From: HME News
ELYRIA, Ohio – With Round 2′s imminent rollout, Invacare knows a new group of HME providers is scrambling for strategies to deal with competitive bidding. That’s why it launched a program at Medtrade in October called “Act Now, Ask Me How.”
Wearing buttons with the program’s name, Invacare’s Mal Mixon and Cara Bachenheimer set up shop in the company’s booth at the show to discuss how providers in Round 1 managed to keep their businesses intact, despite the program’s many challenges.
“As the largest supplier to bid winners in the first nine MSAs, we’ve had a unique opportunity to see what works and doesn’t work,” said Brian Ellacott, vice president and general manager, Invacare North American Commercial Operations. “What we’ve seen is that providers who planned ahead, reconstructed their businesses and took out costs were the ones who were successful.”
The foundation of the program is a booklet that outlines 18 steps providers can take to prepare for and succeed under competitive bidding.
One of those steps: transitioning from a delivery to a non-delivery model for oxygen, a move that has helped Round 1 bid winners make due with one-third less reimbursement, Ellacott said.
“If providers act now, in advance of Round 2, they can have the products they purchase paid off by the time the program starts or mid-way through the first year,” he said. “That means their implementation costs drop to nearly zero, so they can remain profitable.”
Provider Joel Marx says that having a non-delivery model in place before Round 1 went into effect was key to his company, Medical Service Co., winning bids for oxygen in multiple areas.
“We bid based on our costs, and since we were using non-delivery at the time, our costs were lower than others, and we were able to bid lower than others,” he said.
Other steps include developing a three-year financial plan and arranging lines of credit. Again, these steps should be taken well in advance of Round 2, Ellacott said.
“It’s kind of like a hurricane coming: You hope it’s not going to hit you, but you better prepare for it, even if it ends up changing course,” he said. “All the steps that we’re encouraging providers to take–they will help them run their businesses more profitably whatever the future holds.”