MED cuts deals six ways

Wednesday, April 30, 2003

LUBBOCK, Texas — After consideration of 21 contract proposals from leading industry vendors, The MED Group has reached new purchasing agreements with six manufacturers. By press time, MED had announced new deals with Sunrise Medical, Pride Mobility Products and ResMed.

Sunrise will serve as MED’s full-line HME anchor. Pride will supply power chairs, scooters and lift chairs; and ResMed will handle sleep therapy products.

MED has also created new regional manager positions to help open channels between Lubbock and MED’s 250 members. So far, the company has dispatched three managers into the field. By the end of the year, five regional managers are slated to start calling on MED members on a quarterly basis, both to implement MED services for members and to foster support for MED’s purchasing contracts.

“It’s kind of like a manufacturer’s rep,” said Tom McEnany, a MED member at Wheelchairs Plus in Jacksonville, Fla. “If you don’t see him but once a year, you don’t think about him. If you see him every quarter, you’re more in tune.”

Enhancing the relationship between MED’s members and Lubbock is crucial as MED implements far-reaching contracting changes in its 35th year of business. To make good on the pricing deals that MED has negotiated on behalf of its members — one member called the terms and pricing of the Sunrise contract “phenomenal” — MED must be able to deliver the kind of volume purchasing that provides real value to contract partners.

The new contracting process does not come without some risk. While MED has signed a contract with Sunrise and ResMed, it has not signed contracts with Invacare and Respironics — companies for whom some MED members do a vast amount of business. MED CEO David Miller, who is championing the new strategic partnerships between MED members and its contract vendors, readily admits to the risk.

“If this entire process…actually creates a downsizing in MED, we’re prepared to live with that because we believe the core group of members that agree to support these efforts will be stronger and more unified than ever before,” said Miller.

Although MED’s new Request For Proposal contracting process, has yielded just six new contract partners, MED will maintain a fleet of other contracts for niche products and services such as Yellow Pages advertising and insurance.

Downsizing its stable of vendors is consistent with HME provider business plans. A recent HME NewsPoll (see April 2003) found that in five years 47% of HME providers plan to buy 80% of their products from 0-3 vendor, up from 31% of respondents today. An additional 29% of HME providers intend to cut purchasing to fewer than six vendors in five years.

Getting MED managers out into the field is also consistent with strategy at The VGM Group, where about a dozen regional reps are calling on VGM’s 2,000 members. Like MED’s force, VGM’s reps are delivering services and polling member concerns, and also beating the contract drum.

“The manufacturers we work with appreciate having another voice to present special situations and remind [members] of what products we have available and what programs,” said Jim Walsh, president of VGM Management. HME