Big GPO gobbles MED up

Tuesday, December 21, 2010

LUBBOCK, Texas - The largest alternate site group purchasing organization (GPO) in the United States acquired The MED Group in November.

The question is, with competitive bidding threatening to change the face of the HME industry, why jump into the market now?

"We don't like competitive bidding--we think it is wrong and that it is a flawed process," said Mike Sicilian, president of Managed Health Care Associates (MHA). "But at the same time, when you look at the demographics, we think that this is a good place to be. The people who are going to survive are those who can provide solutions to their members, and we think we are good at (that)."

As part of the deal, MED Group CEO Bill Elliott will resign but will remain a consultant during the transition. All other members of MED's management team will join MHA, and MED will continue to be operated out of Lubbock, Texas.

In a release announcing the deal, Elliott stated that "aligning with MHA will allow MED Group to further expand its model and to make additional investments in business solutions."

Sicilian agreed. MHA has been in business for 21 years and brings a number of strengths to the table for MED members, he said. This includes additional purchasing power (MHA members currently purchase about $5 billion a year compared to $350 million for MED members), and expertise in setting up managed care networks.

When it comes to group purchases, price is important, but not the sole factor, Sicilian said. Providers need to also consider if a product provides efficiencies that help them reduce costs.

"If all members do is talk about price, price, price, at some point the manufacturer says, 'I can't go there,'" Sicilian said. "It's our job to give members the tools and resources they can use to compete, but the manufacturers need to be a partner in that. In a partnership, everyone gets what they need out of it to grow their business."