Small Town, Big Ideas

Mexia is a small town of 6,000 that is typical in Central Texas, but it has achieved notoriety for being the hometown of Anna Nicole Smith. Unfortunately, all of the stories of Anna Nicole are based on the past — from super model to billionaire’s wife to a legend who died too young.

Yet in Mexia, one HME provider is looking forward, not backwards, to improve his business and ensure its future.

W.H. Wragge, RRT, has been in the HME business for 26 years, and he intends to stay. MultiPlex Health Care Services, a full-service HME company that has five locations in Texas, started preparing for competitive bidding years ago through automation, education and diversification.

Focusing on efficiency is the “war plan” for his business, Wragge says, and he advises others to do the same. “If you are not efficient, you have lost the game,” he says.

Efficiency Is Name of the Game

That said, being efficient is challenging, especially in the HME industry. “There has always been change. Change is going to be constant, but so much of our industry is made up of independent providers and we want to take care of our patients,” notes Wragge. “For us, this has evolved into a noble approach of being very patient care-minded, which we still are today, but we have had to adjust the way we run our business. The mind-set must be on efficiency.”

When Wragge witnessed demonstration projects in Polk County, Fla., and San Antonio, he knew the government would proceed with competitive bidding and that he needed to plan ahead. His forward-thinking turned out to be a good move since two of the company’s locations landed in the Dallas competitive bidding area. It also meant he had to rethink his longtime business model, which involved a focus on rural care. “With competitive bidding we are going to have to go into the Dallas metroplex,” he says.

Wragge says that while competitive bidding equates to nothing more than decreased revenues, it will elevate the professionalism of the HME industry. “It is going to create a more difficult pathway for people who are not committed to professionalism, which is a positive aspect for our industry,” he says.

But he also wonders why HME providers are targeted so often. “Obviously, there are negative sides to competitive bidding as well. We have been inundated with cuts to the industry as a whole. Our total percent of the GNP is only 2 percent, so why have we been focused on so much?” he asks. “The industry has to step up and has to come to a certain level of standardization. As a provider, you have to realize this is a serious situation, and you have to systemize your business to be able to meet the demand.”

For those who think this will all “go away,” Wragge has additional advice. “If you are waiting on a white knight to come in, then you are going to fall behind. There may be some carve-outs, but you can’t bank on it — you have to go by the facts,” he says.

“Nobody thought it would get to phase one, and now many believe it will not get to phase two, that instead it will convert to an ‘any willing provider’ method. And it may, but we do not know for sure,” he adds.

To create critical efficiencies for his company, Wragge’s first step was to research available computerization and billing systems. Wragge chose a Web-based system, and with its use, he says the company is on the brink of being paperless, which creates both cost and time savings.

“Our system offers us a more direct path instead of a seek-and-find approach,” he explains. “There are a lot of systems out there, and providers should approach finding the right one through a technology-oriented fashion.”

Education Is Another Must

Education is another important element to utilize, according to Wragge. He believes in staff and patient education and views them as essential to his business. “Every staff member has to know every piece of equipment we provide, and their knowledge goes on their employee record,” he says. “Their raises and evaluations are all based on the number of educational units they complete.”

Patient education is an equally significant factor in MultiPlex Health’s model. The company’s history has shown that better educated patients result in fewer after-hours service calls. “You have to spend time with the patient. It is what keeps us known as a patient-minded company,” Wragge says.

In an environment in which many HMEs are laying off employees, Wragge believes a reduction in staff would also reduce the commitment to the core values MultiPlex Health has chosen. “Cutting staff is going to cut a segment of care out of your organization. I choose to go the other way,” he says. “Our staff focuses on the patients’ understanding of the equipment and teaches troubleshooting of that equipment at their level of comprehension, so they know when to call us for additional support.”

Wragge is so confident in his 42-member staff’s abilities to educate their patients that he knows after-hours calls are related to true patient need. The company’s 14,000 patients get a live person when they call no matter what time of day, every day of the year. He adds that the company has also reduced recalls by 20 to 30 percent by concentrating on education.

To ensure continued success, whether he wins his bids or not, Wragge has also made a commitment to marketing, and the company has two staff members whose jobs are concentrated on marketing efforts. The company is working toward growth in managed care, specialty contracts and private-pay opportunities. Each location also has a retail sales area, and Wragge says the company has experienced a tremendous increase in its retail business.

He also takes responsibility for the company’s future. “My job is not to sit behind a desk and point fingers,” he says, mentioning his continual hunt for new opportunities and a goal of reducing Medicare revenues to 20 to 25 percent of business.

Get Prepared for Bidding

MultiPlex Health’s locations in Kaufman and Waxahachie fall in the Dallas CBA, one of CMS’ initial 10. Once that information was made available, Wragge said he attended many meetings and talked with other providers while formulating his bidding plan.

He learned there was an excessive focus on low bids, which he felt would not be logical or acceptable from an economic standpoint. “Our bid is very realistic and is based on money-driven concepts,” he says. “There are the people who have not done their homework on how to approach the bid — and the ones who will not be here next year — because they will not get the bid or they will have to be too dependent on revenue streams outside of what the bid can provide for them.

“A lot of people still do not realize that it is going to be the median of those bids that is going to set the parameters, and you have to be realistic about your costs,” he says. Wragge adds that you must have an activity-based costing approach to bidding. “If you don’t know those numbers, you can’t submit a realistic bid,” he notes.

Because the reality is that margins will be reduced by the competitive bidding process, Wragge remains focused on efficiency. “I am a firm believer that the more efficient we can be, the better we can widen those margins. That is the only thing we have left to influence the numbers,” he explains.

Without subcontracting, Wragge says submitting a bid would not have been possible since winning companies will not fully know the demand that will be placed on them. Although it is a less profitable option, it does offer a solution. “Thank goodness for subcontracting. If there were not subcontractors, I probably would not have bid,” he says.

Choosing the companies he would enter into a subcontracting agreement with involved several factors, Wragge says: “They had to be VGM members, they had to place extreme importance on HIPAA rules and the complexity of their business had to be similar to ours. It had to be patient-care focused and had to be a good representation of us.”

The impact of competitive bidding on patient care will be evident soon enough, Wragge points out. “The system is going to completely change overnight in April of 2008 when the reality of competitive bidding begins to dictate where patients get their equipment,” he says.

He acknowledges the government must do something about the cost of health care in the United States but says competitive bidding is not the answer. “We know there is a problem. We have this massive [tsunami of aging Americans] that is coming and the government is trying to do what it can to prepare for it, but competitive bidding is not the answer. It is going to be as drastic as turning a light switch on and off.”