Faced with potentially ruinous reimbursement cuts and hamstringing regulatory policies soon to take effect, many home care providers are scrambling for ways to offset losses and remain afloat. For some, one option could be sleep medicine.

The leadership team at Clinton, NY-based Upstate HomeCare certainly thinks so. Indeed, company decision-makers find that somnolence-oriented products and services form a perfect fit with their well-entrenched respiratory business, since sleep medicine and pulmonary therapy often go hand-in-hand. “At this point, we are exploring the viability of expanding our existing sleep program, and what we have in mind is perhaps developing a partnership with one of the sleep laboratories here in our area,” says Cathy Lewis, RRT, who manages Upstate HomeCare’s flagship office. “We think a relationship with a lab would be mutually advantageous because, together, we could be a lot more effective at capturing business and satisfying the needs of customers, referral sources, and payors.”

Seeking Buy-In
As Lewis envisions it, a key component of this relationship would be patient education, which she sees as crucial to eliciting buy-in from those for whom sleep therapy has been arranged. “We think the level of education we are already providing in our sleep program could be exceptionally helpful to a lab’s interests because CPAP prescribed for obstructive sleep apnea is not the easiest therapy to get accustomed to,” she says. “We would explain what the therapy does, why it is important and beneficial, and what will happen if you stop it on your own without being directed to do so by your doctor.”

Buy-in would then lead to better compliance, something insurance companies are eager to see. “Payors slant their referrals to sleep labs in accordance with who offers the best compliance rates,” Lewis explains. “If we can help a lab achieve better compliance rates, we will be helping them attract more business.”

Upstate HomeCare is confident it could bring further value to a laboratory not just with improvements in therapy compliance, but also with help on the diagnostic side. “It is possible we might provide prescreening monitors specifically designed to determine if further studies are required,” says Lewis, who notes that in-home prescreening represents a good, low-cost way to identify the precursors of obstructive sleep apnea and other sleep-related disorders, thereby “allowing labs to better utilize their bed space and provide efficient scheduling of required sleep studies. Also, this could further encourage consumers to seek necessary care and avoid the health dangers of going untreated.”

Upstate HomeCare’s Clinton facility—a combination showroom, warehouse, and executive office complex—is where much of this proposed sleep laboratory support would originate, but the company may well elect to also offer it from its four branches in Syracuse, Rochester, Buffalo, and Canandaigua, NY, according to Alyce Crossman, RRT, MPS, vice president and chief information officer.

NIMBLE MOVES
Upstate HomeCare debuted in 1985 and, from humble beginnings, grew at a respectable clip. Four years after its launch, the company operated at two locations with 12 employees among them. Today it has 90 clinicians, technicians, and clerical support workers serving a customer base of roughly 4,000 patients.

The company was founded by four partners: Robert Nevil, RRT; Anthony Artessa, CRRT; Nelson Dickey, RRT; and financier Bernard Cesar, Sr. The three respiratory therapists itched to start a company of their own after becoming dissatisfied with their then-employer’s way of running things. Dickey recently died, but the other founders remain with the company. Artessa serves as president and CEO of the company, while Nevil is board chairman.

The management hierarchy—which also includes Vice President and Chief Operating Officer Gregory LoPresti and Chief Financial Officer Dan Jenkins—began lean and continues that way, and is a big part of the reason Upstate HomeCare is a nimble operation, possessing the agility necessary to jump quickly into emerging opportunities (or, if things don’t quite develop as hoped, to jump right back out largely unscathed). “Initially, we were mostly medical equipment, oxygen, and supplies,” says Crossman. “Then, for a time, we significantly expanded the supplies business, but found conditions for that to be unprofitable. So we scaled back and later ventured into rehab therapy, which we also eventually had to set aside when we found the margins were too small. Eight years ago, we added infusion therapy. That turned out to be a definite winner.”

Plenty of competition exists in the locales where Upstate HomeCare maintains a presence, and the company strives to differentiate itself on the basis of strong customer relationships.“We go out of our way to meet needs—referral and customer alike—and that is what we are best known for,” says Crossman. “Our philosophy is that, if people recognize we are always there for them, they will keep asking for us. And they do.”

FIGHTING THE GOOD FIGHT
In addition to the work it performs with patients, Upstate HomeCare participates in two industry associations—New York Medical Equipment Providers (NYMEP) and AAHomecare. Crossman serves as a member of the NYMEP board, currently holding the post of secretary. She also is a regular participant in the legislative conferences organized by AAHomecare. Crossman says she did not get involved with these groups as a matter of company self-preservation so much as out of concern for the well-being of patients. “My desire to be involved with the associations stems from a loyalty to the people we serve,” she insists. “I’ve gone into people’s homes as a respiratory therapist and taken care of them, so I’m especially sensitive about seeing people who are at-risk being taken unfair advantage of, which is exactly what’s happening to the elderly and the disabled with these backdoor, midnight-session pieces of health care legislation that keep coming out of Washington. I can’t just sit back and watch this happen to these people. I feel like I have to get involved and try to do what I can to help.”

Earlier this year, Congress passed its budget reconciliation bill. However, the so-called Deficit Reduction Act contained several provisions detrimental to the interests of home care providers, one of them being the capping of oxygen rentals at 36 months. The bill’s approval (it won by the barest possible majority in a cliffhanger vote) disappointed Crossman, but did little to dampen her resolve. “I sighed a little and that was all,” she recalls. “I decided I’ve got to get right back into the fight and dig in deeper.”

The fight now focuses on the Hobson-Tanner bill (HR 3559), which promises some relief from Medicare’s national competitive bidding. At press time, HR 3559 had over 90 cosponsors in the House of Representatives—and Crossman thinks that bodes well for passage. “We just have to keep up the pressure on Congress with this one,” she says.

But it is the oxygen rental cap that has Crossman most on edge. “The cap will force us to respond by eliminating certain oxygen-related services,” she warns. “Customers are likely going to be confused, anxious, and probably angry, but maybe this will encourage patients to hop aboard our bandwagon and join us in making calls and writing letters to Congressmen and Senators to demand the oxygen cap be repealed—or at least be modified to include some sort of maintenance provision. If constituents are upset, their representatives usually hear them and respond accordingly.”

Crystal ball time
In Crossman’s estimation, the best the industry can hope for in 2007 will be HR 3559 passing. The oxygen cap would stay, but at least it will remain locked in at 36 months. “With these circumstances, we might just be able to ride out the present storms,” she says.

In her worst-case scenario, no relief is granted on any front, and President Bush gets to pare the oxygen cap to 13 months. As a result, many small companies—and even a few larger ones—will throw in the towel. Also, as an unintended consequence of the oxygen cap, utilizations of emergency department services will spike. “What you may have happen, because of the oxygen cap, is inadequately serviced equipment that malfunctions and does not deliver oxygen in amounts the patient needs,” Crossman says. “The patient will become short of breath and end up having to be rushed by ambulance to the emergency department. In the end, it is going to cost the government far more than it will ever hope to save.”

However, Crossman knows better than to trust Washington to solve problems Washington creates. Thus, the keen interest in capitalizing on the growth potential of sleep therapy.

For her part, Lewis the branch manager is heartened by payor supportiveness of sleep medicine. “Payors no longer automatically say no when you propose adding, for instance, a heater-humidifier to a CPAP line,” she tells. “The heater-humidifier represents an extra expense, but some payors don’t mind reimbursing for it because they understand that it will help certain patients feel more comfortable—and if they are more comfortable, they will be more likely to use the CPAP device and be compliant with the therapy, which will, in the long run, save the insurance company some money.”

Lewis believes that is one of many reasons why a sleep lab would find partnering with Upstate HomeCare a savvy move. “The margins are not huge on sleep therapy,” she says, “so, if a lab and a home care provider team up, they can accommodate a lot more patients, and make up for the small margins with volume.” DP

Rich Smith is a contributing writer for Dealer/Provider.