14,575 Jobs Lost Under Competitive Bidding, Weeks Predicts

MELBOURNE, Fla.–Industry consultant Wallace Weeks of Weeks
Group has estimated the implementation of competitive bidding will
cost the HME sector a total of 14,575 jobs.

In what he calls a “best-case scenario,” Weeks
predicts a loss of 2,662 full-time equivalent jobs from DMEPOS
companies in nine of the 10 MSAs in the program’s first round (San
Juan was excluded from the forecast), and another 11,913 jobs lost
in 69 of the 70 MSAs in round two. New Orleans was also excluded
from the report for lack of credible data, Weeks said.

According to Weeks, it appears that approximately 44 percent of
providers bid in round one vs. 56 percent who did not. But the
failure rate of the companies that bid and did not win may actually
be greater than the failure rate of those that did not bid at all,
he said.

“Since the industry is made of small companies, and some
of their owners have indicated the requirements of participating in
the bidding process is an untenable burden–and some of those
companies derive large portions of their revenue from
Medicare–there will be a significant failure rate among that
segment of non-bidders,” Weeks noted.

But on the flip side, he explained companies that did
bid–theoretically those dependant on Medicare for a large chunk of
revenue and that need to protect it–could be in trouble if they
don’t win their bid. “The bidding providers are more likely
to be those with 20 percent or more of their revenue at risk. Not
bidding is not a practical choice, and not being awarded a contract
is, at best, a major setback,” he said.

As to which companies will be left standing, Weeks said, it
could be a toss-up. However, he pointed out, “When it comes
to employment numbers that’s immaterial; the relevance is to
individual employers that are having to let employees go, and to
those employees and their families.”

What’s more, he said, the number of contracts that will be
awarded is “not the whole story. We have an entirely
different set of problems with the pricing.”

Weeks analyzed the employment data to help the American
Association for Homecare generate media awareness about the effects
of rounds one and two. On Thursday, shortly before CMS’
announcement of round one pricing, the association sent a press
release to national media summarizing recent congressional letters,
economic studies and data from Weeks that “all raise grave
questions and concerns about the bidding program,” AAHomecare
said