Competitive bidding?

Sunday, June 30, 2002

BAKERSFIELD, Calif. - While providers from Maine to Alaska sweat out the threat of a national Medicare competitive bidding program, Manuel Hernandez is blissfully ignorant of the dreaded reimbursement cut.

"I don't know that much about it," said Hernandez, owner of Medi-Stop in Bakersfield, Calif. "I only know that it's coming. I know that it's starting in Florida or back East."

Hernandez is out of the competitive bidding loop for a reason: his business is 80% retail HME and the rest insurance based. Compare his response to competitive bidding to that of an East Coast provider of home respiratory services.

"I would like to think that someone out there is working on an alternative plan to hand these congressmen," said the provider who asked that his name not be used. "Otherwise, I'll be damned if I'm at the end of the mergers'and acquisition line. I'll be first."

While a rarity, Hernandez is not unique in conducting an HME business that is predominantly retail, nor is his peace of mind. Everything Medical in Las Vegas does about 75% of its business in retail, and Dick Upham, president of Medical Supplies in Waterville, Maine, has over the past six-seven years pumped up his cash business to about 50%.

If competitive bidding hits, Upham said, he could terminate his billing department, do away with related overhead and "probably survive."

There's no question about Everything Medical surviving competitive bidding, or even losing sleep over it.

"We don't even have an NSC number," said Jeff Klemen, co-owner of Everything Medical." Everyone is focusing on the Medicare high-end stuff - power wheelchairs, hospital beds, oxygen - and we are sitting here in a nice niche position."

Everything Medical's retail products include bath safety products, walkers, wheelchairs, scooters, incontinence, woundcare supplies, compression hosiery and orthotics. Medi-Stop sells many of the same items. Upham has built his retail business by adding uniforms, professional footwear, baby care products, ergonomic backpacks for kids, ADLs and hosiery.

When it comes to retail, it's location, location, location, said Jack Evans, president of Global Media Marketing in Malibu, Calif.

"I've seen so many HMEs try to be successful in retail, but no one could find them because they were located in industrial neighborhoods or business parks," Evans said.

Both Hernandez and Klemen market their retail products heavily to doctors, and get a lot of referrals that way. They even get referrals from HMEs that don't carry retail items.

"I think retail is the way to go if you want to avoid hassles with Medicare for whatever reason," Hernandez said. "Maybe their computers go down, or they need new CMNs or are cutting back. It's always something, and they take away all the plans you have for you company." HME