Who can make more lemonade?


In the two months that competitive bidding has been up and running, there’s been no shortage of discussions about the impact of the program on contract and non-contract suppliers.

On a basic level, some people think: Have a contract? You have a ticket to work! Don’t have a contract? You’re out of work!

We’re probably months away from knowing the full impact of the program, but that’s not stopping some contract suppliers from using this uncertainty to their advantage, sometimes unfairly.

Take what’s happening to provider Georgie Blackburn. Her company, Blackburn’s, is a contract supplier in the Pittsburgh competitive bidding area (CBA), but only for two product categories, standard power wheelchairs and enteral nutrition. Those contracts are going fine. It’s her other business she’s worried about.

“There are those who have won multiple contracts who are marketing themselves as, ‘We do more than just Medicare. We won the Medicare business and that should tell you something. Why don’t you send all of your business our way?’” Blackburn said. “There are some unfair marketing and business practices going on.”

What’s Blackburn doing about it?

“We’ve had to re-prove ourselves,” she said. “It has been a matter of educating our referral sources and reminding them of our quality care, like 24-hour service.”

But what’s happening to provider John Reed may take the cake.

Reed, whom we’re featuring in a monthly series of articles on the impact of competitive bidding, is a non-contract supplier in the Cincinnati CBA. He found out recently that several of his competitors are sharing those articles with referral sources as “proof” that PRO2 Respiratory is going out of business.

PRO2, which served one-quarter of the area’s Medicare beneficiaries who need oxygen, has had to make some tough decisions because it didn’t win a contract. It has had to downsize its staff. It has had to sell its Philadelphia location.

But it’s emphasizing other payers, like Medicare HMOs, and it’s “evaluating some unique market sectors for revenue growth,” Reed says. In short: It’s far from going out of business, and its referral sources know that.

“We’re pretty satisfied with our long-term business strategy,” Reed said. “PRO2 isn’t the only company that’s looking to retool. If you’re not trying to retool then you probably won’t be in business much longer.”

That goes for contract suppliers, too.

“Are my competitors who are contract suppliers and who face a 40% reduction in reimbursement implying to referral sources that there’s been no inherent damage to their businesses?” Reed said.

Reed has a good point. Competitive bidding is bad business for contract and non-contract suppliers—period. What contract supplier is happy about a reimbursement cut of, on average, 32%? What non-contract supplier is happy about writing off Medicare, most likely one of its more important payers?

The name of the game now is, who can make more lemonade out of lemons?

Contract suppliers hope to do that by doing more of the same business. Non-contract suppliers hope to do that by developing new business.

Only time will tell how this all shakes out, but in the meantime, try to keep it clean.

Liz Beaulieu