No one ever said it would be easy for HME operators to market an oxygen concentrator. It is not an off-the-shelf, high-margin item that sells itself. To market oxygen concentrators properly, the HME operator must have a plan, know the market, understand the health and political regulations/constraints, and establish a few process guidelines. No one has all the answers.

Each day is a new challenge. What I have learned over the years is that to make it work, you have to do your homework.

Funding sources, reimbursement rates, and referral contract opportunities differ depending on the location and the local/regional health regulatory considerations and constraints. So I will deal with this situation hypothetically. Consider that a local health regulator funds home oxygen for area residents who meet established physiological criteria. The health regulator in this case does not mandate what equipment must be provided but does have different reimbursement rates for cylinder-only clients versus those on concentrators, liquid oxygen, home-fill systems, or any combination of these three.

Once the monthly rate for reimbursement is established, it becomes a fine balancing act for the HME operator to control costs for distribution, gaseous/liquid oxygen supply, and equipment while trying to ensure the optimum quality-of-life service for each client.

In my experience, there are five key factors to consider when selecting the appropriate combination of systems and/or products. These include:

1. The activity and/or mobility level of each client.

2. The proximity of the store’s distribution site to the client’s location.

3. The type of facility in which the client resides (eg, residential home versus long-term care facility).

4. The types of products and services that the local competition provides.

5. The monthly cost per client for the equipment selected.

Know your market
For an HME operator, it is not always possible to be all things to all people. No one HME operator can afford to stock every brand name. In my experience, the key for the HME operator is to have a finger on the pulse of the local marketplace to determine the most likely brands referral sources and clients will request. Local research and knowledge are key. If you do not know, find out. In the end, sticking to one or two popular brands may be more cost-effective than trying to provide all brands.

It is also wise for the HME operator to determine how much business is lost by not providing all of the modalities. If it turns out to be less than the monthly costs to provide a particular service, then sticking to one brand may be the most cost-effective and profitable choice. Again, keep a keen eye on the specific market for emerging trends and nuances. As an example, knowing that you service a growing retirement community or a population dominated by Baby Boomers will play a significant role in how you select products and services to accommodate these market conditions.

In my business operations, I have noticed that liquid oxygen systems are becoming less and less utilized due primarily to the monthly cost per client to provide this form of system. On the flip side, combinations of concentrators with conserving devices as well as home-fill systems are gradually becoming more prominent in my marketplace.

The only drawback with these systems is the initial acquisition cost. A standard home-fill system will cost a provider four times more than a standard concentrator and two times more than a liquid system. To be profitable in this scenario, the HME operator must be able to accommodate these additional costs through distribution channels and/or staffing.

It has been my experience that the most effective system to provide the optimum client quality-of-life service at the lowest monthly client cost is an oxygen concentrator that also fills small portable oxygen cylinders. There are a few competitively priced such devices on the market. The one I prefer for my clients has a filling device that is separate from the concentrator. That way, if the filling device fails, the use of the concentrator is not lost, and vice versa.

But again, this works for me in my market. Your market may be totally different.

For clients who are not active, the concentrator can be used independently and the home filling portion kept for the active user. With a client who has the ability to fill cylinders within the home, the frequency of technician visits is greatly reduced, thus saving valuable time and money. For the majority of my clients who require this service, I have been able to reduce technical visits fivefold. That is a considerable cost savings over time when one considers that an average technical visit costs approximately $40.

The savings from this practice alone have been substantial enough to cover the increased monthly cost of new equipment. This business strategy is also generating kudos from my customers. Many have told me that their personal freedom has been enhanced because they no longer have to schedule days and times to be home to meet the technician for a refill.

While some HME operators may be slow to embrace certain technological advancements, my business has benefited directly from adhering to an early adoption process for new technology. The fact that the business is strongly supported in its efforts by its parent company, MEDIchair, is a competitive advantage.

Many larger established HME companies that are owned by industrial gas companies tend to be focused on the sale of liquid and gaseous oxygen. Due to their low cost of product acquisition and the excessive assets they already own in older technology, they are very reluctant to make the transition to new technology. That is an advantage that I explore fully. Others may be able to do the same.

In my business, I have promoted home oxygen filling as a client-focused system that will enhance a user’s quality of life, regardless of reimbursement reduction scenarios. I have also noticed that liquid oxygen provision has dropped significantly due to funding reductions and will likely disappear if funding continues to be reduced. As a marketer, you may be faced with the choice of reducing your clients’ quality of life as, increasingly system choices become based on reducing costs for the providers first and providing convenience for the client second. At MEDIchair, we take great pride in our ability to provide the right home health care product solution for each customer.

Picking the Perfect concentrator
Choosing the right concentrator to match the needs of each client can be a daunting task. To help make the right decision, one must ask seven key questions.

1. What type of manufacturer’s warranty comes with the product?

2. What is the ease of component repair and the ability of the manufacturer to supply replacement parts for qualified service technicians?

3. What are the field test results that determine downtime ratios per hours of operation?

4. What is the acquisition cost?

5. What are the fill capability and configuration of a home-fill system?

6. What is the current relationship between manufacturers of concentrators and other suppliers to potentially bundle the purchases with other product groupings for rebate savings (ie, wheelchairs, scooters, etc)?

7. Will the manufacturer allow access to their products as a result of competitive pressures?

In regard to developing a cost-effective system that helps to balance the rising costs of equipment and perhaps falling reimbursement payments, you need to clearly understand what your overall costs of operation are. You must know the costs of each system on a monthly basis, ie, your distribution cost per delivery, your cylinder gas cost, your cylinder rentals/depreciation costs, and your liquid oxygen costs. If you correctly establish all of these costs, it simply becomes a monthly calculation to determine if you are providing the service at the lowest possible cost, thus ensuring optimum profitability while balancing quality client care.

As clients’ needs and ambulation change, the system being used must also change to ensure optimum client care for the lowest cost. Many of today’s equipment manufacturers have software programs that allow you to “plug in” client information pertaining to flow rates, numbers of deliveries per week/month, and how many times they ambulate outside of the home and for how long. Take full advantage of any guidance and/or training that manufacturers provide to update and educate you and your staff.

Coupled with your costs of operation, the software program will assist in evaluating the most cost-effective system to provide to each client. This also ensures that you provide customers with maximum value while keeping an eye on the bottom line.

You do not have to be a rocket scientist to succeed as a marketer of oxygen concentrators. What you do need is strong market and product knowledge, a flexible sales process and implementation strategy, a willingness to improve customer service, and the ability to adapt marketing skills to changing market conditions.

Tom Greene is the owner of two successful MEDIchair stores in Cornwall and Pembroke, Ontario, Canada. MEDIchair is North America’s largest and fastest-growing HME franchise operation. Visit it online at www.medichair.com