Taking Control

When it comes to being prepared for the implementation of competitive bidding, Patrick Hanna believes in the inside-out approach.

With CMS poised to implement competitive bidding in selected home medical equipment markets in 2007, the president of Tiffin, Ohio-based B&K Home Medical Services and his staff have been concentrating energy and time on perfecting their internal services. And Hanna says that has made them “well-positioned for the future.

“It's the inside-out approach. You can't market your business to death and then not answer the phone or deliver your products on time,” he says. “So we've spent time working on our internal practices. It's the best advertising I can get because I have a happy customer who will tell others about B&K.”

Adjusting to Change

Make no mistake — Hanna is not a naïve HME provider. Like everyone else in the business, he is grappling not only with competitive bidding but also with oxygen reimbursement cuts, new supplier standards and revised power mobility codes and reimbursement rates, not to mention the everyday pressures of doing business in a very competitive field. He is well aware of the threats to his ability to serve his customers and to his bottom line.

“It's tricky to adjust to the different changes in the industry with the reimbursement cuts and competitive bidding right around the corner,” he acknowledges.

He knows that competitive bidding in particular could threaten his small HME — perhaps not in the first go-round of 10 major markets, but definitely down the road. But Hanna has never thought of throwing in the towel and moving on to a less stressful, less government-dominated business.

“I don't think it's going to be necessary for people [to shut their doors],” he says. “There are new tools that come into play that help us be more efficient — document imaging, the concept of activity-based costing and doing more with less, growing your sales but not hiring more people.

“I'm somewhat of an optimist,” Hanna continues. “I think there will be ways to face the threats [that loom]. You find ways to do more with less and be more efficient. You manage costs so you have some profit at the end of the day.”

In short, providers must figure out what they can control. And internally, that is a lot, according to Hanna. At B&K, for example, activity-based costing has led the company to drop product lines — diabetic and ostomy supplies — that were not cost-effective either in time or reimbursement.