In a classic television commercial, a person drops a heavy rock with a Timex watch bound to it off an extremely high cliff. After the rock tumbles down the cliff, knocking and scraping along the edges, a person at the bottom of the cliff retrieves the rock, removes the watch, and shows it to the television audience. “A Timex watch takes a lickin’ and keeps on tickin’,” he says.

It is a memorable commercial for me, not only because it cleverly illustrates the sturdiness of a watch, but also because it reminds me of the importance of overcoming adversity and having personal strength. When I started my new home health care company, Advanced Respiratory Medical Systems Inc (ARMS), in Los Angeles, I often identified with that Timex watch.

I too took a lickin’ and returned for more. Long before starting ARMS, I had founded another home respiratory care company called Sterling Home-Care Medical Systems from my son Matthew Sterling Weatherspoon’s bedroom. It was a small business at first, but over the next 10 years I grew that company to a $4,000,000-a-year enterprise with 35 employees.

Then disaster struck. Due to an unscrupulous management team and poor managed care capitation contracts, Sterling took a nosedive. Eventually, I had no choice but to exit the home respiratory care business.

But while my business was a loss, I had become rich in experience. I learned that lean and wise is better than large and foolish. Eventually, I came back to found ARMS, a growing young company that specializes in oxygen equipment and respiratory services, including providing a full line of respiratory products, such as continuous positive airway pressure (CPAP) devices, bilevel positive airway pressure devices, ventilators, nebulizers, and suction equipment.

Because HME businesses face so many obstacles before they see a dime of revenue or profit, those of us who run HME companies are all prone to taking a lickin’. If your company is a small to medium HME company trying to get started, stay afloat, or improve business operations, I would like to share what I have learned about keeping on tickin’.

1. Learn to Say “No”
The small to medium-size HME company must realize that in this business you cannot be all things to all people all of the time. We tend to take anything a referral source sends out without questioning the insurance, the diagnosis, or anything else, because we are terrified that if we say “no,” the referral source will never call us again.

Be it a physician, a hospital, or a home health agency, we must learn to ask the hard questions up front and not at the end of 90 days when we wonder why our accounts receivable statistic is through the roof.

2. Teach Your Staff to Think
When you are the new kid on the block, the referral sources know you are hungry. They will therefore send you everything that they cannot get any other company to take. The key to overcoming this problem is training your intake and delivery people correctly in the beginning. Make sure they know how to take an order and how HME works, including how to set up a hospital bed, wheelchair, or walker. Your goal is to teach your people to think and not just to fill in blanks on a form.

If your employees do not think critically about each order, you lose profitability every time you get a new referral. A good example is what can happen if a home health agency orders a walker for a patient who lives across town and your intake employee does not ask what walker features the patient needs. Your delivery technician may then drive 50 miles to make the delivery, only to have the home health agency call back the next day to say the patient needed a walker with wheels. You must then dispatch your technician again to deliver wheels on a low-ticket item. Counting gas, vehicle cost, employee wages, and insurance, a couple of deliveries a week like this can really hurt your company’s bottom line.

Avoid this scenario by training your intake staff not only to take patient information, but also to ask about the patient’s needs. Besides the diagnosis, how is the patient’s movement now? Is the walker more for support or for ambulating?

Also, train your delivery technicians to actually watch the patient use the walker. Even if the intake staffer missed that the patient needed wheels, the technician may notice it. A few extra minutes spent up front will save you money in the end. Your goal is to make a one-trip delivery for every product.

3. Mind Management Training
Proper training of the right people is also critical for any HME company’s management team. If you have hired a team or a person to help manage your company and things have gone from good to bad, or from bad to worse, it is time to replace that team or person.

Many HME company owners confuse longevity with competence. Just because a person has been in the HME industry for a long time, it does not mean that they know what they are doing.

If you hire an accounts receivable manager and your days sales outstanding goes from 120 days to 130 days, something is wrong. If your finance manager’s advice is to file for bankruptcy instead of looking at ways to reduce high operational costs, show him or her the door.

With my new company, I take my lead from professional sports team management. If they have a losing year, out goes the coach and whoever else was in control during that losing season. And sports teams keep trying new management until they get it right.

4. Watch Vendor Relationships
Remember that HME vendors can be your friend or your enemy. Most HME vendors have excellent programs to help your company grow, but some do not. Therefore, be careful not to rely exclusively on a single vendor.

One area where good HME vendors can help is with getting access to sufficient capital to grow an HME business. However, since new companies rarely have all the capital they need to grow, some HME vendors will ask for your firstborn before they will do business with you. When you hit a bump on the accounts receivable road and cash is low, these vendors will come knocking.

Also remember to not buy more than you need to get a better price. I never allow a vendor to talk me into buying more to get a better discount. I keep strict inventory control to maintain a balance and not overstock.

5. Beware of Managed Care
Small companies also need to be very careful when doing business with a managed care company or HMO. If you do not have your internal operations together (ie, intake, billing, and collections), managed care will be a nightmare.

Yes, it sounds impressive to say you have this big HMO contract, but after you go through the maze of authorizations and eligibilities, patients enrolling, disenrolling, etc, you will see how much of a headache a managed care contract can be. I sometimes suspect that managed care companies just sit around trying to figure out ways not to pay you. When they succeed in delaying or denying payment, the impact on accounts payable can devastate a small HME trying to meet payroll.

For my company, I make sure that internal operations are set up with checks and balances to ensure timely collections when dealing with HMOs. If I lacked these, I would avoid any HMO contract, no matter how attractive it seems.

6. Check Up on Your Hires
Employees can be a challenge for any company. Delegation is vital, but do not overdelegate. I try to spend a day with my supervisors and key employees at least once a quarter. If I notice that they do not know and understand policy and procedure, I know I can expect problems.

I really like to spend a day with my delivery technicians and my respiratory therapist. I get a chance to see how they manage their time, how they interact with patients, and, most important, their attitude. If I see a daily run sheet with eight to 10 deliveries and it takes 10 to 12 hours to complete them, I make riding along with that technician a priority. I sometimes find that those same eight to 10 deliveries actually take only 6 to 8 hours to complete.

7. Weigh Consultant Advice
There are some good consultants and some not so good ones, and it can be hard to tell the difference between them. Sometimes consultants have you jumping through unnecessary hoops to get to information you already know. And, of course, you are paying for this information at a rate of $200 per hour.

Have specific questions and marching orders for any consultant you hire. Remember, the consultant works for you.

8. Keep Your Chin Up
In this turbulent health care environment, it can be challenging to stay motivated and enthusiastic about the HME business. We never know how the next law or Medicare regulation change may impact our business.

At times like these, remember that we are providing a vital service to our communities. Taking care of someone’s mother, father, sister, brother, or child alone should keep us motivated. I always ask myself how I would treat a patient if he or she was one of my relatives. And when that doesn’t work, I remember a quote I heard many years ago and try to keep in the front of my mind: “What kind of world would this world be if everyone in this world was just like me?”

Take a lickin’ but keep on tickin’.

Will L. Weatherspoon, RRT, is founder of Advanced Respiratory Medical Systems (ARMS) Inc, Los Angeles. Contact him at (877) 711-2767 or through his Web site at www.advanced-respiratory.com.