Selective Contracting

Though compelling in their most conservative estimates I’ll leave out the supporting statistics so as not to distract the message with questions on the accuracy of the numbers. Let’s just consider common sense. Lots of people are getting older. Healthcare needs can therefore be expected to increase. The cost of providing care to so many people is a major concern especially considering the current status of America’s debt and ongoing budget deficits. Admittedly, home medical equipment services is a very small sliver of the Medicare spending pie but one that should be examined. Not just because of a few bad apples that exist in every other industry. Not even because of a misperception of gross overpayment on equipment. It should be examined for its potential to contribute significantly to offering a solution to our healthcare challenges. If care can be provided in the home it should be. There is less chance of infections and patients prefer it which leads to better outcomes. The real bonus is that it is actually radically more cost effective than institutional settings.

Homecare includes all of the services we provide to insure the safe effective use of medical equipment and supplies in the home. Sometimes this is in conjunction with home nursing but many times it is not. We employ respiratory therapist and trained delivery technicians that not only setup the equipment and educate the family but also become vital resources after hours preventing unneeded 911 calls and supporting fragile patients in times of power outages or even natural disasters. The industry is made up of many small businesses that create a safety net allowing the patients to successfully continue services in the preferred and most cost-effective setting…their own home.

Recognizing the buying power of Medicare may seem at first glance like a great way to reign in the growing cost of healthcare BUT you must look at the unintended (perhaps) consequences. Eliminating most providers from participating in Medicare for at least three years will effectively put them out of business. Our economy needs the support of many small businesses. Consolidation and placing all bets on the efficiency of economies of scale has already proven to be very costly. Look at how much the taxpayers are paying to try and rescue some of these companies all because we have allowed them to grow to a point where their falling would cause great distress. It would seem one lesson to learn is to not put all your eggs in just a few baskets. Diversify the taxpayer’s risk by encouraging many smaller organizations.

We are already there in homecare and yet the selective contracting model threatens to change that. The very notion of destroying this vitally important fabric for the perceived (and scored) savings is counter intuitive. Fewer providers available to meet the growing demand for services will require prices to increase. Yes, even the little savings that may be wrought from bidding are short lived. Sadly, the damage done to the cost effective homecare providers is not so easily reversed. You should not kill the goose to get the golden egg. While I think every stone must be overturned to look for savings in these trying times, I believe the reductions already taken have pushed providers to the brink of having no life blood. Many steps toward embracing technology have been taken to manage overcoming the repeated cuts thus far sustained by those of us remaining.
Policy going forward must embrace improvement from the foundation that still manages to exist. Further elimination of providers via immediate cuts or exclusion will only raise the price tag of any serious reform efforts needed to address the nation’s healthcare challenges we face. If bidding is to be part of that reform it must be done in a way that does not eliminate providers. The most service intensive offerings such as oxygen and complex rehab should not even be a part of the bidding. Anything that remains should be done in a manner to allow for any willing provider to participate. Ideally the bidding would only be done to adjust the fee schedule so that the ongoing costs of conducting bids would not go against any savings achieved. I really do not know if even the first round of bidding will produce enough savings to justify the project but certainly it should be examined afterward before proceeding to a round two. Our (American taxpayers) resources are too precious to waste on what may in the end amount to political posturing. My hope is that some good may come from all the resources that have already been poured into this ill conceived project…that the attention on this industry will finally shine a light revealing the good we do.

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