Reporter's notebook: Death of a diabetes provider

Monday, December 1, 2014

In my telephonic wanderings as an editor, I hear plenty of horror stories about the ruin of many a company due simply to bad government policy. Former provider Bill Sweeney’s is one such horror story. The former president/CEO of Four Leaf Clover reached out to me via email and phone to share his story.

“My former company, Four Leaf Clover, Inc., a diabetes provider with 30,000 customers, 81 employees, and $250,000 expended in preparing our competitive bid of $15.86, properly licensed and meeting all requirements did not win a bid.

I spent more than nine months developing an intense Excel spreadsheet of my business. It was built around the financial engine of income less expenses = profit.

At a test box reimbursement of $30.14 I had a very profitable business: 2012 showed $16.1 million of revenue, $1.6 million of net operating profit, zero debt, and a viable company growing at the rate of 1,100 new customers per week. 

My spreadsheet indicated clearly to me as we approached the bid deadline that we could tender a bid of $15.86 for a box of 50 test strips and make a profit. This profit could allow us to support continued growth and yet pay the shareholders a fair compensation.

My spreadsheet also showed that a bid of $14.10 would allow the company to break even (P&L) with existing customers, but not cover new customer cost of acquisition, and not allow a set-side for growing costs to challenge audits and the subsequent write-offs and reimbursements due to existing delays at the ALJ level of appeal. We could not grow, but rather only sustain.

Finally, CMS ‘declared’ a reimbursement of $10.40. There is no possibility that CMS understood the nature, much less the metrics, of a DME provider. My business was lean and extremely efficient. Exactly how did they come up with this insane reimbursement?”

Although Sweeney closed Four Leaf Clover more than 18 months ago, his troubles with CMS have not ended. See part 2 in the January issue of HME News.