VGM’s Bendell: ‘Bid Wisely, Bid Appropriately’

In Atlanta April 17 during a stop on the VGM Group’s National
Competitive Bidding Seminar tour, VGM President Ron Bendell took
time out for a Q&A with HomeCare Monday, and he had
some advice for providers: Pay attention to costs, get your
business in order–and take heart in the industry’s future.

Q. With competitive bidding imminent, what do you see in
the future for small HME companies?
A. We still think the future’s very bright.
There’s a lot going on in the industry to stop competitive bidding.
The mistakes that have obviously been made in round one [with]
awarding bids make things look better for our industry as far as
legal remedies.

Regardless, there have been reports that have come out that say
with the population aging, there isn’t going to be an adequate
supply of medical professionals. That’s something that Congress is
going to have to face up to and our whole government system is
going to have to face up to, so with the large numbers of baby
boomers coming into the system, there’s going to be plenty of
opportunity for the HME provider to survive.

Q. Assuming they bid but do not win a contract under
competitive bidding, do you think most providers could make it on
grandfathering patients or subcontracting or with some other
strategy?
A. There will be subcontracting opportunities, and
the Medicare Advantage program continues to grow. It is not subject
to competitive bidding, so there will be plenty of opportunities to
survive … I don’t think you have to get a bid in order to
survive. In some cases you’ll hear from winners in round one that
don’t see themselves as winners [because the pricing is too
low].

This will all sort out; it’s the latest thing people
gloom-and-doom about in our industry, but we’ve always survived and
we’ve always thrived, and that’s going to happen again.

Q. Do you think there will be some providers that don’t
make it?
A. Certainly there will be some providers that
don’t make it, but I don’t think it’s going to be anywhere near as
bad as some people are fearful of.

Q. The government has estimated that after the
competitive bidding program is fully implemented, there will only
be half as many DMEPOS suppliers doing business with Medicare as
there are currently. Do you think that is an accurate
estimate?
A. For HME providers, not even close. CMS’ 50
percent is based on the number of supplier numbers that are out
there …

If you look right now, there are 117,000 Part B numbers out
there that CMS considers “suppliers.” Many are grocery
stores and small pharmacies and audiologists, so I think the
statement that 50 percent of “suppliers” will go out of
business is accurate because a number of these suppliers will not
want to become accredited, they will not want to purchase a surety
bond should that become finalized, and some of them arguably should
not be in the DME business in the first place.

That’s where I think you will see the fallout … but of the
true HME providers–that this is what they do on a day-in and
day-out basis, taking care of the beneficiary to the best of their
ability–it’s not going to be anywhere near 50 percent … It
will be much, much lower.

Q. With the pricing that has been set for round one, do
you think companies that accepted contracts will be able to service
those contracts, or do you think we’ll see some providers dropping
out?
A. That remains to be seen, but the pricing is so
low it makes it difficult to understand how some people will
survive on that type of reimbursement.

Q. Do you think we’ll see the same type of bidding in
round two that we’ve seen in round one?
A. No. I think with the results of round one,
people in round two are looking at that and saying ‘Wow, so that’s
what happened with this lowball bidding,’ so I think everybody’s
going to be a little wiser. We’re recommending to all providers,
whether they are VGM members are not: Bid wisely, bid
appropriately.

Q. What is the most important issue providers should be
paying attention to today among all the changes they are
facing?
A. They may need to pay a little closer attention
to their costs and pay attention to ways they can streamline their
businesses and modernize their businesses so they can be more
effective at what they do without necessarily having to maintain
the same cost structure they have today.

Q. Do you think Congress will come around to the
understanding that home care is a cost-effective solution to some
of our health care problems, yet that is in direct opposition to
the policies we see the government putting into effect that
restrict this industry?
A. They have to. With the number of baby boomers
coming into the system, if they are not going to use home care then
it’s going to be way too expensive to maintain things as they are
today, so they are going to have to. Just as a result of what
happened in round one, we are seeing more cooperation–at least as
far as listening–from congressmen and senators who more or less
had the door closed before, but now they want to learn about it.
So, things don’t look as bleak as what maybe everybody thinks after
seeing the results of round one.