COMPETITIVE BIDDING - SIZE MATTERS

Needless to say, the controversy over competitive bidding is only going to get hotter.

As reported in HME News, Washington is taking another look at the process after the latest round of bid winners were announced.

The winners naturally anticipate they will be able to grow their business and capture increased market share. Additionally, with more volume they think they will be able to cut their costs since they will be able to use volume purchases to offset the price increases that vendors have passed through. Those who lost the competitive bidding wars are concerned about whether they will be able to stay in business. And the vendors will walk a tightrope in going after the winners to increase business without threatening the losers who will still have markets to serve.

While the impetus for the program revolved around the idea of reducing the costs to medicare, the proof will ultimately be in how much of a cost reduction actually will occur. And at what cost? Some of the questions I have are as follows: Will the winners put the losers out of business or drive them to more effectively uncover new markets? Is this another example of bigness triumphing over the small guy and putting people out of work. And what protection is there in the next round of bidding, if the winners have reduced the number of competitors, that would keep the winners from increasing their medicare bids without fear of competition. These are just some of the issues surrounding the competitive bidding process.

HME/DME Manufacturers Look For Ways to Help Providers Reduce Costs

In the past, if Medicare cut reimbursement, HME/DME providers more often than not pressured manufacturers to decrease product pricing a comparable amount. However, a recent article featured on hmenews.com reports that manufacturers are no longer complying with this old strategy.

"This is not an environment where manufacturers can fund these changes," said Carl Will, Invacare's group vice president for HME. "Even with competitive bidding, it's not likely that prices are going down. Manufacturers are under significant pressure and in an already low-margin business."

Manufacturers may not be able to decrease costs; but they can help control them. At Pride, employees help providers with coding and billing, which speeds up the claims process and increases cash flow. Another way to increase cash flow that should be considered by providers is Medical Accounts Receivable (MAR) funding. With MAR funding, debt-free funds are available for everyday operations, business growth, expansion, etc.

Providers can also use MAR funding to increase their purchasing power. They can use the increased cash flow to take advantage of volume order discounts and save money on freight charges by reaching the 500-pound minimum for free shipping available by most manufacturers.