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Headline News
Apria Banks on Infusion Market with Acquisition of Coram
LAKE FOREST, Calif.--In a strategic move away from reliance on Medicare and Medicaid, giant HME provider Apria Healthcare Group said it will acquire Coram, a national home infusion and specialty pharmaceutical services provider, in a $350 million cash deal.

Company officials said the addition will position Apria as the leading nationwide home infusion provider. Together, the two companies care for more than 100,000 patients in all 50 states.

It also sets up Apria to enter the rapidly growing specialty pharmaceutical market and to expand existing managed-care relationships in its respiratory/HME business. Headquartered in Denver, Colo., with 2,100 employees, Coram has more than 70 branch locations, 50 company-owned ambulatory infusion sites, 1,100 clinicians and centralized pharmacy distribution services to patients nationwide.

"This is a transformative event for Apria Healthcare," Larry Higby, Apria's CEO, said in a statement. "The transaction supports our strategy of diversifying our service offering by adding and expanding complementary product lines that fit well with our core competencies. In addition, this expansion makes Apria significantly less reliant on government reimbursement policies, since government payers will represent a smaller percentage of our overall business."

Higby said in making the purchase, Apria is banking on the future of the infusion sector. "With more than 400 new infusion or injectable drugs in manufacturers' pipelines--over half of which are expected to be released by 2010--we believe that the future of the specialty infusion business will be strong," he said.

John Arlotta, Coram's chairman, president and CEO, will continue to lead its operations after the merger is complete. Apria's acquisition of the Denver-based, privately owned company is contingent upon governmental and regulatory approvals, but officials said the deal could close as early as mid-November.

Arlotta said the merger would allow delivery of "cost efficiencies that payers are looking for."

Apria expects Coram to generate $500 million in revenue in 2008, and said that would work out to between $3.5 million and $5.5 million in net after-tax earnings. But investors' concerns that Apria was shelling out too much money in the deal sent its shares down by $1.38, or 5.6 percent, on Tuesday, closing at $24.23. By Friday afternoon, the share price was $23.20. In the past year, Apria stock has fluctuated from a low of $20.75 to a high of $34.36.

In July, Walgreen Co. announced its acquisition of specialty pharmacy and home infusion provider Option Care, including a network of more than 100 pharmacies in 34 states, in an $850 billion deal. (See HomeCare Monday, July 9.)

With more than 3,000 providers across the country, the infusion market is fragmented. But Walgreen's said the Option Care buy would garner it a 6 percent share behind market leader Coram, which had an 11 percent share.

Walgreen's estimates the specialty pharmacy and home infusion markets at $60 billion a year, with a projected annual growth rate of 20 percent.

To read the NPR report, click here.

To Build or Not to Build: That Is the Manual Wheelchair Coding Question
ORLANDO, Fla.--It could be as late as January 2009 before new codes for manual wheelchairs are implemented because officials are still grappling with how they should be designed, according to a top SADMERC official.

CMS and the SADMERC are attempting to revise the manual wheelchair codes to keep up with new technology.

"The codes will define a continuum of technology that increasingly provides more sizes, options and features that meet a patient's needs," said Dr. Doran Edwards, the SADMERC's medical director, speaking at the National Coalition for Assistive and Rehab Technology's manual wheelchair update at Medtrade earlier this month.

But the SADMERC is in a quandary about how best to do that, he said. Officials are mulling two types of coding possibilities:

1) Establishing 10 "builder" codes that would allow a variety of options so a manual wheelchair could be customized for a patient's weight and health requirements; or

2) Creating 40 codes in 10 weight categories to cover a spectrum of needs.

With the builder code, a provider would start with a basic frame, seat back and wheels. Everything else would need to be added. However, Edwards said, that could "make it possible for you to make a chair more individualized."

The weight-type coding would include more features, but there could be a major drawback. "By doing that, we have handicapped people who need one thing more and we've overpaid for those who need less," Edwards said.

It's quite a challenge to decide which type of code serves both the needs of the patients and the industry, Edwards said. "We're trying to create a coding platform that still allows for the sophisticated products. So do we follow the model of the [power mobility devices] and slice the pie as thinly as you can slice it?" he asked, referring to the recently revised PMD codes that swelled to a total of 78.

That might be too confusing, he said, "so maybe the builder chair would be easier to deal with."

Edwards said that various entities have already weighed in on the issue, including manufacturers, clinicians, consultants and professional organizations such as the Rehabilitation Engineering and Assistive Technology Society of North America.

He would also like input from providers, he said, noting he hopes that a decision regarding the codes will be made "somewhere around the first of the year."

The medical director also said the SADMERC is looking into coding for pediatric chairs. As many as a dozen codes could be added in that category, he said.

Whatever the SADMERC finally decides, things will not be the same. Coding changes will lead to reimbursement changes. Crash testing might become a required option. Codes for various options and accessories would also be revised.

"I live in an Alice in Wonderland world," Edwards said. "We're in the mushroom stage. Whatever we do, it's going to change."

One thing will not change. "We still want to provide the full technology to the patient," he said.

Comments on the codes can be e-mailed to dr.doran.edwards@palmettogba.com.

For questions, CMS gave the MCARE help desk phone number at (866) 324-7315.

AAHomecare to Testify on NCB before House Small Business Subcommittee
WASHINGTON--Reported in its newsletter last week, the American Association for Homecare said it will testify before the U.S. House of Representatives Small Business Subcommittee on Investigations and Oversight at a hearing on the Medicare national competitive bidding program.

Rep. Jason Altmire, D-Pa., the subcommittee chairman, called for the hearing, which will include testimony from both CMS and representatives from the provider community.

AAHomecare is encouraging providers, patients and other industry stakeholders to attend the hearing, which has been tentatively scheduled for Oct. 31 in Room 2360 of the Rayburn House Office Building on Capitol Hill.

For more information, contact AAHomecare's Alex Bennewith, senior manager, government affairs, at alexb@aahomecare.org.

Provider News
Simplex Gets $50M Growth Funding from NEA
BRENTWOOD, Tenn.--Simplex Diabetic Supply has secured a growth equity investment of $50 million from New Enterprise Associates, the company has announced.

A company statement said Simplex, formed in 2007, now provides service to more than 24,000 patients, making it the 12th largest out of 52,000 Medicare diabetes suppliers.

'The U.S. market of diabetic supply providers is fragmented and consists of small- to medium-size players," said Chip Linehan, NEA general partner, who along with NEA's Ryan Drant, will join the Simplex board of directors. "NEA's investment reflects our belief that Simplex's experienced management team has the vision and skill to build one of the largest diabetic supply organizations in the country."

Diabetic patients make up 5 percent of the U.S. population but account for more than 15 percent of total drug spending, the company said. "We believe that diabetes treatment will become the fastest-growing therapeutic category in health care over the next few years," said Larson Douglas Hudson, CEO. "Simplex is well capitalized to set new standards in patient care and provide innovative services for the rapid-growth diabetic testing supplies market."

With 1.3 million new diabetics diagnosed each year, the company said, the U.S. diabetes epidemic is growing due to the aging and increasing obesity of the population. Simplex said estimates from the Centers for Disease Control show that nearly 21 million Americans are diabetic, and another 41 million are prediabetic, a condition with elevated blood sugar levels not quite high enough to be classified as diabetes.

Richard Pinson, Simplex chairman, said the capital infusion will allow the company to accelerate its acquisition strategy.

Manufacturer News
Pride's Meuser Confirms Congressional Run
EXETER, Pa.--Pride USA President Dan Meuser has announced his candidacy for the Republican nomination for the U.S. House of Representatives, representing Pennsylvania's 10th Congressional District.

"During his 20 years with Pride Mobility Products Corp., Dan has seen firsthand how the work of the mobility industry makes a difference in the lives of Americans with disabilities. His commitment to the industry and those it serves will only expand as he takes his extensive business experience to the political arena," said Scott Meuser, chairman and CEO, Pride Mobility Products Corp. "Dan's election to Congress would provide the industry with a passionate subject matter expert in Washington, and Pride Mobility Products Corp. fully supports his decision to run. We are excited for Dan and look forward to his continued success as he begins his campaign."

A vocal HME advocate, particularly regarding power mobility issues, Meuser has worked with government officials such as Sen. Arlen Specter, R-Pa., former Sen. Rick Santorum, R-Pa., and Secretary of Health and Human Services Mike Leavitt. He is a member of the Senatorial Inner Circle Commission, serves on the Financial Committee for the Pennsylvania State Republican Committee and is Honorary Chairman of the National Republican Congressional Committee Business Advisory Council. Within the HME industry, Meuser has served on the board of the National Coalition for Assistive and Rehab Technology and is a board member of the American Association for Homecare.

In 2006, Meuser was a recipient of HomeCare magazine's HomeCaring Award in recognition of distinguished service to the HME industry.

"My career has been about helping build a business and helping build a great place to work, and I will take that experience to government in helping our area move forward economically and making it a better place to live," Meuser said at a Medtrade press conference.

While there are a number of issues to address in the 14-county district, which has "6,456 miles and 646,323 souls," Meuser described, "one of my main positions is senior advocacy. It's what I know best--advocating for seniors' health benefits and retirement benefits and advocating for the disabled ... There's no question that industry advocacy will be something our industry will be able to count on." If he is elected to Congress, Meuser said, he would consider forming an HME caucus.

"I'm very grateful to Pride's employees and customers for their support of my decision to run," Meuser said, adding that he "will remain very committed to my core business strategy of setting and accomplishing goals that has served me well throughout my career at Pride."

Meuser will take a formal leave of absence from the company late this month or in early November to begin campaigning full-time. Pennsylvania's primary election will be held April 22.

Pointing to support from his family, Meuser said, brother Scott had only one condition for the new campaign: "Just win."

Respironics Adds Apollo Light Systems, Keys on 'White Space' in Sleep, Respiratory Markets
ORLANDO, Fla.--In keeping with its new theme of "Envisioning Tomorrow, Improving Today," Respironics announced earlier this month that it has acquired Apollo Light Systems, which manufactures light therapy systems for melatonin suppression and circadian rhythm sleep disorders, in a $6.5 million cash transaction.

Operating under the name Apollo Health, the company is located in American Fork, Utah, and has annual revenues of approximately $5 million.

"Apollo's light therapy technologies further our strategy to expand into the broader sleep market," said Respironics President and CEO John Miclot. "Apollo will become part of our Sleep Well Ventures business, which is focused on pursuing opportunities in insomnia, circadian rhythm disorders and other sleep/wake market segments."

Miclot added that Respironics intends to broaden the company's scope beyond its core business of obstructive sleep apnea to "serve the needs of problems sleepers seeking medical devices that are easier and more natural to live with."

"Just because you have sleep-disordered breathing doesn't mean you don't have other sleep disorders," Don Spence, president of the company's sleep and home respiratory group, told reporters at a Medtrade press conference. "It doesn't mean you can't be jet-lagged. It doesn't mean you can't have insomnia ... In fact, all of us have sleep disorders," said Spence.

He noted that some people suffer from what he termed "the winter blahs"--or seasonal affective disorder--which light therapy is designed to help.

While Apollo's products--including BriteLite tabletop light boxes and GoLite handheld devices--are currently sold direct through the Internet and mass merchandisers such as Costco, "in time there could be a more prescriptive product," Spence said.

"We really are trying leverage off of our market needs approach, which is about creating new solutions in what we call 'white space' in the sleep and respiratory arenas," said Miclot. "If you think about it, one of the best ways to grow a company is to create a new market where there are no competitors, etc., and we are very focused on doing that." The strategy also helps providers by creating new opportunities, he said.

Among new products introduced at Medtrade, Respironics debuted:

-- Its miniaturized MicroElite compressor nebulizer for asthma and COPD patients who want a portable device. With a treatment time of seven minutes, "it's basically about shrinking everything down so it's a whole lot more convenient," said Tim Gordon, director of marketing, respiratory drug delivery. A follow-up to its MiniElite, introduced last year, the palm-sized MicroElite is a product for people who may already have a tabletop compressor but also want a portable unit to take with them. "We find more and more active people who have a need for these products," said Gordon, who noted the MicroElite is a good cash item but is also "priced suitably for reimbursement."

--Its BiPAP AVAPS noninvasive home ventilator. Using Average Volume Assured Pressure Support--or AVAPS--technology, an algorithm provides an average tidal volume by automatically adapting pressure support to meet the patient's needs.

--Its EncoreAnywhere patient management system. Incorporating features from its Encore Pro database system, introduced last year, physicians, clinicians and other care providers can access patient information anywhere through its Web-based portal.

Miclot noted that the company is "focused on the patients that we serve and trying to improve the quality of life and the comfort that we can provide them through the therapies that we envision."

Murrysville, Pa.-based Respironics--which is forecasting growth "in the mid-teens" and earnings per share of 15 to 20 percent--will spend more than $70 million in research and development over the next fiscal year, Miclot said. "We have over $300 in cash with virtually no debt that we'll use to continue to expand the business both domestically and internationally," he said.

On Oct. 5, the company marked the official opening of its new customer relations building in Plum Borough, Pa. The global call center houses nearly 175 employees who handle 5,000-plus calls a day from more than 141 countries.

SeQual Eclipse Garners Wall Street Journal Award
SAN DIEGO--SeQual Technologies has received the Wall Street Journal's Technology Innovation Award in Medical Devices for its Eclipse portable oxygen concentrator.

"The scientific innovation and development required to make the Eclipse possible was substantial," said company CEO Jim Bixby. "We are pleased to have our work recognized as not only cutting-edge but also capable of having a major positive impact on millions of people with chronic lung disease."

Developed over five years at a cost of $12 million, the Eclipse weighs 17 pounds, has a retractable handle and wheels for mobility and is about the size of a student's backpack.

The WSJ awards recognize technological breakthroughs in such areas as medicine, software, the Internet, wireless and consumer electronics.

In Brief
The Tanner-Hobson bill has picked up 130 cosponsors, including 18 new signers over the past month, according to AAHomecare. Nearly half of the recent supporters are from New York, "thanks to a September fly-in by the New York Medical Equipment Providers Association," AAHomecare said. The bill, H.R. 1845, would amend the competitive bidding program to allow all qualified providers to continue to participate in Medicare at the bid rate. However, the association said, there are still 46 members of the House who cosponsored a similar bill last year who have yet to sign on to the current measure. To find out whether your state's representatives are supporting the bill, visit www.aahomecare.org for a list of current cosponsors.

The Med Group kicked off its 40th anniversary celebration at Medtrade in Orlando, Fla. In a congratulatory note from David Miller, former Med Group chairman, president, CEO and current mayor of Lubbock, Texas, the group's hometown, Miller stated: "The founders of Medical Equipment Distributors, Inc., now known as The Med Group, were men of integrity with a passion for serving the physically challenged with the equipment and supplies from their stores. The basis for Med was unity which produces strength which accomplishes desired results. Now, forty years later, I am so proud of all the Med members have accomplished because of that unified strength. I cannot possibly know the millions of people that have been positively touched by Med members through these forty years. I do know, however, that the world is a better place in which to live because of Med, the principles it stands for, and the service it and its members provide."

On Thursday, Sens. Susan Collins, R-Maine, and Robert Casey, D-Pa., introduced the Home Health Care Access Protection Act of 2007 (S. 2181) to prevent CMS from imposing scheduled administrative cuts to the Medicare home health program. According to the National Association for Home Care and Hospice, unless Congress intervenes to stop the cuts, "fewer people will have access to care, those who do qualify will receive less care, more than 50 percent of all Medicare providers will be paid less than it costs them to provide services, many home health providers will go out of business and overall Medicare costs will increase because patients who had been receiving care at home will be forced to receive their care at five to 10 times the cost in overcrowded hospital emergency rooms or nursing homes. Others will simply go without the care that is vital to their health."

Flu season is upon us. Government officials say providers should begin now to encourage patients to get their flu shots--and health care professionals should also protect themselves by getting flu shots--as the best defense against combating the flu this season. Medicare provides coverage of the flu vaccine without any out-of-pocket costs to the beneficiary; no deductible or copayment/coinsurance applies.

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