Reporter's notebook: Deep Throat dishes bid advice to HME providers

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Sunday, February 27, 2011

A very good industry source recently told me something about competitive bidding that I'd never considered: Many winning providers arranged product pricing with manufacturers before submitting a bid. That makes perfect sense, right? If you know your pricing ahead of time, it's much easier to submit a bid you can live with. If you are in a Round 2 competitive bidding area, that's something to think about. Here are a few more things to consider, according to my source.

The commitments

"We talked to a number of the manufacturers and they said they couldn't just come in now and cut prices 20%. They said the smart dealers talked to them before they put their bids in. They formed a partnership with the manufacturers. They said, 'This is what we want to do, and if we win we'll give you 80% of our business, and if we do that, what kind of pricing can you give us?' The manufacturers were upfront, too. They said, 'Look. We'll be willing to give more if we get a commitment.'"

Bad credit? Good luck

"You heard about all these providers who had credit problems. Those were not the guys forming the relationships with manufacturers. It was the guys who were more business oriented. Manufacturers were not seeking out the fringe players. They were seeking out the really good players. First, they wanted providers who were scalable--providers able to deal with the up tick in business, who could go from 500 concentrator patients a month to 1,000. Secondly, they wanted financially viable providers. I don't know of any manufacturer actively seeking out a guy who is going to go out of business or who is not paying his bills. They don't want that guy."

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