Independent home care providers band together

Ready to approach MCOs for contracts

How does a small home infusion agency retain its independence while taking part in managed care contracts usually reserved for the national providers? It’s a dilemma many local providers face, but some think they’ve found an answer.

You take a handful of New York’s small regional providers of a diverse range of home care services and mold them into a unique alliance. The result, the members of Med-Alliance hope, is a regional home health care equipment and services provider that will appear attractive to managed care organizations (MCOs) who otherwise wouldn’t give an individual member the time of day.

"Med-Alliance is a group of independent providers that have been brought together under the Med-Alliance umbrella," notes David Horowitz, RPh, president of Med-Alliance and executive director of C&C Homecare, the respiratory therapy/rehabilitation and medical equipment specialists for Med-Alliance. (See related story on Med-Alliance, p. 91.) Currently consisting of seven providers, Med-Alliance was formed with one goal in mind.

"We started seeing the trend for large groups getting preferred provider contracts, so we looked to form an alliance that had an all- inclusive group for health care services, and then we could be a good health care provider for the patients and get into the networks," notes Thomas M. D’Angelo, RPh, and president of Franklin Square, NY-based Americare Pharmaceutical Services, which is the home infusion provider for Med-Alliance. Other services that Med-Alliance members can offer MCOs include prosthetics and orthotics, DME, respiratory therapy, custom rehab equipment, and comprehensive home health. The group currently plans to make its services available in the New York/New Jersey/Connecticut Tri-State area, with the ability to expand later.

D’Angelo says the group believes there are several reasons it will prove successful in acquiring managed care contracts as a regional provider.

"The quality of care for the patients will be better because we’ll be taking care of the patients as single smaller entities," he says. "There’s more invested by the smaller companies toward their patients. I’m the owner and president of Americare, and when patients call, I’m one of the people who gets on the phone. They’re not talking to a pharmacist who has no vested interest in the company. They’re speaking with the owner, the people at the top."

Right now, national "super-shops" hold the upper hand over regional infusion providers such as Americare, which currently has 20% of its revenue from managed care.

"We’re in alliances with a couple of physicians who like to use us, but we’re often limited by the insurance companies whether they can use us or not," says D’Angelo. "It’s difficult because no managed care organization even wants to open the door, but as a group, we’ll get in."

The reasoning is simple. National providers have already cut their rates to the minimum, and with more overhead than Americare, there may be little room left to cut.

"I think you’re going to see the national companies start turning away contracts pretty soon because they can’t afford to pay the tiered level of salaries from each infusion case that they’re paying right now," predicts D’Angelo.

When that happens, regional providers such as Americare and Med-Alliance will be waiting.

Splitting the pie

The increased marketability of a group of varied home health service providers is obvious in this day and age when "one-stop shop" is not just an overused industry buzzword but fact. But not all the benefits are so obvious. The contract that each Med-Alliance member signed creates a unique working arrangement. First and foremost was the understanding that none of the participating entities would lose any of their individuality. For example, some members, such as Lake Success, NY-based Staff Builders, are already participating in numerous managed care contracts. Existing contracts are not affected by the Med-Alliance agreement. MCOs may call members with existing contracts directly or through Med-Alliance. Horowitz notes that Med-Alliance is likely to prove beneficial down the road even for the pre-existing contracts of members.

"Members recognize that having all these contracts on their own may at some point be a problem because managed care groups are going to want to seek someone who provides not only the clinical services but also, with one telephone call and one billing address, provide other services as well," he says. When such an issue arises, Med-Alliance will potentially save the contract while providing additional business for other members who initially were not involved in the contract.

Med-Alliance is ready to begin its quest for managed care contracts now that the group has completed its initial formation stage.

"There are no managed care contracts currently signed," notes Horowitz. "At this time, we’ve taken all the administrative steps to form Med-Alliance and get it in a position so that we can go out and pursue contracts."

To do that, Med-Alliance has contracted with CPR Medical Marketing and Communications of Teterboro, NJ, a public-relations company with extensive contacts in the managed care community. Med-Alliance proposed to CPR to not only work for it in a public relations capacity but also in a marketing capacity. Horowitz says CPR and Med-Alliance have begun meetings to finalize the marketing plan and hope to begin soliciting five or six targeted managed care groups within the next two months.

Jodi Amendola, CPR’s vice president of corporate development, says the company has been doing such contracting for 10 years, although Med Alliance is a somewhat unique situation. She sees several benefits CPR will be able to emphasize with MCOs, in addition to the one-stop shopping concept.

First, with Staff Builders as a member, Med Alliance has the ability to offer electronic billing. Also, each of the executives of Med Alliance’s individual corporations has extensive clinical background, in that they are from medical rather than business backgrounds.

That’s not to say CPR isn’t expecting obstacles at the start.

"My guess is there will be organizations that will not be interested in pursuing a contract with Med Alliance, but if they give us the opportunity to explain the uniqueness and benefits, I think it will be a pretty easy sell," says Amendola.

Not done yet

An important decision will need to be made in the near future, though: Where will Med-Alliance’s home office be? Right now, members are considering two options: The first is using Staff Builder’s current operations in Lake Success, NY. However, Med-Alliance is also considering using the Philadelphia input and billing office of the Med Group, a Lubbock, TX-based organization of health care providers originally established for rehab dealers that has since branched out to include durable medical equipment (DME), respiratory, IV, nursing, and more. The five original members of Med-Alliance are members of the Med Group, through which they met.

Horowitz notes that structuring an agreement with an existing intake/billing center would save the group a tremendous amount of capital, saving it the cost of having to establish its own office and deal with the numerous associated overhead costs.