Round 2 at one-year mark: ‘We’ve thinned the ranks’

Thursday, July 3, 2014

YARMOUTH, Maine – In the year since Round 2 of competitive bidding was implemented in 91 cities, the HME industry has seen a rapidly shrinking provider base.

In a story that’s being retold across the country, provider Rich King says he will wind down operations at ProMed DME on July 31st.

“It’s sad,” said King, CEO of the 30-year-old, family-owned company in Los Alamitos, Calif., a Round 2 competitive bidding area (CBA). “We had a good business for a lot of years and employed a lot of people—we took care of them and their families.”

Although there is no hard and fast data, there are plenty of anecdotes of providers closing shop or merging with other struggling providers in the past year.

ProMed had contracts for wheelchairs and low air loss mattresses, but King said Medicare makes it too difficult to qualify patients for equipment any more. So ProMed has dumped Medicare and will merge with another local provider.

“This company was the same as me—about to shut the doors,” he said. “We figured we’d consolidate expenses and with their sales we’d make a profit in the next two to three months.”

Without contracts, American Medical Equipment, which is located inside a hospital, turns away patients every day.

“They should never have started this bidding program,” said Masooma Tiwana, president of the Memphis, Tenn.-based company. “Patients are having trouble getting equipment, and we hear all the time that companies are shutting down because there’s no business.”

The one-year anniversary of Round 2 also means the time is up—or nearly so—for providers that opted to grandfather existing patients for certain HME.

“Grandfathering is a slow death,” said Doug Coleman, CEO of Longmont, Colo.-based Major Medical Supply. “Even if you’ve grandfathered patients, you don’t get to add new patients. The patients are dying or no longer need equipment so the patient count dwindles month over month.”

Although it’s hard to believe, the possibility of a third round of competitive bidding is just around the corner. That has providers worried that access issues will worsen.

“We can’t afford to lose any more players,” said Steve Ackerman, owner of Spectrum Medical in Silver Spring, Md. “There’s 10,000 people a day turning 65 and we’ve thinned the ranks down to the very minimal level.”