Hundreds of millions of dollars (euros) are about to be shaved off the homecare market as new government heathcare restructuring is implemented in arguably the worlds largest and most profitable homecare countries – the United States and Germany. Several other countries also have programs to restructure (read save money) largely at the expense of industry.
Having come shortly in the heals of power chair cuts and the respiratory quagmire – most readers here are aware of the confusion surrounding the implementation of National Competitive Bidding (NCB) in the US. What is not confusing is that it is going to happen – starting in the next several months. Don’t fool yourself NCB means just what it says. Your bid is going to have to be a lot more competitive – and that means prices down and in some cases – service up – or more simply put, margin squeeze. Here is todays update from HME NewsWire.
The following is the view of a homecare company executive in Germany, who comments on the hot off the press heathcare reforms in his country.
News from the German Healthcare -System…
Last weekend the new healthcare laws passed the “Bundesrat”, which means that the changes will be valid from April 1, 2007.
What does it mean?
- Homecare Dealers No Longer Require Accreditation
From the dealers point of view there will be a higher level of competition than it is even today, because everybody (who wants) can go and make contracts with Health-Insurances. There is no longer permission needed that approves a dealer as “Sanitätshaus”.
This opens the door for any company in the distribution and logistics business. They are perfectly in place to work all over Germany and provide the health insurance customers with e.g. all standard Patient aids, which are simple to use.
- Tenders For All Standard Patient Aids
Another fact is that the health insurance industry is forced to have tenders for all standard patient aids. So if this comes true, it will be very difficult for any dealer with a small location (stock) to stay in business. It is not yet clear if the insurance companies will have German wide or regional tenders. However a dealer has to have a huge stock when he wants to provide the insurance with products and service – and the price better be right.
- What Does This Mean For All The Buying Groups?
The winners are… Ergoh, Ortheg, Nowecor, TOP and all the others which have stock and members in their region or all over Germany. These buying groups can make offers for the tenders and they have, as members, a very good service and logistics structure.
Also winners are the two or three bigger independent dealers, that work already German wide.So then –
What about Reha Team and Reha Vital? These are the biggest and most influent buying groups in Germany. In the moment it seems that they loose the game, but they have Germanys biggest dealers as members and they are well accepted by the insurance industry. So they will probably have one or more logistic centres in Germany and will also take part in tender business. But only if they understand what the new healthcare system means.
- Small Dealer In Trouble
Fact is that every small, local, independent dealer will be in trouble latest in 2008, when the “old” status of all dealers from today is not longer valid.
- What Does It mean For The Industry?
Lucky are all companies that do not deal with standard products (Congratulations to the Specialists etc.).
For all the others it means even faster price decreases, less market for every company that is not a good friend of the buying group or dealer that wins tenders.
Maybe some of the big companies will try to get more in special businesses which would mean that also in these segments the prices will decrease (Sorry to the Specialists.)
- Who Is The Customer?
The others will do what they always tried: be aggressive and manage their customer relation in a way they think it´s right. But who is the most important customer in future?
Will it be the dealer, the health insurance or the end user?
In the end it´s an open race, that’s been already started, which can only be won by the fastest – not the biggest…
…. To be continued
Oh – I nearly forgot to mention – the same Asian companies that have been supplying manufacturers and distributors in Germany are now making their own contracts with the health insurance companies – even by passing the dealer.
