Originally Published by HME News on April 21, 2017

YARMOUTH, Maine – After a slow first quarter, buyer appetites for HME businesses are picking up, say M&A analysts.

“There’s still more sellers than buyers, but transactions are getting done,” said Rick Glass, president of Steven Richards & Associates. “I think we are bottoming out on the reimbursement, and we’re slowly starting to get some appetite even in the traditional HME and respiratory space.”

While reimbursement remains dire, the business-friendly new administration, along with new leadership at the Department of Health and Human Services and CMS, has analysts cautiously optimistic.

“We’re not going back to the good old days, but some fairer treatment of providers might allow them to move forward,” said Glass.

Still casting a shadow on the improving market, however, is uncertainty around what could happen to the Affordable Care Act.

“We’re seeing hesitation from people with the uncertainty over how a (healthcare overhaul) might impact Medicaid,” said Brad Smith, managing director/partner at Vertess. “If we could get some direction one way or another, I think that would help a lot.”

Where there isn’t hesitation, say analysts: Buyers—whether they are national or regional players—are looking to expand their geographical footprint. Case in point: Rotech Healthcare last week announced it had acquired Griffin Home Health Care, which has three locations in North Carolina. Rotech currently operates in 18 markets in the state.

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Originally Published by HME News on January 6, 2017

YARMOUTH, Maine – The pace of acquisitions slowed down a bit in 2016, but overall it was a decent year for buyers, say analysts.

“The big deals have stalled out a bit, but you have a lot of people that are shopping and acquiring the small patient add-on deals,” said Brad Smith, managing partner at Vertess, a Tucson, Ariz.-based M&A advisory firm. “If you have $10 million to spend, you could get one really nice company or you could buy a whole ton of patient lists, which have more bang for the buck.”

One area of the market that buyers honed in on in 2016 was supplies, with manufacturers, in particular, busy pulling out their checkbooks. Two recent deals include Coloplast, a manufacturer of ostomy, urology, continence and wound care supplies,acquiring Comfort Medical, a provider of those supplies, for $160 million; and Domtar, a manufacturer of absorbent hygiene products and other fiber-based products, acquiring mail-order supplier Home Delivery Incontinence Service for about $45 million.

“I think we are going to see the lines continue to blur here, with manufacturers going direct to consumers” said Patrick Clifford, managing director, home medical equipment, for The Braff Group. “The reimbursement rates kind of dictate that—there’s only so much margin to go around.”

Another trend that continued in 2016: Gone are the days when providers sought to be all things to all people, say analysts.

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Originally Published by HME News on January 3, 2017

 There are a lot of unknowns for a Trump presidency and what TrumpCare (to coin a phrase) will eventually look like. While his habit of contradicting himself makes it difficult to make exact predictions, there is one clear indication of direction: his appointments, specifically Rep. Tom Price, R-Ga., as Secretary of Health and Human Services.

Price, who is himself a physician, has been a long-time champion of the HME industry. In the past, he has introduced several bills to limit or repeal the scope of competitive bidding and has also introduced a bill to create an alternative called the market-pricing program.

According to Price's congressional website, the Secretary of Health and Human Services would contract with an "auction expert" through a competitive process to develop and design the implementation of the program. At the same time, an independent "market monitor" will continue to evaluate the program, identify weaknesses and recommend changes.

By Marc Toth, CM&AA

Volume 3 Issue 11 May 24, 2016

We are in the midst of a profound change in the way healthcare is being provided outside of hospitals: the rise of the physician-owned clinic model.  The combination of accessibility, payer endorsement (Medicare/Medicaid), medical technology enhancements, and the dramatic success of the ambulatory surgery and urgent care center approach has encouraged a new generation of physician entrepreneurs.  In addition, the positive response of patients who consider themselves enlightened consumers has emboldened many physicians to see themselves in a new light, no longer under the shadow of much larger healthcare institutions.

The case of the endovascular office-based lab (OBL) or access center illustrates what is happening, including new opportunities for enterprising vascular surgeons.  Significant technology developments, ranging from drug-coated balloons to atherectomy catheters, now enable physicians to safely manage vascular disease in outpatient settings.  In fact, preliminary surveys indicate that the risk of infection is lower in outpatient OBLs when compared to inpatient settings. This innovation has led to a proliferation of vascular OBLs across the US.  There are currently more than 600 endovascular outpatient clinics operating in the US, with 30 new vascular OBLs opening each month.

The market opportunity is clear and investors, especially private equity groups (PEGs) with billions of dollars in “dry powder,” are taking notice.

Entrepreneurial vascular physicians wanting to avoid the challenges of self-funding their expansion should consider at least two of the possibilities for leveraging their clinics in the current environment:

There are undoubtedly some challenges in the vascular OBL marketplace, including the evolution of reimbursement in the Medicare/Medicaid sphere, but this is a normal part of any disruptive economic environment.  According to Arlen Meyer, MD, President of the rapidly growing Society of Physician Entrepreneurs: “Top-down innovation is being replaced by community-based innovation that comes from the trenches, not from academics.”  This is certainly an accurate assessment of the post-acute healthcare world - and it is especially true in today’s vascular OBL marketplace.

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