Is it time to join? Four panelists make the pitch.

Dealer/Provider: What new initiatives have you introduced to members in the past year?

Mark Axe, senior director of business partner relations and contracts, Pharmaceutical Buyers Inc, Broomfield, Colo: PBI has given its DME contract portfolio special focus and additional resources over the past year and has added many new contracts to its already strong contract foundation. Distribution relationships have also been reexamined and enhanced to address service and performance improvements.

Cindy Ciardo, CO, manager of vendor services, Essentially Women, Oxford, Mich: Because we are facing many challenges that threaten our businesses—such as reimbursement cuts, competitive bidding, FEHBP-based pricing reductions, and stricter, mandatory accreditation requirements—we are concentrating on helping our members survive and thrive by providing more educational resources to prepare for the uncertain future and, if necessary, fight to protect their businesses.

Bill Elliott, president and CEO of the MED Group, Lubbock, Tex: MED initiatives have focused on business/operational efficiencies and product acquisition. We have provided tools for our members to help select and develop employees in an effective manner. Emtrak provides interview templates, prehire screening tools, employee evaluation models, and systems for tracking disciplinary activity. In addition, we have delivered enhanced tools in the area of reimbursement—R3 is an online portal that houses reimbursement and regulatory data that provides timely information to the HME provider.

For inventory purchases, we have monitored market conditions and listened to our members. MED had a contract refresh period in the fall and further lowered total product costs. Recently, we implemented a quarterly mechanism to monitor market pricing for the core products our members provide.

Van G. Miller, founder of the Van G. Miller Group, Waterloo, Iowa: We have several new initiatives that include:

• The Healthcare Quality Association on Accreditation (HQAA), a private, not-for-profit organization open to all HME companies. HQAA is a user-friendly, personalized approach to accreditation and boasts a paperless process.
• Nationwide Respiratory is a membership division developed to meet the needs of the home respiratory care provider.
• The VGM Direct program is designed for members who wish to purchase smaller quantities from major participating vendors.
• The VGM PowerWeb, a new Web design concept created by VGM Forbin, is offered to members at an attractive price.
• The VGM Marketing Survey, developed and conducted by sales expert Louis Feuer. “HME Uncovered: An Analysis of the Industry” covers sales commissions, performance reviews, marketing opportunities, and other topics.

D/P: Among HME providers, what is the biggest misconception about membership in a buying group/member service organization?

Axe: It appears that HME providers do not seem to fully understand the overall cost savings that are available to them by using contracts accessible through a group purchasing organization (GPO). PBI is able to harness the power of the combined volume of its entire membership

base during contract negotiations. Even if a large provider may be able to get a slight discount advantage from a single manufacturer, PBI brings an entire portfolio of contract discounts. As a result, PBI has learned to be extremely proactive with these accounts and has developed communication systems to properly address these concerns.

Ciardo: A big misconception about membership in a GPO is that the only (or biggest) benefit is about reducing acquisition costs. Networking and sharing information are of great importance as well—this includes staying on top of regulations, trends in reimbursement, new product development, and new competition. And, of course, a buying group’s collective strength can make an impact when negotiating prices or battling restrictive legislation.

Elliott: For providers who are not a part of The MED Group, the biggest misconception about membership may be that the only benefit is related to vendor pricing. At MED, it is more than just price—and it always has been. We leverage MED’s collective wisdom, market power, and leadership so that members have the tools and products to manage and grow their business.

Miller: By far, it is that only “buying services” are available. VGM effectively discontinued the GPO designation in 2000, opting for the “member service organization” (MSO) depiction. Among its 17 divisions, the VGM Group provides services and administers innovative programs that help independent business people improve their financial success and maintain a level playing field with national chains. In addition to lucrative purchasing contracts, our array of offerings includes insurance products, financial services, the largest home care managed care network, technology and e-business solutions, legal and regulatory consulting, strategic planning, a complete line of education and training programs, a legislative/lobbying division, and marketing and creative services.

D/P: How would you describe a typical member?

Axe: PBI members are generally independent or small regional HME dealers who are looking for pricing advantages for medical/surgical supplies and DME equipment. Members are also generally sourcing some enteral, respiratory, and pharmaceutical products.

Ciardo: Our members all provide specialty health care products and services for women, as part of an independent HME company, a hospital-based facility, or a boutique.

Elliott: The typical MED member is an HME provider committed to “winning” as defined by improving customer service and outcomes, growing market share, increasing profitability, and developing the capabilities of their people. Our members realize the value that is created through the collective strength of the MED alliance of providers.

Miller: The VGM Group not only represents HME suppliers in the United States and Canada, but also high-tech rehabilitation professionals, orthotic and prosthetic practitioners, and home health agencies. Our newest company, Nationwide Respiratory, is tailored specifically for respiratory providers. Generally, our membership consists of unaffiliated independent companies. Provider revenues vary widely; some of our largest members achieve annual sales upward of $100 million, many exceed $40 million. We estimate, among all of our DMEPOS companies, our members average about 10 employees per facility. Using recent industry estimates of $120,000 of revenue per employee, our “typical” member would be a full service HME, with $1.2 million in annual sales.

D/P: What should a provider look for in selecting a buying group/MSO?

Axe: In addition to the bottom line price a provider will save through a potential GPO, they should also look for a group that is experienced in serving their market segment and has a stable track record. A provider should look for a reputable organization that is noted for its ethical business principles and provides unparalleled support. Technological offerings such as an electronic catalog, customized reports, and electronic communications should also be available. The GPO’s flexibility and its history of adapting to meet the needs of its members should also be closely evaluated.

Ciardo: Evaluate each one according to how it will suit your business’s needs and how well you match the member base it already serves (does it target a specialty market your business concentrates on?). Compare pricing options and value-added services to see if they fit your needs—primarily educational opportunities and training.

Elliott: Look for a buying group/MSO that meets your specific business needs, and with which there is philosophical alignment. At MED, our mission is to partner to enhance our members’ success. Our members know that real value with our vendor partners extends beyond product pricing. We focus on true strategic partnerships for the long term. In addition, we provide programs and services to drive operational improvement and help our members grow profitable market share. MED provides tools to select, develop, and retain our members’ most valuable assets, their staff. And finally, we facilitate multiple peer-to-peer networking focused on best practices toward improved outcomes.

Miller: Strategic alliances are imperative, and VGM encourages all unaffiliated independents to align themselves with a buying group. Providers should look for quality services and an MSO that offers appropriate resources to enhance competitiveness, efficiency, and business growth. Of course, the MSO must also offer competitive purchasing opportunities.

The organization must also offer high-quality ancillary business services, and they should be designed exclusively for the home health care industry. For example, VGM Insurance offers HME-specific insurance coverage; the same is true of VGM Financial Services.

Other services providers request include free referral services for traveling and relocating patients, a managed care network, product research, legal and regulatory experts on staff, technology programs, billing assistance, marketing and creative design development, wholesale or “direct” purchasing programs through the MSO, and full-line educational offerings. Last, and perhaps most important, the relationship between the provider and his group must be based on mutual respect and trust.

D/P: How can buying groups decrease costs and improve profits for providers?

Axe: GPOs are designed for decreasing costs and providing tools to allow members to increase profits. This is at the heart of GPO mission statements. By joining a GPO, members become part of a larger community with similar purchasing needs—and that volume is leveraged with manufacturers to provide deeper discounts on products and services. When members opt to increase their level of commitment to their chosen GPO, there are often additional cost-savings opportunities available.

Ciardo: They have the collective bargaining power to negotiate better pricing than an independent company—thereby lowering costs and increasing revenue for providers—in short, maximizing profitability. But we should not overlook the vital ancillary services that provide members with the educational resources to learn more about operating efficiencies, and the networking opportunities to share information and learn new marketing strategies from successful colleagues, representatives, and industry leaders.

Elliott: At The MED Group, we work to harness the strength of our committed member providers to structure arrangements that lower the total costs of products. This goes beyond the acquisition cost of the product and involves other aspects such as warranty, financial terms, and product development. The MED Group also focuses on leveraging the group energy to develop quality business services that focus on driving operating costs down and improving profits for the provider.

Miller: One answer is access to the group purchasing contracts coupled with available financing. VGM’s 95 participating vendor agreements and large membership base (3,000 locations within VGM & Associates alone) result in excellent pricing. Leasing programs and lines of credit can ease access to capital and investment.

Many groups, including VGM, offer access to industry consultants (both “in-house” and third party) and services at no cost or at greatly reduced rates. The categories to improve the provider’s bottom line are many, and may include consultation and guidance with regard to: accreditation, advertising and design, benchmarking and denial management, billing, coding/reimbursement, and computer hardware/software.

However, at VGM we believe that education should be placed at the top of the service list. We realize education is a continuing business requirement and acknowledge that HME-specific education on our industry is often tough to find or expensive to access. Accordingly, we offer online, industry-specific continuing education customized for HME/rehab providers.

D/P: How do partnerships with vendors and other organizations improve business conditions for your members?

Axe: One of PBI’s key goals is to provide the executive teams of its business partners with a complete education on the various markets PBI serves. The result of this educational process has been many contract additions and enhancements, which positively affect members’ bottom lines and allow business partners the opportunity to fully understand and serve members’ current and future needs.

Ciardo: By providing the educational resources that will help improve business practices and operating efficiencies. Our partnerships with manufacturers and organizations like the Accreditation Commission for Health Care and the Board for Orthotist/Prosthetist Certification not only promote the highest standards in business practice, fitter certification, and continuing education, but do so at discounted rates for our members.

Elliott: Our goals are to form deep partnerships that bring value to members and vendors. Even in light of the recent coding changes and reimbursement cuts, the MED partnerships have been successful. MED members and vendor partners have worked to meet these challenges and are paving the way for a better business environment.

MED members with vendor support have worked diligently to reeducate staff and customers. Buying patterns have changed, indicating members are learning to take advantage of the value and cost savings offered by our contracted vendors. Also, MED members have worked closely with our vendors in product development, designing products to meet the needs of changing reimbursement while improving the quality and functionality that consumers demand and deserve. MED is active in many regulatory and legislative matters for the benefit of our members. Leadership roles in AAH, NCART, and RAMP have a direct and significant impact.

Miller: The obvious benefit is lucrative contract purchasing. However, there are special “group-only” vendor programs for training, equipment demonstration, extended terms, or other credit flexibility on purchases. Credit flexibility may become especially valuable as the member experiences growth spurts or funding issues.

Relationships with MSO consultants can provide members with valuable and timely information, including lobbying and legislative assistance, sales and marketing, and reimbursement tips. Perhaps this 1768 motto is most appropriate: United We Stand, Divided We Fall.