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