Mike Mallaro Explains – What Do HMEs and Auto Dealers Have in Common?

Posted on in HME Government Issues

During the economic crisis of 2008-2009, U.S. auto manufacturers made the decision to close 30 percent of the 21,000 auto dealerships in the U.S. The manufacturers had concluded there were way too many dealers. Conventional wisdom said many dealers were too small, that the distribution of autos could be centralized in larger cities, larger dealerships and via ecommerce. Thousands of community-based, generally small businesses holding auto franchises were notified of the auto manufacturer’s intent to consolidate dealerships and discontinue their franchises. But the best laid plans of oligopolies and bureaucrats don’t always work out. While the giants did succeed in closing many local car dealerships, they only closed about half of the number they were attempting to eliminate. That meant 3,000 small businesses targeted for closure were allowed to stay in business despite a heavy-handed attempt at forced consolidation. Why were the car dealers relatively successful in their fight to stay alive? The answer lies largely in state laws surrounding franchising and auto dealerships. For the past decade, the HME industry has fought a gallant and just battle to prevent the unfair selective contracting imposed by CMS under its so-called competitive bidding program. We lobbied, reasoned, begged and pleaded with lawmakers and bureaucrats. Treat us fairly, we said. Service and quality matter. Patients have special needs. One size doesn’t fit all. Unfortunately, our wins have been few and far between. At the end of the day, virtually no one in Washington is concerned about patient access to quality home medical equipment and service and certainly no one cares if there are any HME businesses left standing. Frustrating, yes, but this is the hand we have been dealt. We will continue to fight in D.C., to keep them honest, but our chances of any meaningful victories there are remote. There is a different group of lawmakers and bureaucrats who are local, are more likely to be citizen legislators and tend to be pragmatic. Our pathway to beating CMS lies in fifty state capitals, not in D.C. We must seek to enact state licensure requirements that establish state-based credentialing standards for HME suppliers. We are health care professionals and should be governed as such. In order to be licensed to provide assistive respiratory and mobility devices in a given state, HMEs should meet standards established by that state. Lead among those standards is proving the ability to effectively service patients in that state, as evidence by brick-and-mortar location in or adjacent to the people of the state. For many years, local auto dealers invested in relationships with state lawmakers in an effort to build a firewall to protect them from the powerful auto manufacturers. The dealers were successful in enacting a web of state-level protections. When it all hit the fan with the economic meltdown, that firewall was the saving grace for 3,000 dealers, allowing them to keep their dealerships over the objection of GM, Ford and Chrysler. Our HME firewall lies in investing in and winning at the state level. Tennessee showed us the way. The Volunteer State’s licensure requirement led to Tennessee providers being spared some of the pain of competitive bidding. We must work to enact state licensure requirements, which include brick-and-mortar standards, in every state in the country to stop the encroachment of Washington in our business and in the lives of our patients.