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How HMEs can drive more cost-efficient programs in the face of declining reimbursements

If you're a home medical equipment (HME) provider, you no doubt already know once Medicare's competitive bidding program was created, roughly 40% of HMEs closed or were acquired over the past decade.1 And, managed care organization (MCO) reimbursements for medical products and supplies continue to plummet as more states turn to private health insurance companies to manage their Medicaid programs. Making matters worse, the strain on the global supply chain is affecting HME providers as they're experiencing shortages, long wait times and dramatic price surges.

Despite the challenges, "the future is still bright for HMEs," says Kris Srinivasan, senior manager of payer strategy at McKesson Medical-Surgical during a podcast for HME News.2

For example, the pandemic positively affected the industry by increasing demand for HME.3 Since March 2020, it's become more evident than ever that home care is the future of healthcare, Srinivasan says. He firmly believes the HME industry is the cornerstone of the healthcare continuum and vital to positive patient outcomes.

And driven by the increase of chronic conditions like diabetes and high blood pressure, the growing elderly population and advancements in technology, the HME market is predicted to grow from $11.53 billion in 2019 to $20.41 billion by 2027 in the United States. That's a compound annual growth rate (CAGR) of 5.6%.4

With declining reimbursement rates, supply shortages and increasing costs — as well as the potential for new opportunities in the future — it's more important than ever for providers to find ways to increase cost efficiency and demonstrate their value.

Look into cost-efficient programs

Tools geared toward HMEs can help streamline business and boost efficiency. McKesson programs like McKesson VerbalCare(R), McKesson Biomedical Solutions(TM) and patient home delivery do just that, while also supporting a better patient experience, Srinivasan says.

McKesson Biomedical Solutions™ helps providers scale their businesses without onboarding more resources, explains Srinivasan. It has solutions for providers of every size to help manage device inventory, so providers can focus more on serving their patients and don't need to worry about stocking, tracking and servicing devices.

The McKesson CPAP resupply program makes ordering supplies from a variety of CPAP manufacturers easy and fast. An optional piece of this program is McKesson VerbalCare®, a mobile app that digitizes patient outreach and engagement and helps support patient compliance. Srinivasan says VerbalCare helps create more efficiencies if a provider currently uses manual methods to connect with patients like calling, faxing or texting. With VerbalCare, however, patients place orders when they want, get alerts so they know when it's time to reorder, tap into educational content and communicate directly with you.

Patient home delivery (PHD) lets providers ship medical products directly to patients' homes from McKesson Medical-Surgical. This saves providers time and shipping costs and reduces inventory and warehouse space. "Our drop-ship program has helped a number of customers scale their businesses without incurring significant costs, which is always a big issue because of low reimbursement," says Srinivasan.

Other programs like continuous glucose monitoring (CGM) are on the horizon. "There are opportunities we're exploring, including how we can help better support the industry through advocacy and/or bringing on different technology sources and programs," Srinivasan says. "Those are really going to help bring efficiency and scalability to our provider base."

Focus on value rather than cost

Srinivasan points out that when a provider buys the cheapest item, they rarely get the best product.

"This industry should be no different," he says. "If you can pay for value at a premium, preferentially, patient outcomes should always be held to that highest standard of care and premium as well." He added McKesson's vision is to help improve care in every setting, delivering timely services, quality products and optimal care to support positive patient outcomes.

Instead of only focusing on price, Srinivasan believes providers should consider the value they bring to the table for patients. "That's where the conversation needs to go. And when it does, I think our patient outcomes will follow accordingly," he says. "Instead of outcomes dropping because of lower-quality care products due to low reimbursement, positive patient outcomes should increase, and your patients can walk away with a positive experience."

Join HME associations

According to Srinivasan, one important way the HME industry can demonstrate value is to speak with a unified voice. The best way to do that is by joining your state or regional HME association and the national HME industry advocacy group American Association for Homecare, (AAHomecare). By joining these associations, providers can keep up with legislative updates and payer issues, get expert advice, share best practices and network with others in the industry.

As an active member of AAHomecare, McKesson also supports the Grassroots Accountability Project (GAP), led by AAHomecare and VGM, and works with state and regional HME associations. The project is focused on having a voice in legislative initiatives that affect the HME industry. Srinivasan says getting HME providers involved and connected with their representatives at the local and national levels can help move legislation forward, whether for greater reimbursement or to minimize the effects of competitive bidding.

"Defining our value and unifying that message will give us, as an industry, the power to push for what's needed for the best outcome on the patient front," says Srinivasan. McKesson sets an example of engagement at any level in these organizations, from sitting on an association's board to finding new members to simply joining the discussion.

"We've got a GAP team of McKesson sales representatives at the local levels across the country actively involved in state associations, along with an active group of employees who support AAHomecare at the national level. With our broad coverage and support, we're working to bring our efforts forward with customers and get them equally involved," Srinivasan says.

McKesson hosts HME industry roundtables around the country for associations, providers, legislators and suppliers. Srinivasan fully believes in the power of the industry coming together, unifying their voices and boosting the HME provider network. "We can talk about cost efficiency, but I think it's more about bringing the message together that gives us the ability to manage our costs — not reducing them." he says.

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