Business Solutions

Rethinking Support Surfaces

How can providers make a difference in their patients’ lives, as well as the bottom line?

• By David Kopf
• Sep 01, 2012

The business of providing support surfaces has experienced some massive changes. Already Medicare has been winnowing down reimbursement across the board for DME, including support surface, but it also added Group 2 support surfaces to its list of categories for Round Two of competitive bidding. Moreover, as other providers try to diversify their businesses, some are adding support surfaces to their offerings, increasing the level of competition.

Suffice it to say, the business of offering support services is in need of a rethink.

Ultimately providers of support surfaces must answer a tricky question: How can they continue to focus on ensuring that patients get the right therapeutic surfaces for the best outcomes, while also keeping a sharp eye on the bottom line in order to survive these massive marketplace changes? Coming up with the right answers isn’t all that easy.

Perhaps the best place to start is by looking at the market pressures that support surfaces are facing, and to consider what they will ultimately mean to providers businesses and the services and products they offer.

Competitive Bidding

The biggest factor to force providers to reconsider how their support surface businesses would work is the addition of Group 2 support surfaces to Round Two of competitive bidding. This includes alternating pressure and low air loss mattresses, which make up a considerable percentage of the therapeutic surfaces being provided to patients. The population patients that need a support surface that either helps prevent or treat wounds and pressure sores is sizable.

“Round Two has Group 2 surfaces on it, which is the most popular treatment product out there,” says Jim Acker, vice president of sales and marketing for Blue Chip Medical Products. Acker adds that fortunately Group 1 surfaces, such as non-powered mattresses and overlays, and Group 3 surfaces, which are air-fl uidized surfaces, have so far not been included in CMS’s bid program. And, while bid amounts are announced this fall, contracts for Round Two won’t start getting awarded until next spring. That at least gives providers a little time to think.

“No matter what they announce in the fall, it’s not going to take effect until next year. Ultimately what’s it going to mean? The same patients are going to need the same treatment,” Acker explains. “Patients that qualify for a Group 2 product are still going to need a Group 2 product. The demand’s not going to go away. It’s a matter of what the market can bear, based on what the allowable ends up being — for [Medicare] Part B patients.”

And this is already having an impact on the support surface products that are available in the marketplace, Acker says.

“Then you have to take a look at what products are out there,” he explains. “You want products that are cost-effective, but are also of good quality, so that they don’t come back to haunt you. There’s a lot of very ‘cost effective slash cheap’ product out there, and they are already playing in the market as though the competitive bidding amounts have been announced, and they are at this low, low price point.”

“Reimbursement is getting cut across the board, which is affecting specific product lines,” agrees Sonal Patel, associate business manager of Therapeutic Support Surfaces for Invacare Corp. “[Providers] are moving to products that might not be the best solution for them; that might not sustain them for a very long time. “… They have to make sure they are choosing products, the solutions, the programs that will help them in the long run to make sure they are able to maintain their businesses for years to come,” she says.

And that should be a point of concern for providers, Acker says, because support surfaces need to be built to last if providers want to thrive. If a provider selects offerings that aren’t backed by vendors that will exist over they long haul, they will be stuck having to replace their DME in the not too distant future, a move that could quickly undermine their bottom line. It establishes an unsustainable model.

“I don’t think the cheaper guys can go any cheaper,” he explains, adding that Blue Chip’s response has been to take the past three years to develop solutions that will fit the price points providers are going to need in order to function under the greatly reduced bid amounts competitive bidding is sure to usher in, while still being of good enough quality to last and provide patients with the right therapy.

“The last thing we want, particularly if we want to play in that lowcost market, is to wind up having quality issues with the product, and have it come back to us,” Acker says. “That’s why we have stayed away from that market and the way it’s played with that low price point. Because there hasn’t been anything out there that is of quality at that low price point. So it’s taken us three years to do this and come up with something that we can be proud of.”

That “something” will be unveiled at next month’s Medtrade expo in Atlanta, which is running from Oct. 16-18 at the Georgia World Congress Center.

In any case, quality becomes a business issue, not only because of replacement, but because of support. A low-cost mattress that constantly needs support quickly stops turning a profit when a provider has to keep rolling trucks and sending techs to support it.

“Providers want to put the product out, and have it work and do what it is supposed to do,” Acker says. “And not get called in the middle of the night or on the weekend and have to go out there and service it, because the moment they have to start servicing it, they’re going to start losing money. They need something they can rely on.” And whatever major margins a provider might be making now with an ultra-low-cost mattress will quickly evaporate when competitive bidding Round Two is put into play, he adds.

Diversification: The Name of the Game

Of course, all this assumes that a provider wins a bid and is awarded a contract to offer Group 2 surfaces in a Round Two competitive bidding area. That won’t be the case for the many providers that have submitted Round Two bids, but don’t get the contracts. Clearly, those providers won’t be providing Group 2 surfaces to Medicare Part B patients in those bid areas, but that doesn’t mean they are out of revenue opportunities, Acker explains.

“They need to focus on hospice, worker’s comp and private payor insurance,” he says. “There are a lot of people who are not Medicare age that need a Group 2 surface treatment products. That’s where those providers need to focus.”

To help providers approach those other patient groups, Acker says Blue Chip conducts webinars and offers other tutelage to help providers understand what other opportunities are out there to make a profitable business with Group 2 support surfaces.

“There is a lot of business to be had out there,” he says. “The nursing home market on its own is very viable, and you don’t have to deal with Part B. That is what we have shown over the years to our customer base that has really gotten behind our program. We showed them how to go to that next level and expand out from Medicare Part B.

“And if they haven’t tried to expand outside of Medicare Part B?” he continues. “Because they’re just hoping they get the CMS contract? They really ought to look at all aspects.”

Fortunately there are already proactive providers that are already diversifying their patient groups and revenue streams. And that’s important, because even winning a Round Two contract, isn’t necessarily “winning” in the truest sense of the word.

“They’re looking across the board,” he says. “And those are the ones that are probably going to make out for the best. And that’s important, because let’s assume they become a CMS provider, well, they’re still going to lose, let’s say, 30 percent of their revenue because of the cuts. That’s pure profit off their bottom line, so now they still have to figure out to make it up.”

And, while some providers might hope to make that profit back based on volume, “that’s an awful lot of volume to cover 30 percent,” Acker notes. “So, why aren’t you out there looking for other areas and diversifying now, so that you’re ready for then.”

New Market Players

Diversification can also mean competition. And, the need for diversification is also pushing new entrants into the support surface marketplace, Patel says.

“Providers are getting into offering products that they never even thought of before,” she says. “I hear providers telling us ‘Well, I’ve never gotten into support surface, because I was afraid of them, but now I’m going to start looking at them, because maybe this is a place where I can get an easy return on my investment.’”

There are many providers who might have previously just gone with a standard mattress that are now looking at Group 1 support surfaces because the patients benefit from them, and they mean additional revenue and a way to differentiate their businesses to referral partners.

These new entrants are often providers that offer similar, or related services that now see support surfaces as a way to help them drive new revenue that can help them escape the funding pressures they are experiencing in their core business.

“They’re starting to tie product groups together with one another,” Patel explains. “We’re starting to see providers change their mindsets, such as rehab providers. A lot of rehab providers are going into therapeutic support surface business. If they are providing a cushion for a patient to sit on throughout the day, what are you doing for that patient at night? By putting them on a cushion in the day and a support surface at night, they are providing them with 24-hour care.”

Other Market Factors

And competitive bidding isn’t the only issue facing support surface providers. According to Invacare’s Patel, the increased trend of patients wanting to age and be cared for in their homes is an important one. Aging in place means that providers need to offer DME that patients can handle on their own.

“People want to stay at home longer,” she says. “They don’t want to be in a nursing home; they don’t want to be in a hospital; they want to be at home. They want to be cared for by their wife, or by their husband. So, what can providers do to help them live at home longer, and be able to have someone come to them and make sure they have product that is simple, easy to use, easy to care for, and easy to set up?”

And this is important because of another trend: limited resources. Simply put, staffs are getting smaller, and that means that each team member’s time becomes all the more vital to the business.

“We have fewer people setting up products and handling deliveries,” she says. “We have fewer intake planners. So, how can we make sure that we have the solutions for them with the limited resources and the limited time that these providers have, while still maintaining that level of care that is suitable for the specific patient?”

Audits are another pressure. With CMS’s ramped up pre- and post-payment audits, many providers are trying to hedge their bets against losing funding due to recoupment and denials. Often, that hedge winds up in opting for the lower-tier product, Patel says.

“They’re thinking, ‘If I buy a low-end mattress, maybe this is going to help me with denials and help when I don’t get paid,’” she says. “However, if they understand the policies, and know what documentation is required, they will get paid.

So, again, those providers need to choose a good quality mattress that will last them over the long-haul, and instead let solid documentation policies and procedures insulate them from audits.

“By choosing a product that is made of high-quality materials, won’t rip, is proven and has a long track record of being able to sustain in the market, be re-used and re-rented over and over again, that will help the provider with a return on investment and total cost of ownership,” she explains.

Referral Relationship

It will also be pivotal for providers to learn how to reach out to the different types of referral partners with whom they will be dealing as they start to broaden their reach through diversification. Fortunately, in this case, a singular message might have the broadest reach.

“It really comes down to the fact that, since this is a therapeutic product, this is expected to have a positive outcome for the patient,” Acker says. “So that’s what they need to be preaching to their partnerswherever they go: ‘I can take care of your patients and give you the outcomes that you are looking for.’ That’s the common thread.”

Also, this also gives them an opportunity for providers to differentiate through good quality support surfaces. If other providers are saying that they can provide good therapy outcomes, a provider with good quality product can follow up by standing their support surfaces against the other provider.

This plays into the fact that accountable care organizations are pushing the trend throughout healthcare for low-cost positive outcomes for patients, Acker explains. As ACOs seek to ensure patients are getting the right outcomes, that effort will reverberate through the healthcare marketplace, include HME.

“That’s what they need to provide, as ACOs come down the pike, it’s all outcome-based,” he says. “That’s what payors are going to be looking for: ‘Did we save some money? Did we give better care to the patient and get better outcomes?’”

And if the answer is “no,” and the reason for that is the product not being up to snuff, then payors are going to quickly start becoming very familiar with specific support surface products that they know will provide the right outcomes.

“That’s where healthcare is trying to go,” he says. “Whether the introduction of ACOs is going to work or not, I don’t know yet, but that’s what they’re going to be looking for: what kind of outcomes can they have. … The only way you’re going to play in that game is to have a good quality product that also yields good outcomes.”

This article originally appeared in the September 2012 issue of HME Business.