidding. When that next round of competitive bidding goes into play, it’s going to decimate the industry.”

Points to Remember:

  • Funding pressures have forced respiratory providers to reinvent their businesses.
  • The rental cap can get particularly frustrating when trying to serve traveling or relocating patients, and especially when they are in their cap.
  • Therefore the entire operation needs close inspection to drive cost from the business.
  • This is especially true when it comes to delivery. Low-/no-delivery models are essential to survival.
  • Rock-solid documentation is also needed, and this means educating referral partners.

Learn More

This article originally appeared in the July 2011 issue of HME Business.

About the Author

Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business and Respiratory & Sleep Management. He can be reached via e-mail at jduffy@hmemediagroup.com or joe@prooferati.com.

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