Business Solutions

Wound Care: Patching up Lost Revenue

Many providers reeling from Round Two are looking to revive their revenues. Wound care offers an option to branch out with new offerings to existing patients.

• By David Kopf
• Dec 01, 2013

Wound care: never could a service be so aptly named for the HME industry. Not only could providing wound care products and services help patch up patients, it could also staunch the fiscal hemorrhaging providers have suffered thanks to competitive bidding.

Well before the rollout of Round Two, HME providers have been branching out into various related services and marketplaces in order to create new revenue streams that help make up for lost Medicare reimbursement. Some notable options have been retail sales, home access and, for some, orthotics and prosthetics. Wound care offers yet another option.

True, some wound care items, such as negative pressure wound therapy (NPWT), are indeed included in competitive bidding, but there are a variety of products that are not. Moreover, wound care is something that is needed by a wide variety of patients that HME providers already serve, and would leverage referral partner relationships they have already established.

For instance, a provider of support surfaces that lost some business in a competitive bidding area, or perhaps won a contract, but is suffering the reimbursement cut from Round Two, could greatly benefit from branching out into providing wound care.

That said, wound care isn’t a slam-dunk. There are various factors that influence whether or not a provider can build a successful wound care business. So what’s involved?

Diving In

One of the first things providers should deal with is squelching any fears of the new, says John Eberhart, RRT-SDS, RPSGT, founder, president and CEO of Eberhart Home Health Inc., which has locations in San Clemente, Calif. and Farmington, N.M. Eberhart provides support surfaces, and has matched that up well with wound care.

“Wound care is a great business to be in,” he says. “Much better than incontinence supplies, for example. There isn’t much profit margin in incontinence supplies. But wound care is still a decent market, and we do fairly well with it.”

“I think what stops a lot of people is the same thing that stops me,” he contends. “When you don’t know about something, no matter how easy it is, it’s really hard to get people to just do it. … Before you’re not going to do something [like wound care], research it. Look at the reimbursement. Don’t let the first word out of your mouth be, ‘no.’ That’s probably 75 percent of the battle, because a lot of this stuff is very doable.”

In terms of products, Heather Trumm, RN, BSN, CWON, director of wound care at VGM Group Inc. says some of the key wound care products that providers should offer would be:

• NPWT, which uses a sealed bandage and a vacuum pump to draw fluid away from the wound and draw blood to the area to promote healing. (She describes this as the cornerstone of a full-line wound care business.)
• Therapeutic support surfaces.
• Enteral nutrition to deliver proper nutrition for healing.
• Compression therapy.
• Bariatric products, because many wound care patients are bariatric.
• Standard dressings.

That full line is something many referral partners want.

“When you look at the doctor or nurse that’s treating patients today, they’re knowledgeable in many of the products that they’re dealing with,” says Kevin Ackerman, director of business development for Medela, which makes NPWT equipment and supplies. “The challenge is they deal with multiple vendors for these items. So they might get NPWT from one company, support surfaces from another, their wound dressings through another party, and if they need compression they’re getting them other different parties.

“By having a DME that carries multiple lines, that can really decrease the contact points for that healthcare provider,” he continues. “So they improve their relationship because they increase their value to that specific doctor or nurse.”

Referral Partners

One key referral partner is wound care centers, says Glynna Stockham, manager of Eberhart Home Health’s retail store in Farmington, N.M., and a wound care specialist. These centers often server diabetic patients, people with pressure ulcers and other patients that need treatment. An interesting demographic is motorcycle accident victims, which can suffer large wounds from falling on the pavement, she adds.

Also orthopedic facilities are another source, but mainly doctors, hospitals and wound care centers comprise Eberhart Home Health’s main wound care referral sources. Stockham also notes that while hospice might seem like a good source, most hospice care facilities buy in bulk, she says.

Ultimately, working with referral partners in wound care is just like other aspects of HME: it comes down to relationships. Stockham says that Eberhart has developed solid bonds with the local wound care center and works closely with its doctors and nurses to ensure it is a trusted partner in the patient’s care.

“We live in a small town,” she says. “So we can converse back and forth, and if the doctors happen to send something that we know that Medicare won’t help, we can call back,” and offer the wound care center different options that can be covered. Initially, the doctor leads the process, she says, but they also rely on the provider to offer options.

That give and take is important when it comes to services like wound care, Eberhart notes.

“These types of ideas for business growth are very much dependent on where you are in the country,” he says, adding that if partners want too much oversight over the process, it might make the process of providing such products too complex to be profitable. “Here in Farmington [New Mexico] and other rural parts of the country, some physicians might say, ‘please take care of this patient for me,’ and it’s a big reason why rural areas might be a more viable setting for business growth, because I think physicians are a little more trusting.”

Reimbursement and Payors

In terms of getting paid, obviously, Medicare is an important funding source, but it isn’t the only one. Also, in addition to competitive bidding’s impact on NPWT, it is important to note that Medicare has cut back on reimbursement for other wound care supplies, and has limited coverage in recent years, she adds.

For example, originally doctors were using Mepilex Border padded dressings for many types of wounds, which have good reimbursement, Stockham says. But the coverage criteria was changed so that if a patient did not have a stage 3 or 4 pressure ulcer, the dressing wouldn’t be reimbursed. Furthermore, reimbursement and usage of other types of dressings were also limited.

“They [Medicare] came back and said, you can only change a dressing three times a week,” she says. “They put a lot of criteria on the amount that a patient can have.”

“I think this is an indirect effect of competitive bidding and all of Medicare’s efforts to save money,” Eberhart adds. “They looked at the spikes in reimbursement, homed in on wound care, and started drilling down on what they could cut back. It doesn’t take away the need, but it forces patients to pay out of pocket a little bit.”

Private payor insurance, such as Blue Cross Blue Shield and others, is another solid source of funding, but it is important to note that most carriers follow Medicare guidelines when it comes to wound care, Stockham says.

And, of course there is retail sales, as well. There are patients who will purchase additional dressings and other wound care supplies out of pocket because either Medicare or their private carrier will not fund everything they need. Also, some patients might want more than what is covered just for good measure.

The Impact of Volume, Product Selection

The key to profitability is to drive revenue, says Steve Ackerman (no relation to Medela’s Ackerman), president of Spectrum Medical, who has been very selective in the sorts of wound care supply he offers. Gauging the true profitability of his wound care business has been a lesson that has been a little rough, but it has helped him understand why volume is key, especially with items that have thinner profit margins.

Five or six years ago, his business did a steady clip supporting local hospice businesses with wound care, but large supply companies came in and took over all the good accounts, which eliminated his business’s position in the market. This taught him that for many wound care items, volume is critical.

“It’s one of those areas where you have to be all-in, doing all levels of products; you really can’t dabble in it,” he explains. “The larger suppliers that have access to better pricing are going to clobber you.”

Other high-volume competitors would include Internet sales and chain drug stores, Ackerman adds. This is especially true as reimbursement and price points have come down. It’s all about finding the right economy of scale.

“You have to be doing a pretty good volume for it to make sense,” Ackerman says.

Moreover, because the quality and variety of dressings has evolved in recent years, this means the provider needs to have lots of stock of a wide variety of offerings. And with payors wanting to pay for lower price options, while clinicians want to obtain higher end items, finding products that will suit both needs can be a tough find.

“But the greater concern for a smaller DME is that you’re going to have people walking in wanting to buy a few things, but if they’re going to be buying them on a regular basis, then they’re going to be price shopping,” he notes.

But with the right product knowledge, providers can identify products that will help them buttress their revenues in the face of Medicare and other cuts. They just have to be selective.

“People are looking to, for lack of a better term, ‘add fries to that order,’” Ackerman says. “And that’s really only the way you can make money with the Medicare contracts, the way that they have cut prices. … So it’s natural with wound care that if you can get a base line of products, and have people ordering, then you can add those lines. The trouble is getting the price right.”

Working With Family, Caregivers

As a multiline provider that also specializes in mobility, many of Chelmsford, Mass.-based Alternative Care Providers Inc.’s patients have special seating and positioning issues, support surfaces needs, incontinence management requirements, and, as part of that entire spectrum of care, they can have wound care needs as well, says Michael Schleipfer, ATP, owner of Alternative Care Providers.

Moreover, because staff can’t be in the home 24/7, a key element in its wound care support is coordinating with caregivers and family. An ideal time for this is when a nurse or other referral partner or patient calls upon his business to address a support surface or seating need, Schleipfer says.

“We can go out and do a patient evaluation/home evaluation,” he explains. “Or, we get called out because of a seating issue. … Then we go in, and really do a patient/caregiver educational program.” “We try and look at everything that’s going on with the patient, as far as skin issues, any seating problems — sometimes people will sit on a dining room chair without realizing all the pressure that’s involved,” says Linda Gradozi, RN, wound care specialist for Alternative Care Providers. “So we try and look at everything the patient is doing around the clock: ‘What do you do in the morning? How often are you in bed? Do you go back to bed?’

“And unfortunately a lot of the times we do get called in is when patients do have problems,” she adds.

Schleipfer says some key elements in instructing patients and caregivers regarding wound care is helping them understand the various factors related to the causes and treatments of wounds. Some prime examples:

Diagnosis — The patient has met with other healthcare professionals and has specific, prescribed needs. This will obviously dictate what the provider teaches them.

Incontinence — This is an issue that is experienced by various patient groups, and when incontinence is not addressed properly, it can lead to sores.

Nutrition — Many patients do not heal properly because they are not eating the right goods and getting the proper vitamins.

Hypoxia — In the same way they need good nutrition, wounds need to get properly oxygenated in order to heal properly.

Where are patients sleeping? — Many patients wind up sleeping in places that aren’t ideal situations in terms of pressure relief. Dozing in lift chairs is a good example, he says.

On what is the patient sitting? — Obviously this is a key concern for mobility patients, because the wrong seating surface can combine the pressure, moisture and heat that leads to a pressure sore.

Most importantly, it pays to ask questions. Schleipfer recalls one patient that was suffering pressure sores that were baffling caregivers:

“We put an individual on a really high-end cushion, and the doctor called two weeks later and said, ‘This wound is getting worse,’” he recalls. “So, we go out there, and I pressure mapped him on the cushion and he looked fabulous.

“I asked him, ‘What do you do the rest of the day?’” Schleipfer says. “He said, ‘Well I’m a front end loader operator.’”

After getting over his surprise, Schleipfer asked the patient how he accomplished that and the patient told him that his coworkers had constructed a special winch to get him in and out of the loader’s cab.

“I said, ‘How long are you in there?’ and he said ‘Eight to 10 hours!’” Schleipfer relates, still with some surprise. “I said, ‘No wonder you get breakdown. Here you have this fabulous cushion on which you only spend an hour in the morning and hour at night.’”

That taught Schleipfer that wound care means truly understanding the entirety of a patient’s lifestyle to get a true picture of how a patient’s routine can influence his or her wound care. Also, the experience showed him that this is another way the provider can differentiate itself to referral partners.

“We work with a number of wound care centers all across the state, and many times when they are out of ideas is when we get called in,” he explains. “We take a look at those extenuating circumstances.”

Gaining, Using Expertise

Like a lot of aspects of HME, the key in ensuring successful patient and partner relationships for wound care lies in establishing expertise when it comes to the products and treatment options available.

“You do need to have clinical people that can talk intelligently about the variables that are involved in skin management,” Schleipfer says. “Especially in older people. So it’s not something that I think is going to happen over night, but we’re starting to see people private paying simply for the prevention of wounds … Medicare patients that realize the importance of being on a mattress that works towards the prevention of these wounds.”

Why would patients consider paying for a mattress up front? Because the initial cost of a mattress pales in comparison to the co-pays associated with a $100,000 treatment series to contend with a pressure sore they developed because Medicare wouldn’t cover the cost of preventative care. With patients willing to pay retail for an alternating pressure mattress when Medicare won’t pay for one, this opens up a large opportunity for providers to leverage the expertise they gain from training and education.

“There are so many small things, rather than expensive low air loss mattresses,” he continues. “And that’s something as simple as off-loading the heels or the elbows. Start with a better mattress that is just a few hundred dollars more than the one that comes with the hospital bed. Start with something like that.

“The skin barrier creams and the changing the diapers more often for people that deal with incontinence. It’s a combination of products and in-services,” he adds. “It’s such an effective way to deal with skin management issues.”

So where do providers start to gain this product and care knowledge? A great place to start is with training from the manufacturers of wound care products, Alternative Care Providers’ Gradozi says.

“Of course they need to look at it objectively, because each company is going to have its own fish to fry,” she advises.

As the level of complexity of wound care services increases, so should the clinical expertise. VGM Group’s Trumm recommends that providers have an educated contact that understands wound care on their team.

“If providers want to do NPWT, I encourage them very strongly to get a clinician on board that does wound care,” she says. “To be successful, that’s what you need: a credential wound care person as a contact.”

There are a few credentials available for wound care nursing that would benefit a provider looking to specialize in wound care: Certified Wound, Ostomy and Continence Nurse (labeled CWOCN or WOCN); Certified Wound Specialist (CWS); and Wound Care Certified (WCC).

“The purpose of having a clinician on staff with wound care background isn’t to be a nurse that touches patients or treats patients,” adds Medela’s Ackerman. “It’s more meant for the product support, the training and education of the users, and the credibility you earn on a sales call by having somebody that speaks the same language as the customer.”

Clearly, education is going to have tremendous value for providers because they can relate products to therapy.

“This is a fabulous opportunity for our industry to build a bridge over to the clinical side,” Schleipfer says. “It’s a unique combination of equipment and clinical experience that brings about the proper outcome.”

This article originally appeared in the December 2013 issue of HME Business.