New Hampshire

CONCORD, N.H. - Providers are still trying to sort through the rubble after the state's Medicaid program in December began using Gulf South Medical Supply as its sole distributor for incontinence supplies.

Providers must now buy their supplies from Jacksonville, Fla.-based Gulf South and bill Medicaid an average of cost-plus-30%, depending on the product. That may sound like a good deal, but it's not, providers say: After they've covered their administrative and delivery costs, their profit margins are more like 15% to 20%. Before, when they could negotiate directly with wholesalers, their profit margins were more like 40%.

"We're trying to determine whether to provide incontinence supplies in the future," said Tamme Dustin, director and CFO of Herron & Smith in Hooksett, N.H., in January. "It's really a matter of, 'Is this still a program that's viable or do we walk away?'"

To make the change a little easier to swallow, some providers are considering no longer delivering incontinence supplies like diapers and pull-ups.

That's what Darryl Coplan did--a move that has cost him about 100 customers so far.

"Still, we knew that if we were going to be able to continue participating in the program at all, our customers were going to have to come in and pick up their supplies," said Coplan, general manager of Keene Medical Products in Lebanon, N.H.

In general, customers haven't exactly taken well to the change, providers say.

"The reps have been excellent at providing free products to get customers into something, but it's like with anything else, when they get used to something, they don't want to change," Dustin said.

Gulf South distributes supplies from 14 warehouses, including one in New Hampshire.