Vendors assess the damage

Wednesday, May 25, 2011

After reading in a local newspaper earlier this year that Ringgold, Ga.-based Fuller Rehab had gone bankrupt, owing $7 million to Pride Mobility Products, I called a few manufacturers.

Who better to know whether providers, suffering under competitive bidding and other reimbursement pressures, are going bankrupt in increasing numbers than the manufacturers that sell those providers equipment and, in many cases, provide them with the financing to buy that equipment.

The manufacturers I called say it's still too early to determine the impact of reimbursement pressures. But they're not sitting around waiting to find out what happens and they say neither should providers.

We work with you

Invacare's Carl Will said the key to surviving reimbursement pressures is getting access to cash and having a plan. When it comes to getting access to cash, whether it's through a local bank or a manufacturer, he says providers need to be "truth tellers."

"We loan money based on two things: one is the ability to pay and the other is the desire to pay, and both of those require us to have a fairly intimate understanding of what type of individual you are and the company you have set up," said Will, senior vice president. "The providers that we know this about are the ones that I'm willing to put our money with."

When it comes to a plan, providers can't be shy about asking for help, Will said.

"Sometimes providers get uncomfortable with the idea of modeling their financials," he said. "We can help. Consultants can help. If you're in the second round of bidding, you can put in the existing bid rates for the first nine areas into your financial statements and just see what kind of business you'd have. That lets you know what your challenge is."

We're tightening up credit, but...

Doug Francis says Drive Medical has tightened its credit policies, but it has also developed new programs to help providers cope with reimbursement pressures. In competitive bidding areas, for example, the manufacturer is helping non-contract suppliers to diversify into non-competitive bidding products and contract suppliers to "gain a disproportionate share of referrals."

"We didn't go to any of our customers and say, 'You're on your own, good luck,'" said Francis, executive vice president. "We said, 'We're tightening up your credit, but we have some programs here that will help you grow your business.'"

We're helping you fight the fight

The increasing pressure on providers is a big reason why Richard Golden says Golden Technologies supports efforts to repeal competitive bidding.

"I have a family member who was a small provider in Pennsylvania and even though she was in Round 2, she knew she didn't have the wherewithal, financially, to win a bid, so she sold her company," says Golden, CEO. "If the government needs to cut costs, I think the industry can find a way to do that, but putting small businesses out of business--that's the worst thing they can do."