Subcontracting: Not what it's cracked up to be

YARMOUTH, Maine - Junk equipment and slow service were not what some subcontractors expected to provide when they signed on the dotted line.

Provider Rick Wilson is in a Round 2 competitive bidding area and subcontracts for several product categories using inventory provided by the contract supplier.

“The bed looks like it came from the 99-cent store,” said Wilson, vice president of Apguard, Medical in Woodland Hills, Calif. “Two of the concentrators we set up the first night failed. It's just been a mess.”

Making the problem worse: The contract supplier got behind on equipment shipments to Apguard, which then ran out of inventory. Apguard refuses to provide its own equipment at the single payment amounts, so there's been a delay in getting equipment to patients.

“I had a patient that couldn't get the bed for two days,” said Wilson. “The daughter finally gave us a credit card to pay out-of-pocket.”

Provider David Chase says it's been difficult to point beneficiaries toward lower-end equipment—such as a heavier rollator—that the contract supplier requires him to provide. His retail location also carries some high-end rollators.

“They look at the others we have on the floor, but we have to say, 'No, this is the one we provide you,” said Chase, CEO of Hampton Home Care in Southampton, N.Y. “It's a total 180 from when we always had the best products.”

For Wayne Sale, subcontracting hasn't been a sustainable business model.

“You make a delivery, you get paid for it and then you don't have income again until you make another delivery,” said Sale, president of Health First in Richmond, Va.

Sale gave up on subcontracting after a few months and is in negotiations with a contract supplier to sell the 31-year-old company.

“I wanted my company to survive and to be a player in the Richmond market,” he said. “The only way to do that was to find a company that had contracts.”

The mindset of some contract suppliers—and Medicare—is that home medical equipment is a commodity item, with little regard for quality or service, says Chase.

“A lot of these companies are not responsive,” he said. “Maybe we were over-responsive. The end result is that the patients will suffer.”