At Home with Dealers

Company Name: Dependable Health Services

Location/Contact Info:
1120 S. Swan Rd.
Tucson, AZ 85711
(520) 721-3822
Fax: (520) 512-0439

Fun Fact: We are in the business of caring for people, so we believe we must care for our employees first. Not only do we have a great work environment, we have weekly drawings for gift certificates to local restaurants, birthday parties, potlucks and our annual tailgate party at the University of Arizona. The UA game is a big deal here. We invite employees and guests and provide tickets to the game. This year we had more than 200 people at the tailgate party at the Pac-10 game between the UA and Washington. We rent a big tent at the main tailgate area, and my partner and I and our CFO do all the cooking. We flip burgers, dogs and chicken, and the management staff waits on the employees. Then we all go to the football game. I really think our company spirit is our best trait. When you have a really bad Friday, it's easier to suck it up and help each other get through it. We believe it helps us give better quality care to our customers.

Established: Original home health license in 1983; Dependable Nurses Inc. in 1992; Original DME in 1994; Dependable Health Services in 2002.

Types of products sold: DME full service rentals and sales, including certified high-tech rehab sales and service

Size of Company:Dependable Medical Equipment Inc. — 32 employees, $3.5 million per year; Dependable Home Health Inc. — 125 employees, $5.5?6 million per year.

Home Health Products spoke to Larry Johnson, president.

Q: What's unique about your store?
We have four corporations under our umbrella: Dependable Medical Equipment Inc., DME; Dependable Home Health Inc., Medicare-certified home health and home IV therapy; Dependable Nurses Inc., private duty and staffing; and Dependable Nurses of Phoenix Inc., private duty and staff in Phoenix. All of these services are offered under one roof. We are locally owned and privately held. We are the only full service home care company in Southern Arizona. In addition, we have one of the largest staffing agencies in Southern Arizona, providing staff to local hospitals, skilled nursing facilities, prisons and other facilities. In addition, we have a location in Nogales, Ariz., near the border of Mexico and approximately 75 miles from Tucson.

Q: What components of your business are working well for you?
Being financially viable has allowed us to continue to offer great service along with the equipment we rent and sell. Also, offering so many services under one roof has helped us work successfully with our referral sources. Our clients have one person they call for everything. And then we just route it within the building. Our referral sources have really appreciated it. A lot of our customers are elderly, and one of the things they always struggle with is their medical bills. As one company, we can help tie all of those different bills together for them. If a client has a stroke, he or she may need a wheelchair, a hospital bed and a bedside commode, but they also need home care — a physical therapist, a nurse, etc. to help them rehab at home. We do it all. So, they just call here and we take care of the patient. It's a pretty good model. Several years ago, we also brought on a highly qualified CFO that has helped us drop our AR/DSO to between 47 and 65 days depending on the line of business.

Q: What have learned from your experience in the HME industry?
I started in DME sales in 1984 and went into management in 1985. The one big thing I have learned is that about the time you think you have figured the Centers for Medicare & Medicaid Services (CMS) out, it will change on you.

Q: Do you think the HME industry is changing?
More so now than anytime I have been in the business. So many things affect how we do business: competitive bidding; capped rentals, including oxygen; quality measures and the transfer of titles to the patient on our rental assets. Though competitive bidding may not directly affect us initially, it will take the choice away from the Medicare recipient. Service levels are going to go down the shoot. One of the things that's made the DME industry function as well as it has is service. If you're going to have Medicare allowables that are the same for me and Joe Blow and whomever down the street, then as far as what it costs consumers, it's the same but they can pick somebody who does a better job of servicing their needs. Consumers are going to lose that right. And we're all for quality, we're all for monitoring the industry, but the quality measures CMS has come up with, it's like a hundred and some odd quality points and it's pages and pages of administrative overhead that does not necessarily improve or measure quality. It just seems like CMS is out of touch.

Q: How do you think the industry could be improved?
Hospitals and physicians are the two biggest expenditures for CMS currently. Home care constantly gets hit with more regulations and less reimbursement when cuts in spending are necessary. We only account for a small percentage of CMS expenditures but seem to get hit with more cuts than other bigger percentage providers. Home care still is one of the proactive solutions to health care reform, and we have not done a good job of quantifying or qualifying that fact. We can do many things at home that would save all insurance plans money, including CMS. Disease management and chronic care in the home are two shining examples. Chronic care in America costs overall somewhere between 65 and 70 percent of all health care dollars on managing major diseases. And if those diseases were better managed, that's where you can cut health care costs. That's where big bangs can happen, not cutting the 15 months down to 13 months on a wheelchair rental. I mean, if you look at the DME industry, nationally it's about a 5-7 percent profit. So, if you go cutting DME prices 10 percent, what did you just do nationally? Put a lot of people out of business probably.

This article originally appeared in the February 2006 issue of HME Business.

The Key to Patient Engagement