I’m going to state this right off the bat: I had to read this column from Madeleine Doubek three times before I think I fully understood the point she was trying to make. From a simple clarity of writing perspective, that certainly isn’t good.
But beyond that, I find the whole thing just strange.
Republican Gov. Bruce Rauner is about as pro-business as Republicans come, right?
He’s got to be one of those free-market libertarian types, right?
Ok, let’s stop here for a minute. We’re already off to a bad start, Madeleine. Being pro-free markets is not at all the same thing as being pro-business. Someone who is pro-business could be completely fine with massive government subsidies for a specific company. After all, if they’re pro-business then all they really care about is what is good for business, right? Everyone else be damned. No one who is pro-free market would support a subsidy like that.
So, starting off by casually confusing these two terms doesn’t really bode well for the next several hundred words.
Would you be surprised to learn his health care department is considering giving a multi-million-dollar contract to one company to provide products thousands of Illinoisans need?
Ummmm… no? Especially not for a governor who has prioritized saving this state money, which changing procurement practices to take advantage of economies of scale could certainly accomplish.
Now that we have that settled, does that mean we’re done with this column? No? There’s more? Darn it…
This is a little story about the nitty-gritty dealings of government that affect real people and the real people who run businesses.
Fun fact: those were my favorite bedtime stories as a kid.
Matt Peterson is the president of Home Products Healthcare, which provides incontinence products for adults and children on Medicaid. He’s also part of an association of businesses that provides home health products throughout the Midwest.
He called recently because he’s concerned about a contract the state might grant for incontinence products. Plenty of people have bladder control issues at one time or another in their lives due to medical conditions, medication or disabilities. People who are on Medicaid deserve good products and a good choice of accessible products, too.
Oh, really? A decidedly self-interested party contacted a columnist because he’s upset about a potential government decision that could have a negative impact on the business his organization’s members currently does with the government? There’s a shocker.
Administrators in Rauner’s Department of Healthcare and Family Services have issued a request for proposals, or RFP, for companies that would be capable of being the sole provider of incontinence products to state Medicaid recipients.
Translated, that means the Rauner administration could pick a winner and create scores of losers among companies that sell incontinence products. It could create a monopoly for bladder control products among Illinois Medicaid recipients.
This is just asinine.
For one, this is how government procurement works. Or, at least, should work. They’re requesting multiple potential providers to submit their best prices to meet the state’s need. Ho-hum. Happens all the time. This is suddenly a scandal because a member of a business group that could potentially lose out on state revenue depending on the decision that’s made called a columnist? Come on.
We do similar things all the time when we shop around for best prices. There’s a reason that people who need to buy a lot of something do it at Costco. Buying in volume from a single provider allows the purchaser to save money while the seller still profits. For a state that is in as big a financial hole as Illinois, this just makes sense. We don’t run around town, buying a smaller amount of the same item from multiple different stores so that we don’t “create scores of losers” out there.
There’s also no reason to believe this is going to create a monopoly in any meaningful sense of the word. We haven’t been given a reason to expect that any of the other providers are going to go out of business if they lose out on their piece of Illinois’ business. In fact, if it’s actually true that any of these businesses would fail *only* because they lost out on the Illinois Medicaid contract, they probably should fail! If their customer base is that thin, they’re clearly not offering much in the way of value to consumers.
Why? To save money and boost quality control, said John Hoffman, spokesman for the Illinois Department of Healthcare and Family Services.
Those sound like pretty good reasons to me.
Peterson said when he and others learned about the move toward considering a sole provider of the products, they met with department Director Felicia Norwood and others, who explained they wanted to save $5 million a year from what the state has been paying. Understanding the state’s debt and budget crisis, Peterson said he and others in the industry got together, crunched numbers and told department chiefs they believed they could work together to cut prices by closer to $5.4 million year.
Why they weren’t doing that all along is another great question, but Peterson said state bureaucrats believe they have a quality issue that causes some people to cycle through more diapers, pads and other products each month than is considered reasonable.
Let me get this straight. We’re supposed to feel sorry for this association of businesses because they might lose out on their state contract when they’re admitting they were capable of charging Illinois taxpayers $5.4 million per year less than what they were? Yeah, boo hoo.
Also, “why they weren’t doing that all along” really is a great question, Madeleine. Did you think to ask Peterson that? Apparently not, because the answer is nowhere to be found.
Once the department heard about providers’ ability to tighten up pricing and quantities, Peterson said they thought they had a deal, but some time in the last few weeks, the department decided not to pull the RFP. Late last week, Peterson and others requested any documents related to the RFP and were given a copy of a letter from Binson’s Hospital Supplies, Inc. that argues for a sole-source provider, makes clear it intends to submit a bid and includes a spreadsheet listing what it bid and won for the business in Indiana as the sole provider.
Binson’s Executive Vice President and COO Ken Fasse did not return a call for comment, but Peterson said he believes Binson’s letter taints the process. I’d say it taints the process further.
Assuming that Binson’s isn’t legally prohibited from providing this information to the state — and assuming that the Indiana numbers would also be available to the public, which I imagine they should be, either readily or through FOIA — I fail to see how providing the state of Illinois with more, helpful information “taints” the process.
“It’s almost like they’re saying here’s what we’ll bid. They are putting out rates they’ve been awarded in another state, which could give them an unfair advantage,” Peterson said. “It tells others, ‘I can’t bid. Look at those numbers,’ or ‘I’ve got to come in lower.’”
How exactly is this a bad thing? The idea of an RFP is to facilitate the state selecting the lowest responsible bidder. If anything, this is helpful to other bidders because now they’re not flying blind. They know what they need to do to be able to complete. If they can’t, so be it. If they can, that’s great.
How this is apparently a nefarious scandal in the mind of Doubek is baffling.
With 30,000 people a month needing the products, Peterson said he worries whether people will get the quality, choice and convenience they need with one provider. The state has more than 400 product providers now, he said.
How do you know if one provider is “living up to standard if you’ve decimated the industry and you have nothing to compare it to?”
Again, this is just asinine. We’d have nothing to compare it to? How about the track record of association of businesses currently providing these products, which has already, in essence, admitted they were overcharging by $5.4 million/year? And, once again, we have no reason at all to believe that this is going to cause all of these businesses to shutter instantaneously. If a hypothetical contract with Binson’s fails to provide both the quality and cost control, the state can make changes.
Peterson is just engaging in demagoguery here on behalf of his business association, and I can’t believe that Doubek is letting it go unquestioned.
Peterson wants the department to negotiate with all the providers to see if they can find a path that keeps most of them in business, preserves patient choice and quality and saves the state –and taxpayers — money.
A monopoly isn’t good in cable TV. It’s even worse in health care, he contended.
Translation: Peterson wants the department to negotiate with the providers who were overcharging because that’s what is in his interest.
In his seminal economic text, Wealth of Nations, Adam Smith wrote, ” I have never known much good done by those who affected to trade for the public good.” That’s what Peterson is doing here. He’s affecting to trade for the public good. As Milton Friedman once explained this idea, no one goes before Congress and says, “give me $1 million because I’m a good person and I deserve it.” No, they say they should get the $1 million because of all the good things they are going to do with it.
The interest of taxpayers isn’t really Peterson’s concern. His interest is keeping the money flowing to the current group of providers. I don’t necessarily fault him for that, but he should be honest about it.
If providers could agree to $5.4 million in savings, then clearly some shaking up in this area was long overdue, but is a monopoly a little too much turnaround agenda?
I don’t know what Doubek is trying to say here, and I’m not really sure she does either. Again, she misuses the idea of a monopoly and then somehow connects it to Rauner’s bigger picture “Turnaround Agenda” for the state. Because, reasons, I guess. I don’t know. I really don’t know.
Hoffman, state healthcare spokesman, said the department still could abandon the sole provider option after receiving bids.
“The department initiated this process to achieve costs savings and better quality control, which are especially crucial to taxpayers in this budget climate,” he said. “The process is ongoing, and HFS continues to pursue all available options to find the best way to achieve these goals.”
As well they should.
This whole story really is much ado about nothing. And the people who we really should have sympathy for here aren’t 400 some suppliers of products that apparently can be more frugally acquired from a single vendor. It’s for the taxpayers in this state that continue to have to shell out more and more of their hard earned money to countenance the state’s gross inefficiency.