Coloplast splits providers

Monday, September 30, 2002

OAKLAND, Calif. - Whether Coloplast's exclusive contracts with managed care payers are examples of a vendor overstepping its sales boundaries or an innovative way for providers to gain market share depends on whom you ask. One thing is certain, though - no one is ambivalent about it.

The Coloplast/Amoena Authorized Network has had contracts with several managed care organizations for a couple of years, but the concept ruffled feathers among Northern California women's health providers recently when the Marietta, Georgia-based manufacturer announced a new agreement with the Kaiser Foundation Health Plan. Coloplast and Oakland, California-based Kaiser have had a relationship since 1997, but terms of the new deal - which calls for providers outside the network to use only Coloplast products - raised an outcry from some 50 women's health providers in the region.

At issue is a condition that women's health providers furnish Kaiser patients with only Coloplast products and that the payer will issue credits for new product purchases instead of cash reimbursement. This dramatic change in the supply chain paradigm has sparked debate in women's health circles, with both sides polarized on whether it is a positive step for medical product provision.

Cheryl Maloney, director of marketing and business development for Fremont, California-based Bras For Body and Soul, told HME News that the basis for her objection is a concern that the manufacturer is trying to corner the market in women's health by eliminating competitors.

"It's clear to us that they are trying to garner a monopoly in this business," she said. "We want them to cease and desist from brokering our services. We have no intention of empowering them to meet this goal."

Amoena's director of sales, Jay Markowitz, expressed dismay at the Northern California backlash and asserted that the program is designed to serve the best interests of its providers.

"We are very concerned when our retailers feel they won't get a fair shake," Markowitz, who along with other company executives, met with the Northern California providers in early September. "Our retailers are very important to us and they need to understand that we want them to get a win out of this."

The issue is so divisive that even members of the same organization have different viewpoints, as is the case with Women's Health Boutique, which has 18 locations around the country. While founder Vicki D. Jones is skeptical about the concept, Ann Schneider, who owns a branch in Escondido, California, strongly supports it. Susan Brooks, who co-owns a WHB location in Torrance, California, offered a milder endorsement of the program.

Jones said while she believes Amoena is a good brand, she has resisted joining the network in part because of a directive that members maintain a minimum inventory. Moreover, Jones says she doesn't want to be pigeonholed into having Coloplast products as the predominant option for her patients.

"We buy specialty prosthesis and bras from them, but we won't stock them," Jones said. "They are losing us as a good customer, but apparently that's okay with them."

Conversely, Schneider says she loves the network because the managed care contracts gave her instant access to patients when she opened her shop just over two years ago.

"It makes life easier," she said. "It has worked out beautifully."

As for the policy of credits over currency, Schneider says she doesn't mind because it defrays the cost of purchasing products that she buys anyway. And providers can get cash payments if their credits exceed the minimum inventory requirements.

Brooks is less enthusiastic about the program, saying that she "can live with it because the ultimate flexibility is still with the provider."

For instance, even though the policy is for managed care patients to receive only Coloplast products, allowances are made if a patient is better served with another product.

"They have a big variety of products and most of them work, but if on occasion a Camp product is more appropriate, they will make an exception," Brooks said. HME