Life in Round 1: AdvaCare perseveres

BRIDGEVILLE, Pa. - After the great unknown that was January 2011, provider Tammy Zelenko is resting a little easier these days. Her company, AdvaCare Home Services, is not a contract supplier in the Pittsburgh competitive bidding area, but, a full year after Round 1 began, she's had her busiest month yet.

"I had a lot of sleepless nights (last January) wondering what was really going to happen and would we be able to survive," said Zelenko, president and CEO.

Here's how she did it:

Keep an eye on the bottom line

"You can never recoup that 32% cut that we took," said Zelenko. "It didn't matter if you won the contract or didn't win the contract, you still took a reduction. That, to me, was the biggest challenge." It didn't help that other payers followed suit and lowered reimbursement. Zelenko has been vigilant about where money and resources go. "I laid the law down and said, 'Before you ask for that, you better have a good reason why you need it,'" she said.

Keep your hand in

AdvaCare may have lost the contract for oxygen in the Pittsburgh CBA, but a subcontracting agreement with an out-of-state company that won the bid has kept AdvaCare in the Medicare game. "Eighty percent of our business is respiratory and sleep," said Zelenko. "It made sense that I tried to do that." Keeping Medicare on AdvaCare's payer list also helped her marketing team, Zelenko said.

Cut losses

Zelenko made the "really tough" decision to terminate contracts with some commercial payers. "You can't accept contracts that you're going to break even or lose money on," said Zelenko. "It's hard, because you're out there marketing and you want to say, 'Yeah, we take all of the payers,' but keeping contracts where they don't want to pay us for what we do is not why I'm in business."

Diversify

Zelenko looked to a new product line to add to her bottom line: CPM machines. One perk has been that, unlike oxygen rentals, CPM rentals return to AdvaCare after use, allowing them to be put back out again. "It's a new product line that doesn't fit into our oxygen and sleep, but it generates the same amount as if you had an oxygen patient out there," said Zelenko.