Each fall, Medtrade offers home medical equipment providers and
manufacturers alike a time to evaluate business and incorporate new
products and services that can enhance profit. But this year, it is
uncertain how the current legislative/regulatory environment will
impact the trade show, which takes place Oct. 2-4 in Orlando.
Will it be business as usual, or has the implementation of
competitive bidding changed the Medtrade scenario for all?
WAITING ON THE WILD CARD
Tom Ryan, president and CEO of Homecare Concepts, Farmingdale,
N.Y., believes providers will be seeking creative ways to adapt at
this year's event. “Providers in the first round will have to
factor in the probable outcome of their bids as we will not know
the winning bidders or the price at that time, and that may be a
wild card calculation,” he says.
“As we all look at activity costs as well as cost of
goods, we have to see how we can improve on what will obviously be
deteriorating margins. The challenge will be to look to either
decrease the cost of goods and services or look at technology that
can decrease some of our activity costs in providing services to
our patients.”
Ron Bendell, president of Waterloo, Iowa-based VGM &
Associates, says providers will most likely stay the course.
“We will not know the results of the first round of bids by
October and people have to run their businesses in the meantime
— and they have to do it as if they plan to be in business
for years and years to come,” he says.
While advising providers to be prepared for changes, he says,
“you have to run your business in today's environment. You
don't want to put yourself at a disadvantage by not running it
properly and not running it to the best of your
capabilities.”
Michael Farrell, senior vice president of Poway, Calif.-based
ResMed's sleep strategic business unit, thinks it is too early in
the process for providers to change their buying plans.
“Winning suppliers for the first 10 MSAs are currently
expected to be announced in [February], so I don't think it will
directly impact their buying decisions dramatically pre-Medtrade,
but it will soon thereafter,” he says.
“I expect many providers will be gathering information to
prepare for competitive bidding and will be trialing commercially
available options for value-priced equipment for contracts awarded
in the MSAs. Some more aggressive HME providers are already buying
products in advance, expecting that they will be awarded a
contract, and using the products in existing competitive HMO
environments.”
According to Tim Pontius, managing director of Steven Richards
& Associates, Tarpon Springs, Fla., buying trends at the show
will most likely not be dramatically different. He thinks providers
will continue to look for new product lines and new areas of
business.
“Everybody is kind of taking a wait-and-see
approach,” Pontius says. “For the folks in the top 10
MSAs, their degree of urgency and their attitude is going to be a
little different than those outside of those areas.”
Beth Guevara agrees. Manager of reimbursement planning for
Murrysville, Pa.-based Respironics' sleep and home respiratory
group, Guevara says providers inside the first 10 MSAs “are
wondering if they can get their ducks in a row and are also
planning what their next steps will be as they plan for winning
— or not winning — the bid.”
Those not included in this round are “waiting to see how
it will turn out and hoping there will be some relief,” she
says.
That means there could be some reluctance from providers when it
comes to spending this year, notes Carl Will, group vice president,
HME division, Invacare Corp., Elyria, Ohio.
“There is a lot of uncertainty, and providers certainly
tighten their belts and slow down their buying during periods of
uncertainty. They will spend more time trying to efficiently deploy
their assets,” he says.
“Ultimately, they still need products to run their
businesses and need to return to normal buying levels until
competitive bidding is in full effect.” However, Will
continues, “when the winning bids are determined, all bets
are off for what the non-winning bidders do.”
DISASTER PLANNING
Although only a percentage of providers are involved in the
first round of bidding, the entire industry is paying close
attention.
“Clearly there is a buzz that is affecting management
across the HME industry.” says Farrell. “Many are
watching to see if legislation may slow down or stop the
implementation of competitive bidding beyond the initial 10 MSAs;
they are waiting to see how the bidding process unfolds before
making major investments or significant costly changes to their
operations.”
Because “Medicare is the ‘bellwether’ agency
upon which many other payers base their reimbursement,”
competitive bidding has devastating potential, points out Dr.
Robert D. Hoover Jr., chief medical officer for DeVilbiss
Healthcare, Somerset, Pa.
“There has always been a perception that Medicare overpays
for home medical equipment; therefore, other payers like state
Medicaid programs and managed care often set their reimbursement as
a percentage off of the Medicare fee schedule,” he
explains.
“Assuming the reimbursement levels achieved by competitive
bidding reflect accurately the minimum amount providers can accept
and still maintain margins, further discounts off of that rate by
state Medicaid programs and managed care plans could spell disaster
for the industry.”
Hoover adds that Medicare bidding is “a very complex
program that has, to date, been fraught with difficulties in
implementation. Most providers in non-competitive bidding MSAs are
just relieved that their areas were not selected for round
one,” he says.
“While some may be (and should be) looking at their
business operations and determining how to wring more efficiencies
out of their operations, most are likely waiting to see how it
plays out.”
Though the bidding process has been frustrating for some, the
delays that have occurred with the first round also offer
opportunities for the industry to gain momentum in Congress for
legislation that would mitigate the program.
“Every time it gets delayed, it gives us another
opportunity to get the information to our representatives and
continue to fight it,” says Bendell. “The proposed
changes in oxygen we're hearing about were there at Medtrade last
year and the industry was able to fight [them] back, so the
industry will once again need to do its part to fight these
changes.”
EFFICIENCY EXPERTS
Providers who are serious about staying in business must have a
strong grasp of their costs, according to Bill Elliott, president
and CEO of The MED Group, Lubbock, Texas.
“The companies that are going to win long-term in this are
going to be systems-thinking operators and are going to be
operating their business on the basis of good information,”
he says.
“They're going to understand every element of their cost
structure and are going to structure partnering relations with a
few selected suppliers that they can have a mutually beneficial
arrangement with.”
Elliott advises providers not only to focus on what they can buy
at the show but also to seek out partners who can offer the
solutions and tools that their companies need.
It is all about improving operational practices, says Bently
Goodwin, CEO of RemitData, Memphis, Tenn. He advises Medtrade
attendees to look for ways to deliver care differently and less
expensively than they have in the past. “Providers need to
look toward streamlining processes, because eliminating
inefficiencies is going to be key,” he says.
“Competitive bidding or no competitive bidding, the HME
industry continues to be tougher and tighter. It puts the onus on
HME providers to be efficient in operations and inventory
management,” adds Gretchen Jerzerc, Respironics' director of
U.S. marketing, sleep-disordered breathing.
At Medtrade 2007, providers should be more selective with their
orders, says Ted Raquet, vice president of domestic sales for
Exeter, Pa.-based Pride Mobility Products.
“Providers need to invest in their future by making
purchases from the manufacturers that are fighting for them in
Washington. Doing business with manufacturers not involved in the
industry efforts takes resources away from those who are investing
heavily in the short- and long-term health of the industry,”
he says.
At the show, providers will be thinking about their near-term
needs arising from competitive bidding, says ResMed's Farrell.
“Providers will be responsible for serving all beneficiaries
in a given MSA, making it difficult for some suppliers to drive
long distances for repairs. Purchasing high-quality, reliable
products will help cut down on non-reimbursed business
costs,” he points out.
KEEPING YOUR BALANCE
Providers should be attending Medtrade with a two-pronged
approach, counsels DeVilbiss' Hoover.
“First, they should be attending the educational sessions
hosted by the various industry experts. Competitive bidding is a
very complicated process, and providers should ensure that they are
very familiar with the regulation and the mechanics of how it
works,” he says. “It is clear from listening to the
Open Door calls hosted by CMS and the Competitive Bidding
Implementation Contractor Palmetto GBA that there are still
providers that are confused about various aspects of the
program.”
Second, Hoover says all providers, whether they are located in
the first 10 MSAs or not, should be looking at products with a good
balance of features, quality and price. “Competitive bidding
is a pricing game; however, patients will still want products that
are reliable and provide value. Manufacturers also recognize this
and will be highlighting products at Medtrade that meet this
goal.
“Providers should be looking at all of their costs of
doing business,” he adds. “That includes not only the
cost and value of the products they purchase but also the other
expenses of running their businesses.”
While it's usually one of the most prominent conversations
providers have with their vendors at the show, this year pricing
will be an even more important consideration when providers are
looking at products.
As they do, Homecare Concepts' Ryan says it's essential for
providers to understand the true costs of providing services.
“They need to look at technology that can decrease the costs
of doing business, and look for the best pricing from manufacturers
or their buying groups,” he advises.
“Manufacturers also need to partner with providers and
teach them how to cut costs,” adds Joel Mills, CEO, Advanced
Home Care, Greensboro, N.C. “Those manufacturers who bring
money-saving ideas to providers will win in the long
run.”
Cutting both acquisition and process costs will be important
going forward, according to Mills, a past president of the American
Association for Homecare. He encourages providers to network with
their peers and get involved in the industry's fight again
competitive bidding. “If providers do not invest in
AAHomecare now, then no one should feel sorry for them when they go
out of business,” he says.
Acknowledging that there is a lot going on the legislative
front, Cara Bachenheimer, senior vice president of government
relations for Invacare Corp., says providers “do not have the
option to ignore it anymore.
“Medtrade is a good opportunity to reevaluate business
strategies and choose quality products even if it means spending a
little more on the front end. We are seeing dramatic changes in the
industry, and providers will have to be aggressive in their
approach,” she says.
Getting involved is crucial, concludes Seth Johnson, Pride
Mobility's vice president of government affairs. “Everyone
really has a stake in the industry and needs to become much more
active in Washington in order for the industry to gain fair
treatment from the government,” he says.
“I really do think positive change is possible within the
reimbursement system, but the main key there is for the industry to
remain passionate and to present those messages on a united
front.”
Crash Course in Competitive Bidding
For additional information on competitive bidding, its
effects and strategies to survive, check the following Medtrade
sessions:
- What in the World Is Going On? A Medicare Update
— Andrea Stark, Medicare consultant, MiraVISTA - Survival after Competitive Bidding: Operations and Marketing
Strategies That Set You Apart
— Miriam Lieber, president, Lieber Consulting, and Colette
Weil, managing director, Summit Marketing - Joint Ventures and Competitive Bidding Networks for
HMEs
— Amy Leopard and Robert Crump, partners, Walter &
Haverfield - Complex Rehab and Assistive Technology Competitive Bidding
Update
— Cara Bachenheimer, Esq., senior vice president of
government relations, Invacare Corp. - The State of the Power Mobility Device Industry
— Dan Meuser, president, Pride USA, and Seth Johnson, vice
president, government affairs, Pride Mobility Products - Retail HME Strategies Panel
Moderated by Jack Evans, Global Media Marketing - Power to Compete
— Wallace Weeks, president, Weeks Group - The Current Status of Legislative Activity
— John Gallagher, vice president of government relations, The
VGM Group - Structuring Competitive Bidding Networks and
Subcontracts
Neil B. Caesar, JD, president, Health Law Center - AAHomecare's Top 10 Series on Critical Issues Facing the
Industry
— Walt Gorski, vice president, American Association for
Homecare - Demand Will Only Increase: Growing Your Business in a
Competitive Bidding Environment
— Denise M. Fletcher, attorney, Health Care Group, Brown
& Fortunato - Competitive Bidding - What's It All Mean? Are You
Prepared?
— Cara Bachenheimer, vice president of government relations,
Invacare Corp. - Operations Checklist for the Current Regulatory
Environment
— Mark J. Higley, vice president of development, The VGM
Group
Advice from the Speakers
What do you need to know before heading to Medtrade? HomeCare
asked some of this year's speakers for their advice. Here is what
they had to say:
Get accredited
“My advice on accreditation continues to be, ‘Don't
wait!’ Medicare will be announcing a ‘drop dead’
date when all providers must be accredited in order to continue to
bill. These deadlines are often very short and do not allow enough
time to get all of the work done well.
“Accreditation usually takes from four to six months and
must include an unannounced survey. Your accrediting organization
needs from 60 to 90 days to schedule an unannounced visit.
Organizations that do not have time to adequately prepare risk
failure or often end up with follow-up surveys that involve
additional time and potential expenses. Therefore, at Medtrade,
take advantage of Accreditation Central and the educational
sessions. Also, talk to your peers and meet with the industry
vendors and their customers as you make your decision and move
forward.”
— Mary Ellen Conway, Capitol Healthcare Group
Plan ahead
“With the third round of competitive bidding delays,
providers should keep a close watch on the second wave of
competitive bidding. Take notes on lessons learned from round one
and plan ahead. Simulate ‘what if’ scenarios even if
you aren't sure of your company's impact or involvement. Attend
educational programs that talk about diversification, operational
efficiencies, marketing and the changing face of HME providers.
“On the show floor, look for vendor consolidation,
innovative new products that aren't reimbursable and ways to cope
with the various competitive bidding outcomes, including hasty
inventory expansion if you win, shifting products if you lose. Meld
your knowledge from the educational sessions with your show floor
time. If you determine that you will expand your retail offerings
so that you can realize additional cash sales, spend time looking
for cash products that move well in a storefront. If you learn that
inventory management and document imaging are primary initiatives
this year, make appointments with software vendors who offer this
type of business solution.
“For the HME provider of 2007, it's anything but business
as usual.”
— Miriam Lieber, Lieber Consulting
Think new revenue sources
“Providers need to do whatever they can at this time to
become accredited and to limit their Medicare dependency. Attend
every seminar that offers another source of revenue, another niche
to explore or another means to improve your current profitability
as well as exploring subcontracting for competitive bidding. All
HME businesses need to be asking themselves, ‘How can we
increase both our gross sales and net profits without
Medicare?’ Think outside the box! Think retail. Think women's
health. Think wellness.”
— Jack Evans, Global Media Marketing
Listen and learn
“While at Medtrade, providers should open themselves up to
any and all learning/changing experiences both in the educational
sessions and in the exhibit hall. Ask questions and listen and
become aware of the technology/programs that are out there. When
combined with your own creativity, these will augment your business
efficiencies.”
— Jacquelyn McClure, BS, RRT, FAARC, LGS
Enterprises
Devise a strategy
“For providers attending and investing in Medtrade with
one or many employees, your business strategy objectives should
define your needs in education, training and marketing prior to the
show.
“No two providers are alike in their markets. Be sure that
trade show programs deepen your expertise to execute your business
strategies in product, payer, service and geographic initiatives.
If your strategy is to expand or deepen relationships with
different payer sources, attend programs that provide new skills
and tools. If your strategy is to expand cash sales and retail
through specific product categories, specifically attend retail and
vendor seminars that will train you on marketing, merchandising,
customer service and promotions know-how.
“Your exhibit hall focus should basically follow your
pre-plan with key vendor appointments to identify profitable line
extension opportunities, new product/market requirements and their
program support. Be sure to leave room to see new
innovations.”
— Colette Weil, Summit Marketing
Industry Advocates Speak Up at Medtrade
Reps. John Tanner, D-Tenn., and David Hobson,
R-Ohio, will present a video keynote address to kick off Medtrade
2007. The two legislators are authors of H.R. 1845 — or as it
has come to be known, the Tanner-Hobson bill — which would
change the competitive bidding program to ensure beneficiary access
and allow all qualified providers to participate in Medicare at the
bid rate. The keynote is sponsored by Invacare Corp.
Tuesday, Oct. 2, 7:30 a.m.
Orange County Convention Center, Room W110 A/B
