By Thomas Ryan
The days of scrambling to secure toilet paper are over. But the pandemic is continuing to wreak havoc on supply chains.
Pet food is in short supply. Restaurants are warning customers that their favorite meals may not be on the menu. Then there’s the shortage of semiconductor chips, which has raised the price and curbed the availability of medical devices.
Waiting for a piece of medical equipment can be life-threatening. Our leaders must therefore make bolstering the medical supply chain a bigger priority.
They can start by ensuring the companies that provide and service medical equipment are paid enough to compete for the scarce chips and raw materials that they – and their patients – need.
Many of these companies care for homebound patients who rely on things like motorized wheelchairs, ventilators, and home oxygen. More than 63 million of these patients are covered by Medicare.
Pre-pandemic, Medicare’s payment rates to home medical equipment providers were barely sufficient to keep them in business. In the last decade, some 35% of providers closed or stopped serving Medicare beneficiaries.
The pandemic has exacerbated the challenges they face. Providers are waiting months to receive parts to repair things like power wheelchairs. Prices for some parts have shot up 30% since early 2020 due to limited supply.
Over the same time frame, the cost of steel for wheelchairs and hospital beds has jumped over 60%, while the cost of polycarbonate plastics, used for oxygen tubing, nebulizers, canisters, oxygen and PAP masks, has increased by 100%.
Shipping container costs are partly to blame for these dramatic spikes. Since the pandemic began, the cost of these containers has risen over 1,200%.
Then there’s the chip shortage, which has disrupted production of everything from blood pressure monitors to remote-control hospital beds.
When the price of inputs rises in other industries, companies typically pass the increase on to consumers. But home medical equipment providers are constrained by pre-determined Medicare pricing that doesn’t account for today’s costs.
That leaves them to either stop taking on new patients or absorb the cost increases they’re facing – perhaps by curbing their workforces, shrinking their geographic service area, limiting the selection of products to meet individual’s needs, reducing complimentary but essential services, and more.
All of those options diminish patient outcomes and access.
Congress and the administration must take action to ensure homecare remains viable and accessible for those who need it, now and into the future. That will require addressing the chip shortage.
To his credit, President Joe Biden is taking action to shore up America’s supply lines. He’s created task forces to identify bottlenecks and bring semiconductor chip manufacturing back to the United States.
In the meantime, Congress and the Centers for Medicare and Medicaid Services must make sure home medical equipment providers have the resources to compete for scarce technological inputs. That means raising payment rates.
Medical device manufacturers should not be losing bidding wars over scarce electronic components to non-healthcare providers, just because the latter have the ability to raise prices.
These devices save the health care system billions of dollars a year. It doesn’t make financial sense to starve home medical equipment providers of funds. To survive, they must be paid an amount commensurate with their rising expenses.