If what happened May 6 in Washington, DC, is any gauge, Capitol Hill fly-ins work. Evidence of providers persuading lawmakers to see the light with regard to Medicare competitive bidding was on display that day during a US House of Representatives Ways and Means Subcommittee on Health meeting chaired by Rep Fortney "Pete" Stark (D-Calif). For about 45 grueling minutes, CMS acting administrator Kerry Weems had the thumbscrews put to him with at times hostile questioning from both sides of the aisle.

Tim Binkley was at his office in Roswell, Ga, watching the hearing streamed live over his computer. "The fact that Weems was challenged the way he was suggests that our volunteer legislative efforts through AAHomecare and other provider organizations have clearly had some impact on the thinking of Congress," says Binkley, president and CEO of Valentines Diabetic Supply, a mail-order operation (and one of the first to become accredited) serving roughly 6,500 active patients spread across 32 states, but mainly in Georgia, Alabama, North Carolina, and South Carolina.

"There are now a lot of congressmen very unhappy with what CMS is doing," says Binkley, with the irony of having Weems jabbed hardest by Stark—a staunch advocate of government-controlled health care—not for an instant lost on him. "It's obvious that those congressmen have heard from many concerned voices made up of providers, manufacturers, and constituents."

Binkley's first DC fly-in took place back in the late 1970s. "I've continued going back to Washington regularly since then, because I know that our representatives appreciate hearing from us," he says. "They want to know what their constituents and business people from back home think about issues. These face-to-face encounters are the most effective way for us—for anybody—to get a message across."

In Binkley's case, part of that message is structured around his experiences providing diabetic testing supplies, glucose meters, and insulin pump items—which are the sum total of products carried at Valentines Diabetic Supply. "The reason we have such a narrow product focus is that we're believers in the principle of keeping things simple," Binkley explains. "We've done well by sticking with that formula."

Even without competitive bidding to worry about, holding the line on expenses has always has been a Valentines Diabetic Supply priority. "In the diabetic supplies space, wholesale pricing traditionally has been stable, as long as the provider was willing to buy in volume," says Binkley's brother Mike, who serves as company vice president. But the initial round of competitive bidding—which wrought an overnight 43% cut in Medicare reimbursements for key diabetic supplies—has roiled the situation. "We have to shop long and hard now to find and lock-in the best price." Adds Tim Binkley, "There's no question that pricing today has fallen out of line with current market realities. Fortunately, manufacturers are more willing to work with providers on pricing deals—they want us to survive."

The Binkley brothers knew their company from the beginning would survive. And thrive. They launched Valentines Diabetic Supply in 2002. Prior to that, Tim Binkley, a respiratory therapist and heart-lung technician in an earlier phase of his life, and Mike Binkley ran a business brokerage (they still do). "Our brokerage had several clients in the diabetic supply business," says entrepreneurial-oriented Tim Binkley, "so we already were acquainted with the industry at the time we decided to start a diabetic supply company of our own."

The brothers also were acquainted with the needs of diabetic patients, since the disease runs in their family. Further, their research demonstrated plenty of growth potential for providers of diabetic supplies. "The incidence of diabetes is increasing significantly in the United States, and especially here in the Southeast where obesity and poor eating habits are quite common," says Tim Binkley.

Another factor in the decision to start Valentines Diabetic Supply was the desire of Tim Binkley's wife to get back to work. Sherry Binkley had become restless in early retirement following the sale of a business she owned. "I was looking for something else to do," she says. To be more precise, Sherry Binkley was interested in a venture that would involve her and her husband as a team. Valentines Diabetic Supply came to be seen as the perfect solution.

DAY OF RECKONING

A representative from Valentines calls patients every 90 days to discuss upcoming shipments.

They chose the name of Valentine for their new business because February 14 was the day the legal papers establishing it were signed. "And, of course, calling our venture Valentines gave us opportunities to incorporate hearts into our logo and advertising—the heart being a very powerful symbol of caring," says Tim Binkley.

Initially, the three Binkleys pondered whether to acquire an established diabetic supply company or build theirs from scratch. In the end, they decided to go de novo. "We felt we had the right ideas and ingredients to successfully do it ourselves," says Tim Binkley. Later, though, Valentines Diabetic Supply went with acquisitions when it came time to expand. In 2004, the company purchased a small mail-order outfit in Wilmington, NC, followed in 2006 by one in Alabama. "We began the acquisition process because one of our best referral sources had operations in those two states, and it made sense for us to follow them there," Tim Binkley offers. Today, Valentines is eyeing additional acquisitions elsewhere. "There are plenty to choose from," he says.

In its own right, Valentines is a vigorous competitor with several important advantages. The first is its business model. "The approach we take is to pursue referrals from professional sources, rather than go consumer-direct," says Tim Binkley. "Our professional referral sources include doctors, diabetic centers, and home health agencies." Mike Binkley mentions that, by adopting this model, "we were able to get our business off the ground with less capitalization than would have been necessary otherwise. Also, we're not spending a small fortune on the broadcast and print advertising that it takes to drive a direct-to-consumer model."

Superior service is another check mark in the Valentines plus-column. "If the patient's meter breaks down, we send them a new one," divulges Sherry Binkley, who serves as general manager of operations. "Or, if the patient isn't happy with, say, the lancet, we let them try something different. In other words, we take very good care of our patients. We call them every 90 days to discuss their next shipment, and usually that turns into a conversation where they tell us all about what's been going on in their lives, right down to what's growing in their garden."

The familial nature of these relationships engenders intense loyalty among patients, who, in turn, are extraordinarily complimentary when discussing Valentines with their doctors and other referrers—which intensifies the good feelings doctors already have toward the company and fosters continued or increased referrals, Sherry Binkley adds.

PRODUCTS FOR LIFE

At Valentines, a narrow product focus fits in with the philosophy of keeping things simple.

Valentines also deals itself a winning hand by carrying state-of-the-art products, beginning with the FreeStyle blood-glucose monitor from Abbott Laboratories. "Since our business model centered on seeking referrals from professionals," says Tim Binkley, "we decided we needed to offer products the professional could feel comfortable about." The FreeStyle fits this criterion perfectly. "It required a smaller blood sample and gave a significantly faster read than the low-end meters preferred by volume-oriented providers. It was easier to use, which helped patients be more compliant with their medication regimen."

However, higher-end products could become a millstone around the neck of Valentines in the event competitive bidding proceeds as planned to its next-round implementation in July. "The rates that have already been announced by Medicare for some of the diabetic products are ridiculously low," grouses Tim Binkley. "I don't see how a company 80% or 90% dependent on Medicare dollars could survive with those rates. As it is, we're 61% Medicare dependent, so we'd expect to have some difficulties ahead if CMS refuses to change course."

The company already has taken a hit from competitive bidding be�cause of its branch office in Charlotte, one of the places where the Medicare cost-savings scheme debuted last year. "Fortunately, our initial exposure to competitive bidding has been small," says Tim Binkley. "In the Charlotte area, only about 300 of our enterprise-wide total of 6,500 active patients were affected."

But Charlotte was not the sole extent of the company's competitive bidding experience. It submitted bids in six other metropolitan areas across the nation—and lost straight across the board. "We were awarded nothing, anywhere, because our financial information was supposedly inadequate," says Tim Binkley. "We found that difficult to believe, so we did some checking and discovered that the problem was we had provided our 2-year historical financial data on a single page in side-by-side comparison columns, rather than on two separate pages." But CMS never stated it wanted a year's numbers to the page, Tim Binkley stresses.

OPTIMISTIC DESPITE UNCERTAINTY

From all outward appearances, the future is a riddle wrapped up in a mystery inside an enigma. Despite all that, the Binkley family is optimistic about the months and years ahead. "We're looking closely at which products we'll be able to ship that are not Medicare bid items," Tim Binkley reveals. "That means they'll have to be out-of-pocket affordable to the typical Medicare patient. We're currently evaluating proposals from some of our vendors about product additions that can satisfy this requirement.

"Also, new cases of diabetes are being diagnosed in this country at an astonishing rate. Valentines Diabetic Supply will continue to be here because we're needed. Competitive bidding is not going to change that."

Rich Smith is a contributing writer for HME Today.