When buying groups first emerged, they appealed to small HME businesses primarily because of their bulk buying power. While getting good prices is still at the top of the list of reasons to join a buying group, these entities have grown well outside that boundary. Today, providers also become members of buying groups in order to capitalize on business advice and networking opportunities, billing and Medicare compliance education, lobbying know-how and resources, and conferences and educational programs.
So what should one look for when deciding what group to join? Evaluate each one according to how it will suit your business’s needs and consider how well you match the member base it already serves, counsel many current buying group members. Since the bottom line is on everyone’s mind, take a look at the pricing and contract options first before you factor in a group’s value-added services.
Money Matters
“Price is the bottom line,” says Dale Richardson, president of R&R Discount Medical in Kalamazoo, Mich, and a member of the buying group Northwood Inc, Center Line, Mich, for 5 years. “Small guys look for good prices. What [buying groups] can do for you with their purchasing power is one of the most important things. If you don’t buy well, there is no profit and you can’t compete in the marketplace.”
Tom Mullaney, president of Mullaney’s Medical, Cincinnati, Ohio, says he chose Northwood because it had most of the product lines his company sold and it was inexpensive. “As we grew, we joined the VGM Group [Waterloo, Iowa] as well to meet the needs of the rehab side of this business,” he says. “In both cases, the benefits of the groups really lay in their pricing.”
Diane Loewen, vice-president of Mitchell’s Home Medical in Ipsilanti, Mich, believes that buying groups have created “miraculous” opportunities for the independent provider primarily because of that increased buying power it grants.
“I have been a member of Northwood and VGM for years, and they allow a provider at my level of revenue to be able to purchase like a national,” she says. “They work vigilantly to capitalize on price points at a level that gives us fair competition, which provides us the opportunity to give excellent care without getting beat up on the price.”
Extras Add Up
For other providers, however, while good pricing is certainly attractive, it is not their primary reason for seeking membership in a buying group.
“I don’t think pricing is the number one issue anymore,” says VGM member Sudi Freeland, manager of Boulevard Homecare Center in Bartlesville, Okla. “The manufacturers have pricing down as low as it is going to get. It really comes down to what kind of variety the buying groups offer in educational opportunities and training.”
Donna Southworth, president of Genesis Oxygen & Home Medical, Portsmouth, Ohio, says gaining the buying power of a larger company was the impetus for joining VGM in 1987, but the group has since developed “into a real friend to our industry.”
“They are heavily into lobbying and education,” Southworth says. “The VGM Learn program is great too, and the teleconferences really help because they are so inexpensive.”
The story is the same for MED Group member Jeff Wills, COO of Canadian Valley Medical Solutions, in El Reno, Okla. He came to the Lubbock, Tex-based company 3 years ago because of the buying power of the group as well as its programs.
“The buying contracts are definitely an advantage, but that is not why I chose to participate,” he says. “We take advantage of numerous ancillary services including The MED Masters program, a CEO roundtable discussion.”
Leslie P. DeFelice, president and CEO of DeFeliceCare Inc, in Wheeling, WVa, uses The MED Group’s ancillary services. “An organization like The MED Group provides a consistent forum for meeting with your industry peers, sales representatives, management, and consultants,” he says. “The MED Group’s corporate compliance program also allows us to cover every penny of our postpayment audits, and we worked with the group to become accredited with commendation in 1996. Most important, however, the friendships we have made with our peers in other companies are invaluable and will last a lifetime. It goes so far beyond the contracts.”
| Mixing Business and Politics As buying groups become ever more responsive to the needs of members, entering politics was a natural evolution. The VGM Group, The MED Group, and Northwood Inc all advocate for their members’ interests on Capitol Hill. And while competition between the groups is fierce, all three have generally worked for common political goals. However, in March, Northwood Inc, Center Line, Mich, took a controversial stance on national competitive bidding (NCB)—a top legislative issue for the HME industry. According to Ken G. Fasse, president of Northwood, the industry must prepare for the possibility legislators will pass a bill including competitive bidding at the same time as it argues against this proposed Medicare payment method. That means educating legislators about all aspects of NCB, including network models, such as that practiced by Northwood, and how it would work with NCB. “If we wait until Congress legislates NCB, it will be too late,” Fasse says. “How can we prepare as a network for NCB if the policy makers do not know that we exist? The policy makers in Washington are not aware of networks like Northwood or how the private sector has implemented competitive initiatives similar to NCB over large populations. It would be a very sad day for our members that rely on Northwood if we were left out of NCB or precluded from participating due to uninformed policy makers. This would play into the hands of the national companies.” However, there is a strong danger that this information, which Northwood distributed in the form of a position paper sent to legislators, on its Web site, and through advertisements in industry journals, could undermine the argument that NCB is an unworkable system legislators must vote down, say Northwood competitors The MED Group, Lubbock, Tex, and VGM, Waterloo, Iowa. “I appreciate the boldness of a person who will stand up and take an unpopular position as doing so can demonstrate creativity and independence,” says MED Group president David Miller. “However, when we realize what a small portion of health care dollars is devoted to HME, which, in turn, gives us a similarly small voice in government, then we simply must speak with one voice in harmony with one another. Conflicting viewpoints behind closed doors is one thing. But to have those viewpoints clash in front of elected officials and government regulators is damaging and divisive. We paint a picture of being splintered and disjointed, thus further weakening our ability to protect the reimbursement levels needed to sustain our businesses.” Fasse says he also hopes NCB does not happen, but educating policy makers about Northwood and successful private sector models is not the problem. “The real problem is that our competitors are attempting to draw attention away from what we have accomplished in Washington on behalf of independent providers,” he says. —Lena Lindahl |
When You Offer Specialized Care
For providers whose focus does not include the full gamut of products, a specialized buying group, such as Essentially Women, Oxford, Mich, makes sense. That was the case for Wills’ wife Tracey, the president of the women’s health boutique segment of Canadian Valley Medical Solutions.
“The VGMs and MED Groups of the world do have contracts with women’s health care-related entities, but it is not their primary focus and certainly not one of the primary product lines for the majority of their members,” Tracey Wills says. “Essentially Women is really the only game out there for the women’s health niche, and I have been very impressed with their collective bargaining power.”
As with larger organizations, the benefits at Essentially Women stretch beyond pricing and contracts. Many members use the group’s broadcast email system to help locate hard-to-find products.
“It may be a discontinued item, but chances are that someone, somewhere has it,” says Ruth Addison, owner of the Total Woman Boutique in Baton Rouge, La. “With the email system, we can always pick up what our customers need.”
The networking aspect of the group likewise appeals to members.
“I highly recommend that small businesses in particular belong to a buying group because it gives them a chance to get involved with and learn from their peers,” Addison says.
Making the Choice
In an industry driven by providing high-quality patient care within a certain cost structure, DeFelice notes that HME providers “need all the help they can get.”
“No matter how well you may be running your business, someone else is doing it differently—and perhaps better,” he says.
Finding those who have harnessed such ideas for doing it better has become the province of buying groups, and that means providers deciding which group to join need to consider a variety of factors.
“Buying groups all have the same types of contracting and purchasing ability, so what you really want to look at is what a particular group offers that will fit your business needs,” Wills advises.
If you wish you knew more about what is happening in your business in different parts of the country, and about how other companies solve problems, joining a buying group may help.
“Buying groups can help you gain confidence, show you the ropes, and set you off in the right direction,” DeFelice says. “With the right group, you can minimize failure and maximize success.”
Elizabeth Finch is a contributing writer for Dealer/Provider.
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