Podcast - The Fast-Growing Wound Care Industry

Morgan Ribeiro: Welcome to Counsel That Cares. This is Morgan Ribeiro, the host of the podcast and a director in the firm's healthcare practice. Today's guests are industry leaders in the wound care space, one of the fastest growing segments of the healthcare industry. Driven by the rise in chronic diseases and ongoing aging population and many other factors, the segment is getting a lot of attention from investors, regulators and many others across the industry. Today's guest, Juliet McBride, a partner in the firm's Houston office, and Dr. Jon Belsher, an industry leader with a well-rounded career path, spend a large chunk of their time in the wound care space and will offer up their wisdom and insights during our conversation. Juliet and Jon, thank you very much for being with us. 

Before we discuss the industry trends and the developments in the wound care space, which I mentioned in my intro, I would love to hear a little bit more about each of you and your background. So Jon, why don't you kick us off?

Dr. Jon Belsher: Thank you, Morgan. I'm the president and CEO of HealBridge. We provide wound care services to skilled nursing facilities in Texas. And as a physician executive for a number of years now, I sit at that ultra-critical intersection of high-quality clinical care and business execution.

Morgan Ribeiro: Amazing. Juliet, how about yourself?

Juliet McBride: Thank you, Morgan. I practice my legal area on helping healthcare providers, most often with issues tied to payment somehow, whether they are receiving the appropriate payment, defending that payment against state Medicaid programs or the OIG, or helping companies think about new models of payment that might not be as readily available yet with the shifting landscape in healthcare. As well as helping companies that help other healthcare homes.

Morgan Ribeiro: As I mentioned in the introduction, this is a growing area of the healthcare industry, really something that we've seen over the last few years in large part due to the prevalence of chronic disease like diabetes and obesity. We have an aging global population [with a] substantial economic burden of non-healing wounds and rapid technological advancements in treatment. So in essence, the rising volume and complexity of wounds combined with proving clinical and financial benefits of advanced treatment have made this space a prominent and rapidly growing area. Juliet, I'd love to start with you just as kind of a basic question. When we talk about the wound care sector, what exactly are we talking about here?

Juliet McBride: Yeah, it's a big sector for sure. So we're talking about providers or clinicians primarily who are helping patients with their wounds and treating them and helping them through that journey. We're talking about companies that actually make products that help with the wound care healing process. So whether that's a skin substitute or other kinds of products that might be used in the healing journey. Topical gels, different drugs, different screening methodology. So there's companies who focus on that. And then we also have players in this space who are really keen on getting the products into the right hands. So that might be the middle person between the manufacturer who's created the product and the ultimate clinician who's using it. And, of course, we've got the patients who are suffering from the wounds who need these services.

Morgan Ribeiro: Great, thank you for that very succinct definition of the space that we're here talking about. So Jon, you've recently launched a business that is targeting this segment. Can you tell us more about your company and what drove you to invest in this area?

Dr. Jon Belsher: You bet, I'd be happy to. Wound care, as Juliet alluded to, has come so far in the last 10, 20, 30 years. I think back to what it was like when I first went into medicine and was training and things have progressed quite a bit. Wound care, interestingly, is very, and unsurprisingly, a very high-impact area, but historically fragmented, if you will, and I would say historically sort of overlooked. Outcomes have varied widely based on process and not just product, given that fragmentation. And for our business, we're focused on the post-acute care space, and in particular, the skilled nursing facility space, because these patients or residents, if you will, are oftentimes some of the sickest and least visible to the system. I'll say this, the beauty of the business that we are designing and operating is, wound care, in my mind, is one of those few areas in medicine where doing things better clinically simultaneously reduces downstream costs, given the economic burden of care for wounds that is not optimal or done properly, if you will, or on a timely basis.

Morgan Ribeiro: Great, thanks for that, Jon. And Juliet, beyond what Jon has shared, I mean, are you seeing certain areas of the wound care segment where investments are being made?

Juliet McBride: Sure. And I'd like to expand on something Jon hit on, which I think is absolutely right and kind of dovetails into these investment areas, which is oftentimes the clinicians working in this space and with these patients see a fuller picture. Sure, they're post-acute after the hospital, but they've been dealing with them since before. And so what I'm seeing as far as investment is really trying to approach more of a care continuum for that patient, as opposed to just one-off office visits or treatment. I'm seeing a lot more hands-on capabilities with patients, meeting them in the home setting to help them really develop into a healthier individual. I'm see more technology to support those measures of reaching the patient more directly in the home setting. You're seeing CMS invest in ways to support technology of monitoring patients differently. And I think there's just a lot in the investment space as it relates to how to reach that patient more directly.

Morgan Ribeiro: Great, thank you. And I think all these advancements and all this growth is wonderful. And at the end of the day, it can be really good for the patient. I'm curious, is there a flip side to all of this growth?

Juliet McBride: Glad you asked, because so many of us right now are busy in this space with respect to the exponential growth of Medicare audits and scrutiny investigations, all somehow tying back to, it seems, wound care and the use of skin substitute products. And it seems that the enforcement environment is so hot because this space related to cell tissue products in particular has grown rapidly over the past two to three years, like record speed. And unfortunately, at times, I think the government can view rapid growth as inherently bad and expensive. And I think some of us in the industry would view that rapid growth as something inherently good. It means something's working. It means more patients are getting access to care in different ways they didn't have before. So there's that difference in view as to why or how the rapid growth came about. The payment for some of these services has been called into question as well because cell tissue products are different. They've traditionally been treated as a drug or biologic for payment purposes by CMS, which means that payment has been differing across each different product type, based upon an average sales price. And so you could have a varying price difference of a cell tissue product that costs hundreds of dollars versus cell tissue products that cost multiple thousands of dollars. And with that variance, I think [it] has introduced increased scrutiny on the part of the clinicians who are using the products. And an unwelcome narrative from the government that clinicians are drawn to more expensive products in order to reap bigger benefits of the use. You're going to see a lot of that go away now, as far as those allegations are concerned, because this year CMS has come out just with a new payment methodology effective this year and has really instituted certain safeguards that they've tried to implement in order to change that payment structure.

Morgan Ribeiro: Great, that's really helpful. And Jon, I'm curious, anything you'd add there as it relates to sort of that flip side of the growth and investments in the wound care space?

Dr. Jon Belsher: You bet. Innovation in and of itself is a great thing. We've had so much innovation in healthcare in my life, and it will continue into the distant future, if you will. And generally speaking, it's been a great thing, given the treatments and the processes and the medications and the solutions that we're able to leverage in the healthcare system. Innovation is always a win importantly, though, when it's tied to indication. Outcomes and documentation being an important thing and not just availability. So the way I see innovation is if something's designed and it actually improves the patient's care at bedside and ultimately impacts the outcomes, it's definitely a win. If innovation is seen as a, well, it's available, we should try to use it, that's where there's a bit of a gray area in my mind. So I think innovation is great. Appropriate selection [and] deciding when to leverage innovation at bedside is really important. When those two things are aligned, it's a win-win.

Morgan Ribeiro: Excellent point. Well, you know, you mentioned this earlier, Jon, but I'm curious if you want to elaborate on this at all about the post-acute care space and sort of that intersection of wound care specific to post-acute care. Are there any particular shifts that you're seeing in that segment?

Dr. Jon Belsher: I am. And one thing I'd like to go back to is what Juliet said earlier, it got me thinking about fragmentation, which I mentioned, and the continuity of care. So interestingly, fragmentation in my mind can not only be related to variance around the care that individuals are receiving, but fragmentation can be fragmented care along the continuum of care, if you will. So it can be point in time, or it can be along the continual. And I think in both those regards, both of those areas have to be addressed. Juliet, understandably, was talking about the continuity or the continuum, if you will. So important. I also was referring to the idea that our goal with HealBridge is to create, optimize and consistent standards across skilled nursing facilities and market states and the nation, whereby individuals are being treated with the latest standards, if you will, and techniques and solutions, so that there's continuity. And that continuity in my mind — now I put on my physician hat — is definitely tied to evidence-based medicine and what moves the needle from the standpoint of outcomes. And I think, you know, that's why we're focused on the post-acute space. I think I shared this earlier that the post-acute space is such an important space, it's a growing space. And in my mind, as a lot of individuals and companies are looking elsewhere in the healthcare ecosystem for opportunities, sometimes some of these areas, if you will, are overlooked a bit because they just aren't as visible to us on a day-in and day-out basis. But in my mind, not only do we have a segment of individuals who require a good, high-quality, outcome-based care, ensuring that it's compliance-first, going back to the idea of what do we use, what do we leverage, it all needs to be done based on evidence-based medicine outcomes, but also the economic burden of these individuals not receiving the highest quality of care or driving the outcomes that we need to absolutely leads to downstream costs that are significant to the system.

Morgan Ribeiro: Absolutely agree with that, and Juliet, you mentioned earlier about incentives and payments for wound care. I'd like to dig a little bit deeper into that. Can you give us some examples of what we are seeing as it relates to reimbursement?

Juliet McBride: Sure. So on the reimbursement or payment side, we're seeing with respect to historical claims, claims related to services provided over the last two to three years, a second or third look at those claims that have already been paid and audits associated with the use of cell tissue products or treatment modalities, including wound care just generally. And clawbacks associated with those services based upon allegations that the services were not reasonable or necessary, but then understanding that the denial really ties to a broader theme with respect to the view that certain products are experimental and investigational. And that goes back to one thing we were discussing earlier with respect to just having newer and more products on the market, which is a great thing. But with that rapid growth has caused more spending. And now you see payers — government payers and commercial payers, frankly — trying to recalibrate the payment that's already happened by going back and doing what is called clawbacks. Now that we're in 2026, the idea is maybe some of this landscape will change now that there's a more uniform payment methodology. So CMS has established a new payment structure under the physician fee schedule that now assigns just a singular price across all skin substitutes, as opposed to that variance that we talked about earlier that could range from hundreds to thousands. And so, with that, there's a lot of thought around enforcement on a go-forward basis, but I really want to highlight something else.

I keep piggybacking on words that Jon says because I think they're really critical. I wrote down two words that he said, and I just want to briefly touch upon them in a payment context: overlooked and outcomes. Based on what I've seen over the past couple of years in payment and structuring payment, it seems oftentimes that those clinicians who are more mobile in nature have been overlooked in trying to identify or define appropriate payment structures. What I mean is there's different costs associated with a clinician who's got to employ other clinicians going into the patient's home: the gas mileage, you know, the need to treat the patient in the home setting differently, the need to look at products differently because they need to be able to go in a car and they can't just be in a refrigerator all the time in the clinic. And when you read through CMS' preamble discussion as to how they came up with new pricing structures, often time it's based upon structures that aren't relevant to many of our clients. It's based on hospital patients, but that's just a whole different model. Those patients are seen and cared for differently — as they should be — but then how can we overlook the clinicians in this other context. And the outcomes are going to be different, too. So my hope is that as reimbursement continues to evolve, that CMS will invite to the table some more relevant stakeholders who can really speak to outcomes in a different way for treating patients mobile-y, for treating patients directly.

Morgan Ribeiro: Jon, what's your reaction to that? I mean, I feel like that sort of touches on your area of expertise.

Dr. Jon Belsher: Well, I listen to Juliet [and] I get excited about, frankly, what we're doing and just the opportunity. And this is why I love being in healthcare. The ground is fertile. There's just so much opportunity to continue to optimize and improve and streamline and elevate the healthcare system. And wound care is just one sliver of that, if you will. So there's just much opportunity. I'm excited that there are people like Juliet who've devoted their careers and their time to optimizing a space like this, because if we can improve care in this space and improve outcomes, I think it has far and wide ramifications, if you will. I will say that in healthcare, based on my experience, if a company's business model is based on sort of one payment structure, one payment area is emphasized over others, and you're modeling it that way, or you're thinking about it that way, that's a very risky way to probably approach the business because two things I think are flawed in that regard. One is that you're leading with sort of the business model and the revenue and what is it going to look like on paper. The second issue is, if you're overemphasizing one component of your service or your company, that puts you at risk that you may not always be leading with the right decision around what the patient really needs at bedside. So the counterpoint to that is I firmly believe that if you lead with what is best for this individual patient at bedside — not for all patients, but this individual patient at bedside: What can they derive the most benefit from? What is unique about them that requires one treatment or another? What do evidence-based medicine guidelines say? What do outcome-based treatments show? If you lead with that, you decide by patient by patient by patient, individual by individual, what the right treatment is, whether it's CTPs, skin substitutes, etc., you'll always do well. Because my firm belief is not only will the care of that individual be optimized or ideal, but as a business, going back to that intersection, I talked about that critical intersection between a high-quality clinical care and business execution, if you lead with what is best for the patient, what will drive the best outcome without regard to the financial model of your company or business, you'll do just fine. It's the converse, if you will, that at times can lead companies to go down a very rocky or tricky path, if you will.

Morgan Ribeiro: And speaking of that, I'm curious, Juliet, going back to you, you know, we've talked about reimbursement. With that comes kind of regulatory and enforcement. There have been several headlines over the last year or so where there were pretty high-profile cases involving reported fraud, waste and abuse in the sector. So I'm curious if you're seeing any particular trends as it relates to enforcement in the wound care space.

Juliet McBride: Thanks, Morgan. I keep doing this, but I have to, because Jon brought up a great structure for compliance, which is patient first and evidence-based. When you do see models stray from that, I think you get to some of these headlines that you ask about, you know? So some of the more egregious headlines include instances where companies may have only and always used a certain type of product just for financial gain, even on patients that might've been near death. But that's one end of the spectrum. At the other end of the spectrum, you have well-intentioned and well-meaning providers who might not understand the full nuance as to the care they're pushing forward. They might not have understood at the time that they were buying a product for the care. Everything was shored up with respect to how they were going to purchase it or how they were going to use it going forward. And I think that a lot of the headlines you might be seeing relate to instances that might have either focused on one end of the spectrum too much on the product and not the patient, to the other end of spectrum, that this is a more complex environment. And sometimes what one may deem as conduct that's not deemed appropriate by the government could really be confusion as to the do's and don'ts, as to how to acquire or purchase a simple product that's going to be used for patient care. Folks can really focus on understanding that nuance with appropriate help and understanding what laws they might be bumping into. They might not even know that exists, that there are certain laws that could govern how you buy a product or the purchase of a product could be viewed a kickback if [there's] some sort of significant discount that's not deemed appropriate or based upon fair market value. So I would just say take caution and heed as to what you're seeing in the headlines because they're just really [ranges] on both ends of the spectrum.

Morgan Ribeiro: Great. Well, as we wrap up this conversation, I would love to know from each of you, is there anything that I have not touched upon in terms of what you're seeing in this sector, whether that be related to the growth or regulation or reimbursement?

Dr. Jon Belsher: I’d just like to add, Morgan, that I was thinking Juliet and I may need our own radio show because I agree with her in so many regards. And going back to what she said, I just want to underscore that there's some great parties, great individuals, great groups doing wound care today, and I just want to call out those parties because they're doing it the appropriate way based upon the patient at bedside, outcome-based, evidence-based medicine, etc., And as Juliet alluded to, and I wholeheartedly agree, they may not fully understand the ramifications they're abutting, if you will. So I want to reassure everyone that's listening: There are great parties trying to do the right thing today, delivering great care, and we're proud to join them in this movement, if you will, to elevate the standard of care in wound care in the post-acute space. The other thing I want to say at a high level, if I may, is, as in every industry, and healthcare is not excluded, incentives shape behavior. And incentives can be a really good thing, and incentives can be less than a good thing. If our incentive in healthcare is to improve your care at bedside — the individual, your family member, your loved one, your cousin, your patient — if we can stay focused on the incentive being improving an individual's care at bedside, not only do we do fine economically, but the system improves overall in reducing its costs. So I think incentives are really good, great thing. But at times, we have to recognize that they can drive the wrong behavior. And I think we have to consciously always remind ourselves, why are we in healthcare? We're in healthcare to take care of the person at bedside, first and foremost.

Morgan Ribeiro: Great, Juliet, anything you'd add?

Juliet McBride: Yes, there's just a couple of things I think I'd say in closing. First, I've been really inspired in this space and getting really closely and deeply into it over the last two to three years because I've met so many passionate people who care so deeply about patients and meeting those patients in different ways. I've learned so much and I've learned a lot about patient care options. And what is now described as limb salvage, meaning there are clinicians out there who want to make sure patients have their full-service options as opposed to just being another subject for an amputation, that has been an eye-opener for me and really inspiring to see. And I'd close with saying that if I were to dream up my ideal payment change for providers, it would be that there's a way to reward these really complex cases wherein you've got a patient who might've been going to the hospital every six months because of their infected non-healing wound over the past three years, but have come forward and gotten completely healed and aren't going to be in the hospital as much anymore. I think those stories are plentiful from what I've seen, but for some reason they're not making the headlines. And I wish that they would, and I wish that there would be a payment structure to really hone in on those differences that are being made by clinicians like Dr. Belsher and others in this space.

Morgan Ribeiro: Great. Well, I mean, it sounds like this space is, we could probably check back in a year from now and see where we are, because there is so much innovation happening in this space, a lot of new solutions. It seems like it's also very right for consolidation and sort of partnerships and those across the industry, looking for ways to kind of bring better care, better efficiency. And you guys are at the center of all that. So I appreciate you joining me today for this discussion, and look forward to learning more from you all in the future.