Of the many things that rankle Tom Mullaney, RPh, about the impending arrival of national competitive bidding, one in particular is its potential to transform friendly, caring, service-oriented HME companies into mere sellers of a cold, hard commodity. “Patients will be harmed by our conversion into businesses that no longer can afford to provide service with the products we offer,” says the newly installed president of the Ohio Association of Medical Equipment Services concerning the unpopular Medicare cost-savings plan that takes effect at the beginning of next year. “This is exactly what has happened in pharmacy. They turned pharmacy into a commodity; now the name of the game is ‘let’s see how many prescriptions we can fill in an hour.’ ”

Pharmacies, he alludes, are held hostage to insurers who want to pay them just 50 cents per prescription, “so they’ve got to fill a lot of prescriptions every hour to meet overhead. It doesn’t pay to provide any kind of service beyond that.”

If national competitive bidding does manage to reshape HME into a pure commodities racket, Mullaney predicts many companies will seek to survive by closing their brick-and-mortar stores and converting to warehouse-based mail-order operations, further shortchanging patients in the process, and setting the stage for the exact opposite of what CMS hoped to accomplish. “Once the service component is gone from our industry, it will be bad for health care as a whole in the long run because it will drive up costs,” he says. “When the patient’s concentrator stops working, and we’re no longer there to provide the backup unit, or to service that first concentrator, the patient is going to head straight to the hospital emergency room for help.”

Well-earned Reputation
National competitive bidding is one of several major issues with which OAMES is grappling. Among the others: elimination of the capped rental category in oxygen, and the not inconsequential matter of supplier standards. Fortunately, OAMES is an organization clearly up to the task—it enjoys a well-burnished reputation as a group able to affect the course of legislation, both in Columbus (the state’s capital) and in Washington, DC. The secret of its success is it knows how to muster large numbers of activists from the grass roots whenever the time comes to pay visits to lawmakers. This traveling OAMES army forms a lobbying force that elected officials frankly find difficult to ignore.

As president of the association, Mullaney is not likely to urge a change in tactics. He is a veteran of OAMES’s lobbying campaigns, and he understands what it takes to get heard in the halls of government. Before becoming the chief executive, Mullaney served on the association’s legislative committee. In the role of chairman, he helped lead the OAMES charge to mandate state licensure of DME/HME companies doing business within Ohio’s borders. “We persuaded the legislature to go along with our recommendations,” he enthuses. “This law is currently in the process of being implemented through our state’s respiratory care board.”

Mullaney is convinced licensure is the answer to calls for supplier standards. “Licensure is a more effective and less costly way than accreditation to ensure quality and safety,” he says. “If you’re accredited and subsequently develop bad habits and no longer measure up, the worst they can do is pull your accreditation. But here in Ohio, they can pull your license.”

With regard to leadership style, the methodical Mullaney characterizes his as quiet and low-key. Until, that is, he comes face to face with bureaucrats and rule-makers who prove intractable. “Then I can get pretty loud and assertive,” he muses.

Timing Was Right
When not wielding the gavel at OAMES meetings, Mullaney is busy overseeing the operation of his family’s 70-year-old business—a combination pharmacy and DME outlet with three Greater Cincinnati locations and 55 employees. Mullaney was just a youngster the first time his pharmacist father brought him into a Mullaney Medical store and started showing him the ropes. In his last year at pharmacy school, Tom Mullaney started the DME business and continued to work in the venture founded by his grandfather.

For more than a half-century after Mullaney Medical opened its doors, it was exclusively a pharmacy. In fact, its name back then was Mullaney’s Pharmacy. It became Mullaney’s Pharmacy and Home Healthcare around 1990 with the addition of a dedicated DME store (later the name was streamlined to Mullaney Medical). “We’d dabbled with DME for a number of years prior to that, but we felt the timing was finally right to go at it in a serious way,” says Mullaney. “We had been receiving lots of requests for DME products, but for the most part had been referring those to a friendly competitor of ours. Finally, we asked ourselves, ‘Why are we giving away all this business? Why not do this ourselves?’ ”

As it so happened, Mullaney Medical had shortly before taken over a rival pharmacy at the opposite end of the block. The acquired pharmacy’s operations were carted over to the neighboring Mullaney Medical store, leaving behind a 3,000-square-foot vacant shell. “We needed to do something with that empty building, and here we were planning to start a DME operation,” Mullaney recalls. “It worked out perfectly, giving us a ready and nearby place to open up shop.”

Mullaney Medical proceeded cautiously in launching the DME store. Says Mullaney, “We started small, with a modest investment of product.” Before long, business picked up at an annualized clip of about 25%. “We knew within our first 12 months that this was going to be a very successful venture,” he adds.

HME, ADLS, and Boosting Cash Sales
Last year, Mullaney Medical grossed $14 million, about half of that coming from the HME/DME side of the business. If trends continue, the home care operation could eventually overtake and even eclipse the pharmacy end, Mullaney observes. “DME is already the more profitable of the two,” he says.

Products for the home sold by Mullaney Medical include respiratory devices, bathroom safety items, mobility aids, and medical supplies. Most of these are covered by insurance. However, owing to the way reimbursements have been shrinking, Mullaney Medical now is angling for more cash sales. Thus, the stores have begun strongly promoting smaller items, those that customers do not mind paying for out of pocket, according to Kathleen A. Thomas, billing manager. “One popular package we offer is targeted at the elderly and includes a number of products to make activities of daily living a little easier—it in-cludes a reacher and a back scratcher, for instance,” she says.

Moreover, when discharge planners, case managers, and other referrers now order items on behalf of patients, Mullaney Medical sales personnel make recommendations for related products that a patient might also find beneficial. For example, if the order is for a hospital bed, company representatives suggest value-added compatibles such as alternating pressure pads and specialized linen, Thomas indicates.

Still Works the Counter
Although Mullaney is company president, he still rolls up his sleeves and puts in time working behind the counter as a pharmacist. “I enjoy doing that,” he says, noting that during periods when the pharmacy is shorthanded he may spend as many as 2 or 3 full-time days filling prescriptions. “Our first priority is to help take care of the patients who come to us. It is my responsibility to do everything possible to make sure that happens.”

Of course, even if his help were not needed, Mullaney would still periodically don his pharmacist garb, solely as an exercise in good customer relations. “Patients like being waited on by the owner of the pharmacy,” he says. “And, for me, it is rewarding to have that direct contact with the customers. It gives me a more balanced perspective on the running of our business.”

With all that Mullaney has on his plate at the shop, one wonders what would motivate him to also become involved with an outside activity like OAMES. “My interacting with other providers and exchanging ideas with them benefit my business,” he explains. “OAMES facilitates this. For example, when I run into a problem I have never before encountered, I can pick up the phone and call an OAMES member in, say, Cleveland, who I don’t compete with here in Cincinnati, and ask him for his advice on how to successfully handle the problem.”

Naturally, wearing two hats at the same time has prompted Mullaney to make some adjustments to his life. Jokes Thomas, “He has had to give up a few things. Sleep, for instance.” Jesting aside, Thomas reveals that Mullaney possesses the ability to multitask exceptionally well. “Tom has an advantage in that he is one of those people who really enjoys doing several things at once.” Meanwhile, “the rest of us try to make it so Tom doesn’t have to worry about the store when he’s away in Columbus on OAMES business. We all know our jobs, and we do them well.”

HME Will Survive
The future often proves unpredictable, but that does not stop Mullaney from taking an educated stab at how things will look 5 years hence: “Home care will still be around, and there probably will be more of it,” predicts Mullaney. “The equipment will be a lot more sophisticated too, meaning that many patients who today can be treated only in an institutional setting will be able to receive care at home. That will be a welcome development for both patients and payors. For one, people like the idea of being cared for in the comfort of their own homes. For another, payors recognize it is a lot less expensive to go this route than have everyone receive care in the institutional setting.”

Mullaney is optimistic because home care has a history of surviving brutal economic assaults. National competitive bidding perhaps will prove no different. “We’ve been able to adjust to everything Congress and CMS and the private payors have hit us with so far,” he says. “I feel we’ll continue to find ways to survive as an industry—no matter what—as long as they don’t completely shut us out, or succeed in turning us into a commodity.” DP

Rich Smith is a contributing writer for Dealer/Provider.