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Strategic Insights for Competitive Bidding in Healthcare: A Comprehensive Overview

This document outlines a successful competitive bidding model in the healthcare sector, detailing the legislative history of significant acts such as the Balanced Budget Act of 1997 and the Affordable Care Act of 2011. It addresses the complexities of the National Competitive Bidding (NCB) program, including strategic planning, financial impact, and the management of bids. Key concepts such as SWOT analysis, cash flow management, and business expansion strategies are explored. This resource is essential for stakeholders navigating the evolving landscape of healthcare bidding.

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Strategic Insights for Competitive Bidding in Healthcare: A Comprehensive Overview

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  1. A Successful Competitive Bidding Model July 8, 2014

  2. Brief Legislative History • The Balanced Budget Act of 1997-Demonstration Projects • The Medicare Prescription Drug, Improvement and Modernization Act of 2003—Established NCB to be phased in in successive rounds starting with 10 • The Medicare Improvements for Patients and Providers Act of 2008—Halted Round 1 after 14 days • Patient Protection and Affordable Care Act of 2011—Requires Round 2 to be expanded from 70 to 91 MSAs and extend NCB rates nationally by 2016 • Budget Control Act of 2011—Requires Medicare Provider Payments cut 2% (AKA—Sequestration) • American Taxpayer Relief Act of 2012—Requires HHS to apply payment rates from national mail order for diabetic supplies to non-mail order

  3. Financial Impact Discount Capacity Sustainable Growth Rate/Sustainable Loss Rate Key Threats Rate Cut Deductibles Audits

  4. Elements of Strategy • Acceptable Profit Margin—Know It/Operate to It! • Costs Associated with NCB Contract • Capabilities, Vulnerabilities and Intentions of Rivals • Consequences of Winning • Consequences of Not Winning

  5. Planning for NCB Identify SWOT Create Strategic Plan Identify Tactics to Accomplish Plan Manage to Plan Cash Flow vs. A/R

  6. CB Preparation and Planning Core Competencies Cash Flow Management Outrun the Sins of Your Past

  7. Business Expansion • Open or acquire location in CBA • Open new locations for additional bid opportunity • Acquire non- CBA for diversification • Expand to Non-CBAs • Diversify Payor Mix (Medicare still best payor) • Direct Contracts • Hospice • Veterans Administration • SNFs

  8. NCB Is In Place—Now What? • The Strategic Planning Process • Plan A—Winning Our Bids is Critical • The Winner’s Curse—now what? • Changes in operations • Changes in staffing • ABC process now really kicks into gear • Know your business/know your weaknesses • Plan B—Not Winning Provides Chaos and Opportunity • Rely on branches in non-NCB areas (2016) • New programs/New services not affected by NCB (managed care, specialty programs Vents, Infusion, Retail, Adjacent Business Opportunities • Plan C—Sell your company…

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