Medical Equipment Suppliers Face Cutbacks, Trim Services
Home medical equipment suppliers, "an industry that was expected to thrive as hospital stays shortened and the population aged," instead have found themselves "under siege" from new federal reimbursement limits and "a clamp-down on payments by private insurance companies," according to the Orlando Business Journal. Florida, with its "large numbers of frail elderly over the age of 80," was deemed "especially ripe" for medical suppliers. While 8,000 medical supply businesses now operate in the state, the numbers hide "industry-wide turmoil," the Journal reports. The federal Balanced Budget Act of 1997 "cut rates for oxygen supplies by 30% and froze the rates on all other home medical equipment and supplies," moves that "may take all the profit out of [the medical supply] business," according to Tom Connaughton, CEO of the American Association for Home Care. According to Connaughton, "private insurers in Florida are struggling with their own bottom lines and have not picked up the slack" in payments. Their decreased income has forced many suppliers of home medical equipment to institute "cutbacks" in services. Expressing the "frustrations" of many insurers, Matt Davies, CEO for United HealthCare of Florida, said, "(Americans) expect health care to be different from any other enterprise and deliver services that are not fully reimbursed." One central Florida store "is selling off its entire line of mastectomy supplies," and others have stopped carrying ostomy equipment because "Washington reimburses medical suppliers less than the actual cost." Still others "now require their members to buy medical supplies from a single medical equipment supplier -- and often that dealer operates in another town, or only operates through mail order." As a result, a 350-pound woman had to order a wheelchair made for a 250-pound person, and a woman with Parkinson's disease "mail-ordered a motorized wheelchair with a joystick controller" not "programmed specifically for her," causing the wheelchair to "caree[n] off a ramp." But in both cases, the women "are stuck with their equipment: Medicare won't pay for a new wheelchair for another five years." While no one is "sounding the death knell" for the medical supply industry, the consensus is that "not every supplier will survive." And Davies predicted that the surviving suppliers "won't be able to do business they way they did 5 to 10 years ago." Given the increasing numbers of baby boomers requiring care however, Connaughton said that despite "a rough couple of years," he does not expect the industry's slump to last long: "In the long term, the industry will grow and prosper -- but it won't be without headaches" (Lundine, Orlando Business Journal, 10/16).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.