Word on Competitive Bidding

The Word on Competitive Bidding

Original Article in the HME Magizne Today by by Butch Vanderpool


A meeting in San Antonio gave this Polk County provider the chance to share his insights into the competitive bidding process.


USA I am not accustomed to photo shoots, but for this article I participated in one. In my discussions with the photographer, I found that he was an electrical engineer turned photographer, because photography was his first love. Well, the HME industry is my first love; I wake up every day excited about going to work. In fact, I am more excited today about our industry than ever before, and I personally feel that our future looks bright.

Imagine with me an environment in the HME industry where business owners and their employees are joyful, happy, and excited about what they do once again. Believe it or not, it is possible. Moreover, I firmly believe that change, good change, is on its way.

Now let us further imagine that as a fortified, united industry we proactively lobby Washington and our state legislators with a new, positive approach, whereby we are armed with measurable proof that home care is the preferred and least costly alternative for managed care organizations, Medicare, and Medicaid.

I can imagine all these things and more. That is why I speak so candidly on the issues that affect us all. But the real reason for all the above rhetoric is to lead me into a discussion of my most recent undertaking, which concerns the Polk County Competitive Bidding Project.

Contrary to what some people may think, neither I nor my constituents in Polk County lobbied Washington in an effort to bring competitive bidding to our area. As a matter of fact, we could not have been more surprised by the selection. However, we were chosen, and so I set out to take the lemons I had been given and make lemonade out of them.

Although I am well aware that our industry prays for this project’s failure, I personally have vowed not to fail. I have chosen the tack that competitive bidding is the wave of the future in our industry and have and will continue to make the very best of it. Much to the chagrin of many of those in our industry, I have also decided that since the Balanced Budget Act of 1997 was mandated by Congress, I would not kill the messenger—the Health Care Financing Administration (HCFA). Quite the contrary. Instead, I have worked to develop good professional relationships with many members of HCFA and the Region C Durable Medical Equipment Regional Carrier. And while I am sure that many of you reading this article could never imagine that, I am proud of my efforts.

Perhaps even more startling than that is the fact that I am so confident about the future of our industry that I accepted a very gracious offer from HCFA to attend the Medicare supplier meeting in San Antonio, Tex, held on March 28, 2000. Far be it from me to turn down any opportunity to share with the provider community what I have learned, particularly the San Antonio community who could use whatever insight I have into the demonstration process. I was actually eager to take advantage of this opportunity to tell them what to really expect from the bidding process. I wanted to help them not to make the mistakes that we in Polk County had made.

I told the good, bad, and ugly of it all, and really appreciated the fact that HCFA allowed me to do this. I explained to the San Antonio constituency that the bidding process is very straightforward. I also told them that it was imperative for them to get control of their businesses and to know their costs; I let them in on the secret that the majority of the work was preparatory. I also suggested that they not rely on state and national trade organizations to intervene on their behalf. That although the Texas Association of Medical Equipment Dealers (TAMED) is a strong organization and one of the most active in the nation, providers should never allow anyone to make business decisions on their behalf.

I pleaded with the Texas providers not to believe everything they read in their trade publications. There have been many negative comments about the project, when the truth is that the experience for most providers, beneficiaries, and referral sources has been very pleasant.

While there were some objections concerning the project that I personally needed to overcome and I am never excited about releasing private financial information to anyone, the truth is that no one’s financial information is all that private in the first place. I did not fancy HCFA thumbing through my charts either, but I also had, and still have, nothing to hide.

I then made the statement that makes every HME crowd ooh and aah. I said, “Preparing for the competitive bidding process made me a better businessman and my company a better company.”

Now imagine an HME company sharing with other HME companies “top secret” information on how to be a better business. Because that is exactly what I did. I told San Antonio providers about the choices that my company in Auburndale, Fla, made to become more streamlined and efficient. Those choices were:
• We hired a consultant to perform an independent audit to confirm that we were on the right track. (Incidentally, with clean paperwork, our accounts receivable [A/R] improved tremendously.)
• We hired an attorney to develop a corporate compliance program to ensure accountability in our business.
• We instituted activity-based costing in order to place an informed, intelligent bid.
• We installed a new software program, so that any information that we need is easily retrievable.
• We began to transfill our own cylinders and saw savings of more than $50,000 in the first year.
• We researched our mode of delivery and made substantial inventive changes that most people said would not work. They were wrong.
• We made clinical changes. We continue to give an excellent level of care, but now we are smarter about doing it.
• We also decided to return to our core business and to shed the one-stop-shop philosophy.
• We put systems in place to empower our employees to make their own decisions.
• We implemented “Just in Time” deliveries from our manufacturers. We anticipated usage for the coming year and put it out for bid. We pay the same price for equipment whether we order one item or 50, and in most cases, we realize 1- to 2-day deliveries.
• We implemented systems to track costs and A/R. We track denials, unpaid claims, and unacknowledged claims. With this information we also renegotiated all of our existing managed care contracts.

I shared with San Antonio that we made the choice to have a good attitude. I said that happiness is a choice, and advised them to decide to love this business and to overcome, regardless of what was thrown at them.

Finally, I shared that all of us as business owners and managers should every day concern ourselves with three things and three things only or we are really wasting our time. We need to aggressively increase our sales, control our costs, and collect our cash. If one piece of that puzzle is missing, we will not survive.

So call me a dreamer, positive thinker, or eternal optimist, and I will plead guilty as charged. I have promised in my heart to avoid pessimism at all costs. If I entertain negative people, negative press, and a negative industry, I too will become negative. Instead I choose to be happy, successful, and prosperous.

Though I seem to be a very small voice in a tremendously large industry, I have faith that armed with a positive attitude, a renewed commitment, and a proactive approach, we can once again establish ourselves as a vital and profitable industry.

Butch Vanderpool is president of Health Care Diagnostics, Auburndale, Fla. He can be reached at (863) 595-1440.