Medical Equipment Suppliers Struggling Under New Medicare Competitive Bidding Program

From: Becker’s ASC Review

Medical equipment suppliers are finding it hard to remain financially viable as CMS rolls out a new competitive bidding program, according to a Crain’s Cleveland Business news report.

Under the new program, which went into effect this year in nine regions and is set to expand to other regions later this year, only medical equipment suppliers that win competitively bid contracts with the federal government can be reimbursed by CMS. The program is supposed to help save the agency approximately $28 billion over the next 10 years, but suppliers are having trouble adjusting to the new system.

According to one company president, Joe Petrolla of Seeley Medical, companies are forced to bid much lower than they used to in order to win contracts, making it hard to offer the latest medical equipment to providers and patients. Mr. Petrolla said he has had to let go of 25 percent of his employees in the last two years to make up for the financial losses.

As it becomes harder for many companies to run independently, many suppliers are leaning toward mergers or affiliations to expand their business and diversifying their portfolios, according to the report.