New Jersey: Medline secures contract

TRENTON, N.J. - Providers here were shocked and dismayed to learn that they were losing part of their incontinence business to Medline.

“We actually never imagined that this would happen,” said Ben Hertz, store manager at Elizabeth, -based Elmora Healthcare. “New Jersey Medicaid just went to private HMOs two years ago, and state-run Medicaid never signed exclusive deals with anybody.”

Horizon N.J. Health in August awarded Medline a contract to be the exclusive provider of incontinence supplies to its members, effective Oct. 1. Horizon is one of four Medicaid managed care contractors in the state.

The deal gives Medline access to 60% of the state's Medicaid clients, estimates provider Vikram Patel. He says deals like this aren't good for anyone involved—even the exclusive provider.

“Right now, Medline is happy, but what happens when the contract is up and the insurer says, 'Bring down the cost or we'll go to McKesson?'” said Patel, manager of Newark-based Derosa Pharmacy and Home Health, and a member of the Jersey Association of Medical Equipment Services board of directors. “In the long term, they're going to be squeezed by insurance companies.”

Providers seem to have no recourse: The state says the deal is between the insurer and the provider and it has no jurisdiction, Patel said. Providers can now only voice concerns about the deal in hopes of preventing similar deals in the future.

Medline says New Jersey is the eighth state to sign such a contract with the company. It's a trend stakeholders expect to see continue in other parts of the country and for other products.

“There is a fundamental shift in the healthcare industry driven by the states to improve quality of care, efficiencies and reduce costs,” said Mike Lee, president of Medline's Homecare Division. “We are strongly positioned to meet those changes.”

Medline declined to comment on the value of the contract, but Lee said, “This will be a strong partnership committed to delivering the highest quality of care.”