2009 Coming to a Close (Thankfully)

2009 has been a challenging year for businesses of all shapes and sizes in all industry sectors, the home medical equipment industry is no exception. When I talk with people about what Cape Medical Supply does the constant refrain is, “that’s a great businesses, no shortage of people who need your services.” Which is true; homecare is the most cost effective and patient preferred method of healthcare available and we are very proud of the work we do. But our industry continues to fall victim to devastating reimbursement cuts, largely from the biggest payer for our services, the Medicare program. So while demand remains high, profitability is tremendously challenging in an environment where costs are rising and major revenue sources are shrinking.

One could be forgiven for thinking that it is precisely services like ours, in times like these that Medicare should be promoting and strengthening – after all, we are locked in a pitched healthcare debate and it would stand to reason that we would be seeking out aggressive cost savings mechanisms while balancing the need for quality care. However the federal Medicare program has long viewed our sector with a wary eye and continues to institute devastating cutbacks which have proven to eliminate providers and will ultimately provide fewer choices for consumers and threaten to marginalize quality as providers have fewer resources to fund additional services.

We have worked exceedingly hard as a company to reduce our own cost structure, while concurrently balancing a need for high quality care and consistent reinvestment in technologies to allow our patients to lead more productive and comfortable lives at home. This has been more challenging this year, but we are succeeding, largely because of a laser like focus on strengthening our services, not reducing them.

2009 started with a 9.5% reimbursement cut to our largest product categories from the Medicare program…9.5%, not at all a trivial amount. Think about your own businesses revenues being cut by 9.5%, or your paycheck, what would you do to maintain services or quality of life with a cut of that magnitude? It’s an interesting question to ponder, not simply a rhetorical question.

We have chosen to focus on the expense side of the ledger, paying careful attention to insure we are not reducing investments, rather that we are aggressively attacking expense line items which will not hurt our future chances at success or reduce the levels of service we take such great pride in. One such area we have had great success in is reducing our shipping costs by switching the technology and provider platform we use for shipping outbound goods to customers. The idea, coming from a member of our warehouse staff, has succeeded in substantial cost savings with no corresponding reduction in service or quality. Other areas we have successfully attacked are trash removal, utilities, vehicles, fuel, etc. Each area we have had success in has passed the test of not reducing quality or service, simply reducing the amount paid for certain services we require to run our business.

We have also been forced to reexamine certain product categories, paying careful attention to where we excel and where we lag. Where we lag we have sought out strategic partners to take on services and provide a seamless transition for our patients; this too has been a great success, however it has been achieved through very careful examination, analysis and aggressive internal and external communications.

We have been fortunate to receive a wide variety of awards and honors this year as well; the result of 30+ years of focusing on the service we provide and what we mean to our patients and referral partners. These awards have come equally from our industry and our community, something we are exceedingly proud of and a true validation of the hard work put in by our team members every day.

We enter 2010 with a solid team and plan in place and we are confident we are taking the right steps to succeed in what remains a very challenging environment. We remain hopeful, if not certain, that pending federal legislation will recognize the key role we play in the healthcare continuum. We are not banking on increased reimbursement; rather we plan on some level of stability so we can run our business and provide our services with minimal interference and legislative red tape. Fraud is an issue, we understand that the Medicare program must do a better job containing this issue and remain hopeful they will engage us in a solution, rather than push for dangerous legislation which will do little to help the honest providers succeed – the law of the unintended consequences is alive and well in many proposals we have seen and the overriding fear is that many good providers will be lost as the hunt continues for the bad apples.

At Cape Medical Supply we believe deeply in what we do and we cherish our connection to our patients. We reach out to patients on a monthly basis for feedback; that feedback, which is overwhelmingly positive, helps us better design programs and services to enhance our business and better serve our patients. I personally review every piece of patient feedback that comes in and I am delighted to see both the good and not so good feedback we receive. When constructive criticism comes in I am known to reach out personally to see what can be done to remedy a mistake or change a policy to ensure it’s not made again in the future – that’s my job and I take it very seriously.

So, we are nearly done with our 2010 planning; nothing groundbreaking, just a continued focus on putting the best team together to deliver the best service possible. We do it with your continued help and support and I sincerely encourage you to reach out with your thoughts – gsheehan@capemedical.net – we get our best ideas from the outside and would be delighted to work with you on new and innovative ways to provide services to our community.

Thank you for your continued support…we will succeed, no matter the environment we are in, because we are confident we have the best people and the best plan in place to use those people to deliver the best services possible. It would be our pleasure to service you should a need arise!

Happy Holidays and a Happy New Year, Gary