Optimism seems in shorter supply around the executive suites of many a home care company these days. Understandable, in light of the changes besieging the industry, not many of them favorable.

However, there is never a lack of optimism at Homecare Concepts Inc (HCC), Farmingdale, NY, where Tom Ryan is CEO. Ryan started HCC in 1988, back when times were comparatively easier for a young company looking to make a name for itself in oxygen and HME.

Despite market turbulence since then, Ryan has maintained a steady faith in his company—and in the industry. It was a faith not at all misplaced: 17 years later, HCC is thriving, as evidenced by expectations that 2005 revenues will handily top $6 million. With 47 employees and two locations (not to mention a separately operated respiratory pharmacy), the company covers all five boroughs of New York City, plus Long Island, and a number of Gotham’s key suburban centers.

Ryan’s almost legendary belief that things can turn out well in the end proved infectious enough that members of the American Association for Homecare this year chose him as their organization’s chairman.

A question on the minds of many is how he manages to wear two important hats at the same time. Home Healthcare Dealer/Provider magazine caught up with Ryan to ask him about that, and find out what he thinks it is going to take for companies to be successful in these uncertain times.

Dealer/Provider: What has been the biggest positive change you have seen in HME since you first got into the business?
Ryan: I would have to say the increased professionalism and sophistication of our industry. Accreditation and licensure are very positive changes also. They have made it harder for companies that are not quality-conscious to enter the industry, and they have helped decrease fraud and abuse. The continued push for meaningful quality standards and compliance with those standards can only further enhance our image. At the very least, they will ensure our future as an industry.

Dealer/Provider: What is the biggest adverse change in that same span?
Ryan: Continued reimbursement cuts and regulatory burdens have caused instability over the years, forcing the industry into a constant reactionary mode. Our goal should be to continue to increase the sophistication of care we provide by improving on technology and patient outcomes. We can do neither unless we are paid properly.

Dealer/Provider: Among the regulatory burdens, which are most onerous?
Ryan: Easily, it is Medicare postpayment audits. They are extremely time-consuming and problematic, especially if you are asked to produce additional documentation—which may not be in your records but may be in the physician’s. Of course, these days, almost anything in our industry that is regulated by the government tends to be over-regulated. If you add up the costs of compliance with all the regulations, you often find they exceed the cost of the product or service you are providing.

Dealer/Provider: Should regulations be entirely done away with?
Ryan: No. Some are necessary. Certainly the ones put in place in response to fraud and abuse, and those intended to protect consumers. But many others are unnecessary and are detrimental to both the industry and the interests of consumers.

Dealer/Provider: Do you feel the home care industry is working properly?
Ryan: I don’t think that we as an industry can claim to be successful until we can be looked at as part of a solution to health care in America.

Dealer/Provider: And right now the industry is not looked at as part of the solution?
Ryan: Not really. We are still a small part of the total health care picture, and we have a lobbying force that is tiny in comparison to that of other industries in health care. This is one of the reasons we are such easy pickings when it comes to decreasing our reimbursement rates, which is done so that budgetary dollars will be available to pay for other programs. What we need to do is prove—not anecdotally, but quantitatively with good data—that we are an important piece of the total health care picture.

Dealer/Provider: Is there enough data now for that purpose?
Ryan: Sure. I think there is compelling data that can be pulled together right now to make our case. And it is important we do so. We also need to be able to demonstrate with hard numbers the impact that cutting oxygen reimbursements has on other parts of the system. For example, if we can’t afford to have a respiratory therapist go out to the home, how many more emergency room visits are going to result—and how much more is the system going to end up paying in the long run because of it? I would actually like to see the system start rewarding us for keeping patients out of the hospital.

Dealer/Provider: Why is your company so keen on technology?
Ryan: We are in a very competitive market, and technology is one of the ways we can differentiate HCC. We have been technology-driven almost since the beginning. For example, we were one of the earlier companies to embrace the home-fill technology and portable battery-operated concentrators. And, today, we are a paperless office where, eventually, we hope, electronic CMNs will be a routine part of operations. As things currently stand, we spend less time analyzing raw data—thanks to our technological capabilities—and I receive a weekly dashboard report that gives me the key metrics I need to look at, which makes it a lot easier to make important decisions. Our positioning as a technology-focused company is strong enough that HCC is considered an education resource, a provider that sees it as a responsibility to make sure patients understand and appreciate the latest technology.

Dealer/Provider: Speaking of education, you also have a reputation for helping patients understand current reimbursement changes.
Ryan: That is correct. We educate patients on Medicare and Medicaid reimbursement policies and practices. We feel that is important because it helps them—along with patient advocacy groups and referral sources—understand how they will be impacted by the severe reimbursement cuts for oxygen and changes in pricing for inhaled respiratory medications—national competitive bidding included.

Dealer/Provider: You are running HCC and you are also chairman of AAHomecare. What kind of changes are you having to make in your life, and your way of working, to wear both hats at the same time?
Ryan: Association work has always been a daily part of my business routine—and I have been in this business 25 years—so this is nothing that has required any getting accustomed to. I was a past-chairman of NYMEP (New York Medical Equipment Providers) and was active with one of its predecessor associations, ESMED (Empire State Medical Equipment Distributors). I am still with NYMEP and serve as the chairman of its legislative committee. But make no mistake: it is very much a challenge to simultaneously run a company and lead an important association. My business partner—Frank Brown—deserves a lot of credit for making it possible. He has been very supportive by assuming responsibility for some of the tasks I would otherwise be doing myself were it not for the demands on my time. Frank and I met serving on the NYMEP board, and he helped me launch HCC in 1988 as a copartner.

We both know the value of working with associations, networking with successful players in the industry, and lobbying. Another asset is the tremendous support I receive from my HCC management team, which shares my and Frank’s philosophies concerning what it takes to continue having a successful company.

Also, I am carrying around a lot more personal electronics these days so I can be in touch at all times. I have been a Blackberry devotee for about 5 years now, but it does become a bit overwhelming after a while. Every time my Blackberry beeps to announce the arrival of a new e-mail, I feel I have got to stop what I am doing to look at it. I am trying hard to break myself of that habit [laughter].

Dealer/Provider: Is the time commitment a big part of the reason we don’t see more providers willing to roll up their sleeves and become involved in the political process? Might there be other reasons for their reluctance?
Ryan: Perhaps it is fear of the unknown. My belief is that, if you rely on government entitlement programs for your revenue, and particularly if it is a significant percentage of your revenue, your role as a CEO of your company must include lobbying. You should come to the AAHomecare legislative conference, go to a Capitol Hill visit with your peers, sit in the back of the room, and watch the seasoned providers in action. Don’t worry: any fear you might have will soon be overtaken by the competitive entrepreneurial spirit that is within you. Before long, you will want your turn on the stump, stepping up from the back of the room.

But look, there will always be a segment of the industry that chooses to remain on the sidelines. They will figure somebody else can be counted on to do the advocating for them. We need to continue to get these companies off the sidelines and participating more. At the very least, they need to become members of both their state home care association and the American Association for Homecare. They need to contribute dollars and input so we can more effectively deliver our message to lawmakers.

Dealer/Provider: How generous are these sideliners when it comes to financially supporting the associations?
Ryan: It amazes me how many executives balk at kicking in even a $500 contribution. That is not a lot of money, yet, when it is pooled with other companies’ contributions, it can buy quite a lot of lobbying on your behalf in the halls of your state legislature and on Capitol Hill.

Dealer/Provider: What do you hope to accomplish during your term as AAHomecare chairman?
Ryan: I would like to definitively prove to our national legislators that we are part of the solution to the crisis in health care in the United States. So, I will be advocating for our industry to continue collecting the data that we can give to our legislators, providing them with irrefutable facts that prove this point. However, I also feel it is crucial that this industry enter into a period of stability. In other words, we need to stop the never-ending cuts to reimbursement. We need to protect our wins and we need to advocate for market-basket updates.

We need to fill the Program Advisory and Oversight Committee (PAOC) meeting room, letting CMS see that we are concerned about national competitive bidding. We need to convince Congress that continued cuts cannot be part of the solution. We need to align with physician groups and with the patients we serve to keep getting this message out. The providers in every segment in this industry cannot let poor public policy threaten the businesses we have all worked so hard to build. When my term as chairman ends, I would like to be able to say that I helped harness the strength of the small providers who serve this industry and previously sat on the sidelines, that I had a hand in recruiting them to serve as foot soldiers in this battle against reimbursement cuts. If I can help generate the sense of urgency that gets them involved, I will have built on the success of past AAHomecare chairmen and done my part to help move this industry in the right direction.

Dealer/Provider: You bring up competitive bidding. What can be done to affect the debate concerning the shape and direction competitive bidding ultimately takes—or is that a lost cause?
Ryan: First of all, I believe competitive bidding—restrictive contracting is what it really is—can be fixed. And it is absolutely crucial that it be fixed because, unless that happens, so-called competitive bidding will actually discourage competition, threaten quality of service, restrict patient access to home care, and put small providers out of business.

Fortunately for us, there are several promising avenues to remedying its harmful provisions. One is legislative action. Two members of Congress—David Hobson (R-Ohio) and John Tanner (D-Tenn)—last month (August) introduced HR 3559, the Medicare Durable Medical Equipment Access Act of 2005, a bill that would be very favorable to us. It would modify many of the restrictive contracting requirements for home care that were included in the Medicare Modernization Act of 2003.

Among other things, it would exempt rural markets—areas with populations under 500,000—and would in all markets exempt items and services unless savings of at least 10% can be demonstrated, compared to the fee schedule in effect on January 1, 2006.

What else can be done? Well, another important avenue is working through the PAOC, which provides guidance to CMS on dozens of critical decisions that need to be made to implement competitive bidding. The home care community is represented on this committee by several very capable individuals. From the AAHomecare perspective, fixing this is our top priority.

As a small provider myself, I am especially concerned about the impact of restrictive contracting on the little guy, which is why AAHomecare recently created a committee to address the specific small business concerns raised by this issue. One of the things we are going to be pushing for is a reevaluation of the assumed savings that would result from this bidding process in light of all the cuts to HME over the past 2 years.

Dealer/Provider: What is the status on the “any qualified provider” idea/initiative?
Ryan: This is a provision we are pushing to include in the national competitive bidding system that basically says a provider, if qualified, should be allowed to compete. We think that is reasonable. We don’t think it is reasonable for CMS to limit the number of providers in the program by winnowing out those who can’t meet CMS’s arbitrary pricing and standards.

Dealer/Provider: What about the issue of quality as it relates to competitive bidding?
Ryan: AAHomecare contends that quality standards must be in place before restrictive contracting is implemented; otherwise there is going to be no way to ensure quality of care. AAHomecare supports a high standard because we recognize that it will help eliminate questionable business practices, which is one way we can gain more credibility in the eyes of government officials.

Dealer/Provider: Looking ahead, beyond competitive bidding, what do you foresee as the next big threat the home care industry will face?
Ryan: The biggest coming threat is actually one that has been with us for a long while now—a continuation of federal and state budget pressures. Our federal and state governments are stepping up their efforts to find programs they can squeeze and cut. So our job is to educate Congress and the governors about the cost-effectiveness of home care.

This gets back to my point about needing to show that we are part of the solution. Home care is a very cost-effective and innovative sector in health care that can help the United States cope with a growing demand for care and address the problem of health care inflation.

Dealer/Provider: After CMS issues its new accreditation standards, what impact will that have on providers previously accredited? By the same token, to what degree will those seeking first-time accreditation find the process difficult, cumbersome, time-consuming?
Ryan: Until we see the standards from CMS, it is difficult to know what impact this will have. Hopefully, the standards will be part of the Notice of Proposed Rule Making, which is due out this month (September); we will have an opportunity to comment on the specifics at that time. What we are looking for is some sort of a deemed status, or grandfathering provision, for providers already accredited.

As to providers going through the process for the first time, yes, it will be time-consuming, cumbersome, and costly. However, I am confident they will find accreditation to have been worth the effort. There is a need for quality standards, and I believe any company that wants to be able to submit bids must also be able to abide by the standards. By the way, the number of providers who will need to be accredited is potentially quite large while the number of accrediting bodies are comparatively few—which means there will be many logistical issues to deal with—and, to my thinking, that is one more good reason why national competitive bidding ought to be delayed.

Dealer/Provider: The political process is often about compromise. Apart from competitive bidding, name an issue affecting the home care industry and involving Washington or the states on which there is no room for compromise.
Ryan: The answer is any issue where a policy decision would damage the infrastructure for providing high-quality and cost-effective home care across the United States. We have an obligation to protect patient access to care—to quality care. Millions of home care patients depend on that. As far as I am concerned, any attempt to reduce access to care or to reduce the quality of that care counts as an attempt to damage the infrastructure and is therefore an issue on which we can’t compromise.

Dealer/Provider: What do you predict the HME business will look like 5 to 10 years from now?
Ryan: Obviously, the technology will continue to advance and change for the better. Manufacturers will continue to improve their designs of home-fill concentrators and portable concentrators in ways that help drive some of the variable costs out of providing those particular products. In 5 to 10 years, we will see a higher percentage of providers using these newer technologies. Meanwhile, patients will continue to be more informed as consumers, so I would look for them to be more demanding of this newer technology.

Turning again to manufacturers, I think they will keep using direct-to-consumer advertising as a strategy to increase demand for their products. Generally, home care will still be a service industry; however, it will also have a far greater focus on outcomes because there will be widespread use of pay-for-performance based on those outcomes. Consolidation? There will be some of that too, but because home care is very much a locally oriented industry, there will continue to be a mix of national and local providers competing to meet the increased demand for products and services. All in all, I am confident the industry will still be here and doing OK, if our united voices speak loud enough to lawmakers today.

Rich Smith is a contributing writer for Dealer/Provider.