While doing research for this article, my mind kept wandering to my early years in HME sales and marketing.

I realized that, in some cases, our industry has changed less than I thought it had. Even back in “the old days,” the industry gurus were forecasting the shifts in reimbursement and encouraging HME providers to jump on the retail bandwagon.

Today, retailing lectures continue to draw a large audience. The reason the topic remains so popular is simple: Retailing equals cash sales and cash sales equal increased profits.

Reduction in insurance allowables and more stringent coverage guidelines continue to eat away at HME providers’ bottom lines. However, the concept of accepting cash is still difficult for many providers to grasp. Years ago, a speaker at a marketing seminar I attended recommended the audience stand in front of their mirrors and repeat this saying, “We accept cash, check, or credit card, how would you like to pay for this item?” Taking money from a customer was totally unheard of then.

Now, retailing is more broadly accepted. It is amazing how quickly you can learn to love hearing the ch-ching sound as money goes in your register. You appreciate it even more as your daily bank deposits grow, allowing you breathing space while you wait for insurance checks. Cash retail sales may also take the bite out of payment processing delays for higher ticket items, such as rehabilitation equipment and power wheelchairs.

Getting Started
Once you have made the decision to expand your retail product offerings, do your research. Start by getting to know your customers. The demographic data you are looking for include:

• Who buys your products?
• Why do they buy them?
• What are their needs?

Once you know who your customers are, see if you can create a need among them by attractively displaying and advertising products that promise to improve their health, safety, mobility, or quality of life.

The next step is to shop your competition. After all, your customer does. Determine what products and benefits your competitors offer that you do not. Ask yourself honestly what your competitors are doing better than you are. Carry merchandise and/or brands your competitors do not and adjust your pricing accordingly.

The Buying Decision
Selecting the retail products you will carry is a highly individual decision. Ask yourself if the product you are considering has any of the following qualities:

• Does it enhance your current product mix?
• Is it a new product line?
• Will it create additional cash sales?
• Have customers requested it?
• Will you receive support from the product’s vendor? For example, does the vendor offer co-op advertising money or product? Does the vendor have a good return policy? Does the vendor offer credits and/or adjustments for late deliveries? Does the vendor allow invoice extensions and/or timely payment discounts? Will the vendor share in paying freight costs? Can you bargain for exclusive rights and products that will not be sold to your competitors? Does the vendor provide markdown money for slow-moving or discontinued products?

Once you have selected the retail products you will carry, sell them to both staff and customers. For your staff, provide full product education and develop incentive programs to encourage ancillary sales of new items. For your customers, use eye-catching merchandising techniques, such as creative in-store displays that allow customers to see, feel, and touch merchandise. Make sure signs are easy to read, and test different promotional phrases to describe new products. For example, “new items” may sell better or worse than the words “manager’s choice” or “introductory special.” Use available co-op dollars to print flyers, newspaper advertisements, and other promotional materials.

Finally, you need to control your inventory by implementing a system to manage and maintain it. A good inventory management system will help you avoid shortages and out-of-stock situations by anticipating ordering requirements. It can also track products that are best-sellers. Eliminate excessive stock in slow-moving categories and promptly return substandard and problem merchandise. To find new products and better values, attend trade shows and join buying groups.

Poor planning and failure to adapt to industry changes have been primary factors in the demise of many HME companies. Recognizing and, yes, even accepting that our industry will continue to be hit with lowered reimbursements, payment delays, and increased documentation requirements offer a strong motivation to the HME provider considering entering the retail market. Retail may be just what you need to strengthen your cash flow and financial position—and there’s no better time than the present. Remember, we accept cash, check, or credit card!

Helen M. Farell is a consultant for Medical Accounting and Reimbursement Services (MARS), Chesapeake, Va. Contact MARS at (757) 410-1732.