Providers explore market to soften cuts

Wednesday, April 30, 2003

WASHINGTON — While state budget deficits and looming Medicaid cuts have forced the clamps of spending to tighten around the healthcare industry, some rehab providers are expanding into new markets hoping to bring in more revenue.

To offset the Medicaid cuts to the rehab industry, Jeff Day, chief executive officer for Freedom Fighters of Texas, said the rehab supply company plans to double the size of its Midland location and add an orthotics product line in May. The high-end rehab supplier, which has locations in Abilene and Midland, will now offer foot-pain and foot-care products as well.

“In a way, it’s a safety measure to help with the (pending Medicaid) cuts,” Day said. “This way, not all my eggs are in one basket.”

Freedom Fighters of Texas is not alone. Advent Medical in Hudson, N.H., is also exploring “diversification” by expanding into other markets, said president Charles Freiberger..

“We’ve been heavily focused on rehab in the past,” Freiberger said. “But we’re now getting diversified and expanding into Enforcing purchasing compliance has always been a tricky proposition. “It’s totally unenforceable, or trackable,” said Waits. “To me, it’s crazy.”

Waits believes the best approach is slathered with honey. PHS does not charge its members a fee. Its revenues are, like much of MED’s and VGM’s, manufacturer-driven. In addition to contracting services, PHS provides political advocacy and a forum for networking. But the provision of those services is conditional.

“We provide encouragement, information and incentive for people who use our contracts — proportional to the amount they do use them,” he said.

Older than PHS, the Homecare Providers Co-op is still chugging along, albeit as a subsidiary of VGM. Though HPC founder Shelly Prial is no longer active at the group’s helm, the cohesive group he brought together still enjoys the fraternity of each other’s company.

“Since it’s not broke, there’s no need to fix it,” said Jim Schaefer, vice president of HPC.

But there’s more glue than nostalgia for HPC members. While HPC enjoys the benefits of purchasing agreements with Pride Mobility Products, McKesson and Red Line, VGM does not.

Like PHS, joining the North Carolina-based Charter Buying Association is a relatively harmless financial play at $400 per year. And like PHS, Charter has found safety in small numbers and a tight focus. The bulk of its 26 members are former Majors Medical franchisees. All of its members are mobility dealers.

“The members want to keep that focus on mobility,” said the group’s director, Beth Bowen. “We don’t want to branch out too much. Once, we tried to add bathroom aids, but it really didn’t fly.” HME