MED Group members take advantage of a networking opportunity between sessions at their 2001 conference in San Antonio, Tex.

For the independent hme provider competing with national companies, joining the right buying group can be a lifesaver. Besides gaining leverage when negotiating with large manufacturers, members also get access to services ranging from business training to insurance. There are four major groups in the United States, each with its own style and niche. So take a closer look and see which matches your business the best.

The Biggest: VGM
With 1,800 members throughout North America, the 15-year-old Van G. Miller (VGM) & Associates is the largest buying group/member service organization in the HME industry. Founded by Van G. Miller, an HME provider who grew his business into a successful franchise operation with 26 locations, VGM now occupies a 66,000-sq-ft corporate headquarters in Waterloo, Iowa. The group’s staff exceeds 300 and includes more than a dozen companies.

The philosophy of the group is to support members and provide value-added services in order to maximize their profitability. “We stand for the independent HME dealer, and offer the widest variety of services,” says current executive vice president Ron Bendell, who will become president of VGM on September 1.

Members have access to volume pricing, and VGM has contracts with 75 leading manufacturers of HME. It is also the only buying group to offer access to FreedomLink, a 24-hour service for traveling and relocating patients; US Rehab, an alliance of providers registered by the National Registry of Rehabilitation Technology Suppliers that educate payors on the value of high-tech rehabilitation; and Homecare Providers Co-op, an interactive group of owner-operated HME providers focused on business development.

There are two membership plans designed to meet independent providers’ needs, and dues vary. Members have access to regional and national managed care contracts, as well as financial services, HME-specific insurance policies, and telecommunications consulting and products.

In addition, the group operates a warranty repair center for several manufacturers’ products.

“We also offer access to industry all-stars for consulting, in-house creative services to help members with the development of brochures and literature, and our own technology services,” Bendell says.

Finally, VGM has several educational programs. The latest additions are a sleep marketing program and the Heartland educational conference to be held on September 5-7 in Waterloo.

The Original: The MED Group
In 1968, five independent businessmen who sold and rented medical equipment realized that their small companies were endangered by larger HME chains. To survive and thrive, they needed a support system. The men incorporated under the name of Medical Equipment Distributors Inc and headquartered their operations in a loaned office in Forest Park, Ill. From that humble office grew the MED Group, which now boasts more than 250 members.

The MED Group still focuses on finding solutions for its members in all aspects of running their businesses. “We want to identify what we can do to help our members the most and find solutions for them because they have better things to do, such as running their business,” says Mike McKillip, director of marketing.

The MED Group believes in the power of networking and gets members together so they can share solutions. The annual conference gives members an opportunity to interact face to face, and a members-only area on its Web site features a discussion database where members can ask questions of peers.

“We supply our members with an education library, testing, and everything else that can be done online,” McKillip says.

To help members with reimbursement, the MED Group’s director of reimbursement puts out a newsletter, and members can ask questions of MED Group-affiliated consultants.

The MED Group also retains the exclusive right to sell RemitData, a program for solving reimbursement problems.

Annual dues vary depending on the services members have, which can include access to a National Repair Center or membership in the Re/hab Network, a group for members interested in rehabilitation.

Finally, every member gets the advantage of the consolidated power of a buying group. “We negotiate beneficial contracts with key vendors and manufacturers in the industry, and many of our agreements provide optional payment terms and/or money-saving freight terms,” McKillip says. “We are trying to make everything more accessible to our members.”

The Managed Care Specialist: Northwood Inc
Managed care contracts are more than just one of the benefits of being a member of Northwood Inc; they are the buying group’s cornerstone. “Northwood was actually started in 1992 as a managed care program, and our buying group was a subset of that network,” says Lynda Clute, vice president of Northwood, Center Line, Mich. “Some of our competitors claim they have a lot of managed care contracts, but they are sometimes referring to their providers’ contracts, which are not necessarily exclusive. Our managed care contracts are exclusive to Northwood.”

More than 70 major manufacturers and distributors are signed with Northwood, and the group has more than 3,500 locations nationwide, including DME, prosthetics and orthotics, infusions, home health, and pharmacy. In addition to offering exclusive contracts, Northwood sends referrals to members, serving as a licensed third-party administrator.

“We have a really good open communication line with our providers, and we hold focus groups to find more ways to help them out,” Clute says. “We keep ourselves tightly focused on what is going on in the marketplace, and we are constantly putting ourselves in the providers’ shoes so we can figure out what we can do to give them a competitive edge.”

Clute says Northwood’s members are respected, independent providers, and the group works hard to keep that criterion intact. Members must be certified by a national accrediting agency, and must focus on quality care and service, exhibit financial stability, and typically have operated for 5 years or more. Northwood also prefers members who have 24-hour emergency-service staffing, a good reputation, and reasonable levels of insurance.

In return, Northwood offers regional and national contracts, administrative support services, utilization management reports, and a capitalization database.

The buying group also has a marketing and administrative arm that offers discounted “fee-for-service” contracts to employer health plans, self-funded employers, and other payor groups.

Northwood’s Group Buyers’ Program provides reasonable costs in supplies, equipment, and services. The buying group also operates a program that allows members to open a Lease Line of Credit (LLOC) to lease equipment at competitive rates.

Members either pay a $250 annual fee and a $50 monthly fee, or make an annual, one-time payment of $800. They then combine their purchasing volumes and assist in Northwood’s program administration and compliance. “We look at our providers as our partners,” Clute says.

The Ladies Niche: Essentially Women’s Buying Group
Nine independent businesswomen operating companies that specialized in providing health care products and services to women founded the Network for Women’s Healthcare, LLC, dba Essentially Women in 1996 as a venue for independent businesses to cut costs.

“The founders started Essentially Women because they wanted to even the playing field for smaller independent businesses,” says Cindy Ciardo, manager of vendor services. “They wanted to help the privately owned boutiques be more competitive in a managed care environment.”

Achieving that goal meant addressing the concerns of small, independent businesses, which included diminished reimbursement, escalating acquisition costs, poor cash flow, and inefficient business practices.

Today, the Oxford, Mich-based group has almost 300 members. Although originally focused on post-breast surgery products, the scope of services has grown to include products and services for breast-feeding, lymphedema management, orthopedics, skin care products, wigs, incontinence, foundations, and credit card services.

“The group’s collective buying power gives individual proprietors some leverage, and thus they are better able to negotiate for contracts,” Ciardo says.

Essentially Women also operates a Rewards Program based on purchases made with participating vendors. “That is our way of marketing, and it allows us to reward members and control our costs,” she says. “The $15 quarterly membership fee is more than covered by the rebate program.”

The buying group keeps members up to date about new product information and news through direct mail, broadcast fax, and a quarterly newsletter. “The basis of the newsletter is ways to help increase business acumen, sales, and marketing. We encourage advertisers to provide us with articles that describe their products,” she says. “We also have a Web site that we are revamping to make more interactive.”

Members can attend a free annual trade show that includes educational seminars and business tips, as well as product and vendor information. “Essentially Women is very strong on networking, and this gives our members the opportunity to hear success stories from other businesswomen across the country,” she says. “Some of our members can’t afford to attend MedTrade, so this gives them a chance to get out and see products they would not otherwise have access to. In this way, we are able to reach different areas of the country to give everyone that opportunity.”

Liz Finch is a contributing writer for Dealer/Provider.