There are a lot of big changes coming in the healthcare world in the next few years, and they have a lot of people scratching their heads. From major Medicare changes that will affect the supply base of some products, to nationalized healthcare that will change the landscape of health insurance. The way you purchase your medical supplies and services is likely to take a fairly dramatic turn. If anyone really knows what the exact effects of these changes will be, well, you would probably be a millionaire by now. But as it is, all we can do is try to understand what the changes are likely to mean to most Americans within the next few years.

Let's start by looking at a major change in the Medicare system called “Competitive Bidding”. This change is being implemented by Medicare in an attempt to consolidate the number of suppliers being used, and in doing so, lowering the overall administrative cost to manage certain pieces of the Medicare program. Medicare will not only benefit from an administrative standpoint, but from a purchasing perspective as well. As is part of most bidding programs, suppliers will be incentivized to bring their price down, and in turn delivering big savings in the way of lower re-imbursements paid for certain supplies. That's the good, but this will also result in some issues for the patient. As the program is implemented, some patients will no longer be able to receive their medical supplies from the same companies they have in the past. If your supplier is not submitting to the competitive bidding program, or if they are not awarded the contract (which is the more likely scenario), then the patient will be forced to switch suppliers to a company who was awarded the bid in their local area .

This is certainly not convenient for patients who have been receiving their medical supplies from the same supplier for years. That said, it is not likely to be the biggest problem encountered during the shift. The real problems will start when those companies who are awarded the bid start to struggle in meeting demand. These businesses will have a large increase in patient volume, and the service to the average patient is likely to drop while these businesses learn to deal with the sudden increase in customer base.

The other potential issue facing these businesses is the reduction in margin they were probably forced to accept as part of the process. You will now have companies forced to deal with additional volume, at a lower price point that was needed to win the bid from Medicare. Anytime a business is forced to take a significant hit to margin, there is a typical decrease in service delivered to the average customer.

So as you can see, there positives and negatives to the situation. The major benefit is potential cost savings to the Medicare system in the long term, and no doubt we need to make that happen. The big question is how big of a hit we will take to our service levels as more cost pressures are put on medical supply businesses. Only time will tell, but be assured you will see these changes in the next few years, and are likely to experience the effects of them in some way in your daily lives.

Look for future articles where will discuss more changes within the healthcare system, including nationalized healthcare.