The (Dire) State of HME and Future of HME
The HME (home medical equipment – also known as durable medical equipment) industry exists for a very specific reason: to give individuals, be it senior citizens, those living with diabetes, or any other treatable ailment the chance to maintain a sense of normality in their everyday lives. These products allow people to use high-quality medical equipment to maintain their independence without the need to rely on major life changes like moving to assisted living facilities or making daily trips to the nearest hospital. It’s an industry that works to provide people with convenience, assurance, and above all else – freedom.
However, if things do not change – this important industry will collapse before we know it.
Unfortunately, government regulation and public policy continue to negatively impact the HME/DME space, making it more difficult for companies to pair their products and services from the people whose health they can benefit. More specifically, these policies impact how Medicare bids on DME products, which has had an adverse influence on pricing throughout the industry. For example, low bids and failed contracts have been included in calculations that determine the average industry pricing, which not only creates an inaccurate representation of the market’s worth, but highlights broader issues about how bids and contracts are determined within the program.
This is understandably frustrating to HME/DME providers, who see the positive impact that their products have on their end consumers day in and day out. Simply speaking economically, doesn’t it make more sense to provide products that lessen the burden on services supplemented by taxpayer dollars like nursing homes and hospitals while also allowing them to maintain their quality of life? It should come as no surprise then that economists from around the world have been critical of the current public policy – especially with regard to its impact on the integrity of the industry.
A second issue that has arisen from this shift in government policy is related to the auditing process for HME/DME claims. These audits continue to become more complicated, and as a result, more exclusionary, again making it difficult for providers to carry out their daily operations.
CEO of Respitec Medical, Ron Jenkins recently told HME News that his colleagues are beginning to go out of business. Those that aren’t out of the game completely are likely considering downsizing or moving away from the Medicare program.
While some may be hopeful that congress or other legislative bodies may step up to advocate for these crucial changes to be implemented, others have begun to look in a new direction: industry disruption.
An Industry Disrupted
From Wikipedia, disruptive innovation is a change within an industry that helps establish a new market and value network. Over time, this new market eventually disrupts the existing market and causes a fundamental shift in how the industry operates and is perceived. In layman’s terms, it is anything that improves on a product or service in such a way that the entire market reacts.
In this day and age, disruptive innovations are all around us – just look at the shift from the flip-phone to the Smartphone, the rise of wearable technology like the Apple Watch, or the fact that movie rentals storefronts have become completely obsolete. When Netflix introduced digital streaming, the industry was disrupted – and if competitors did not react and change their strategy, they quickly found themselves out of business.
Industry disruption has become a gold standard of success, particularly within the tech industry, as a way of measuring whether a product is truly revolutionary. There are even guides and lists highlighting how you can take steps to disrupt your own industry.
But when it comes to a space as heavily regulated as home medical equipment, what does industry disruption look like? Is it even possible?
One global giant that seems to think so is Amazon. It has been predicted that the online retailer will be entering the healthcare space in the near future. While Google and Apple have both dipped their toes in the healthcare pond through their HealthKit and Google Health services, it is Amazon’s existing infrastructure that give it the potential to make a huge splash within the HME/DME industry.
In an article on MD+DI’s DeviceTalk, Arundhati Parmar writes, “Amazon, by its very structure, is a natural fit in a healthcare world that is demanding price transparency, lower cost and greater value. Digital health and the consumerization of healthcare are also trends that play into Amazon’s strength.”
What’s more is that Amazon definitely has the purchasing power and existing infrastructure to not only meet the needs of individuals requiring HME products, but to provide that equipment at a market leading cost.
Think of it this way, who would go through the process of working with an HME provider when everything you need is available in a cheaper and more convenient way from a website you already shop from? It’s a no-brainer.
If Amazon entered the HME space, there is no doubt that the industry would be disrupted. The way people connect with these products would be changed and competitors would have to adapt in order to stay relevant.
Looking Forward
Looking forward at the direction the HME industry is taking, it would seem that providers have three choices:
- Wait for congress or another government body to create a change to the existing policies and barriers facing providers.
- Watch the competition, wait for a corporate giant to disrupt the industry, and follow suit based on the successes and market shifts created by others.
- Try to get ahead of the curve and create their own disruption, change the game, and work towards connecting their products to the people that benefit from them in new and innovative ways.
The choices that these providers make now will undoubtedly impact their success and position in the market later. The industry is changing in a number of ways, all at once, and how these companies choose to react to that change will make all the difference.