Four Tips for Tackling Competitive Bidding Head On
Staying ahead of competitive bidding can be challenging for small providers who, despite submitting their most competitive bids, end up losing to larger HME suppliers that have more capital and lower costs. Because competitive bidding is not likely to go away, providers must think beyond today’s reality and prepare for what is to come tomorrow.
Effectively using real-time reporting tools can assist providers with competitive bidding. Here are some tips to help you use reporting to tackle competitive bidding so that it doesn’t control your business.
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1.Submit only bids that will make you profitable. While it’s tempting to win the contract at all costs, you have to make sure that winning actually makes sense to your overall profitability. To determine if it does, use your technology reporting tools to identify your cost of goods sold, overhead, and revenue from each product sold. This data will help you determine where the breaking line is between a profitable bid and one that, if accepted, would actually cost you money in the long run.
2.Analyze how important the contract would be to your bottom line. When bids fail, suppliers could lose more than the contracts at hand. They also risk losing sales of other non-competitive-bidding items that are associated with each patient. While this scenario can be hard to analyze, technology reporting tools can project the potential impact of losing a competitive bid as well as analyze the potential lost sales of other non-competitive bidding items and how that would impact your revenue. Knowing this information prior to bidding can help you determine how each contract will affect your revenue in the coming months.
3.Provide only the services for which you will be reimbursed. Because many providers are now shifting into retail while continuing to participate in Medicare fee-for-service, there are more transactions, and more transactions means more opportunities for mistakes. Technology tools can quickly alert staff when patients are in competitive bid areas that you serve as well as note when a patient is in an area that you are not allowed to serve. As a result, you can be sure you are providing services only to those patients for whom you will be compensated.
4.Analyze if you should pursue other products/services with higher margins. In some cases, it may make sense to stop providing products and/or services for which you consistently earn pennies and add higher margin profit centers that yield favorable results. Technology tools can quickly identify products that have the highest margins as well as those that are draining your revenue and should be eliminated. By comparing the profitability of Medicare versus retail operations, you can see where the greatest growth opportunities exist. Expanding the retail side of your business is a great way to eliminate the financial risk of being trapped in a competitive bid contract that you wish you would have never entered in the first place.
In today’s market, you can’t afford to manage your business based on your current view. Looking beyond the present allows you to prepare for what is ahead before it is too late. And relying on data enables you to run your business on facts instead of your own intuition. Is your HME/DME business using technology to the fullest to overcome these competitive bidding challenges? CareTend can help you avoid competitive bidding headaches with real-time reporting tools. Learn more today!