Amy Leopard: Consider joint ventures

Wednesday, September 30, 2009

What can providers gain by teaming up with the competition? Efficiency and stability, says attorney Amy Leopard, who has seen a growing trend in merger alternatives, such as joint bidding or networking and subcontracting. Leopard will identify the benefits and challenges of affiliation in "Joint Ventures, Subcontracting and Merger Alternatives for HMEs" at Medtrade.

HME News: Why are joint ventures, subcontracting and merger alternatives relevant to providers right now?

Amy Leopard:  With national competitive bidding, the industry is in a state of flux. Suppliers are figuring out how they can affiliate and be strong suppliers for national competitive bidding and for negotiation in general.

HME: What are some of the pros and cons to joint ventures and subcontracting?

Leopard: The advantage is you're able to leverage the strengths of each company and leverage purchasing power. There are, however, more relationships to manage and there are legal requirements that you have to be mindful of, such as antitrust and anti-kickback laws.

HME: What are some of the obstacles providers face when forming joint ventures or subcontracting and how can they overcome them?

Leopard: You will have more moving parts. It requires more formality and contracts that set forth how you're going to do things together.

HME: What are some of the elements of successful joint ventures or subcontracts?

Leopard: Nail down the aspects of the relationship that are important to you financially and strategically. For example, I'm starting to get more inquiries from providers about larger managed care contracts or other ways to grow their businesses without relying on the Medicare population.

HME: How did providers do when they tried to form joint ventures and subcontract during Round 1 of national competitive bidding last year?

Leopard: It was a wild ball game last time around. We saw a lot more subcontracting than networking, partly because people weren't prepared.

HME: If providers take away one thing from your session, what should it be?

Leopard: With a good understanding of the alignment strategies, you can choose the one that helps you meet your objectives for competitive bidding and private contracting.