Med-Equip’s owner Wally Tschopp (left); Mark Wegelin, director of corporate operations (center); and Dan Sedlacek, vice president of pharmacy operations (right); are experienced at serving rural customers.

The newest location of med-equip, a home health care company based in Hartley, Iowa, might seem a little unusual—it shares a building with the “Hey, Good Cookies!” bakery. But the arrangement helps keep expenses down and provides walk-in business. And it is one instance of how Med-Equip manages the costs associated with a small business in order to grow like a big one.

The company began in 1969 as a drugstore owned by two doctors and a pharmacist. The current owner, Wally Tschopp, invested in the business in 1974, and in 1983, the company began offering, in addition to its compounding pharmacy, oxygen supplies and HME as Hartley Home Health Supply.

“The medical equipment side was started basically out of a closet,” says Mark Wegelin, Med-Equip’s director of corporate operations. “We opened our fifth store about 5 years ago.”

Four of those stores are located in the northwest corner of Iowa, with a fifth in neighboring South Dakota. “It’s all agricultural, small towns, very rural,” Wegelin says. One store is located in Cherokee, Iowa, a town of 6,000 in a county of 13,000. Its headquarters is in Hartley, Iowa.

Catering to rural customers poses a different set of challenges than servicing a densely populated area. “Going 25 miles to deliver something that may have a retail price of $50, there is a cost factor that we run into,” Wegelin says. “We have drivers on the road every day.”

Med-Equip employs five drivers, one of whom has logged more than 340,000 miles on his van. “We market directly to referral sources, using our drivers,” Wegelin says. “The drivers are our ears and eyes out there. Most of our customers never even come through our doors.”

A Piece of the Pie
Staffing presents another difficulty. “It’s been a struggle, especially in the billing department,” Wegelin says. “Our work pool isn’t as large as in bigger cities.”

As a result, Med-Equip must shoulder much of the burden of training new employees. “We rely heavily on The MED Group and others to help with training, because [in our area] we don’t have lots of experienced people looking for jobs.”

Wegelin anticipates turnover becoming less of an issue as the company moves from sole proprietorship to employee ownership. “We’re kind of in the infancy here,” he says. “We hope it will at some point take hold and allow employees to feel that they have a vested interest in the company, which will make them stay. We’re only in our fourth year [of the transition], and it takes a while to get it going. I don’t think we’ll fully realize what it’s all about until somebody is able to take money out at the time they retire.”

Although Wegelin says Med-Equip is clearly the leading supplier of mobility products in the area, it does face competitive pressures. “It may not be as competitive as some places, but the big boys are still around, and we have some independent owners who are in competition with us as well.”

In addition, some area hospitals that have started their own HME businesses try to send their patients only to their HME stores, cutting out companies, such as Med-Equip, that rely on hospital referrals for some of their business.

The new Med-Equip building across from the Great Lakes Mall not only showcases its HME business, but also is home to a specialized compounding pharmacy.

Fortunately, Med-Equip is well prepared for these and other challenges. Because it relies heavily on patient referrals, Med-Equip tries to offer its customers what larger companies can’t or won’t. “We’re able to give local service right here in their own town, at the customers’ own houses, whereas some of those other companies don’t,” Wegelin says. “We’re able to do a lot more one on one with the customers. We try to service the heck out of them.”

Wegelin says Med-Equip can try to compete on price with some institutional customers, but price is not the biggest factor in most cases. “Depending on who the payor source is, it doesn’t make any difference anyway,” he says. “We are all getting paid the same. It is just who is servicing them better, or who is taking care of the patients.”

Reimbursement is another area in which Med-Equip faces the same challenge as other providers. “Our sales keep climbing, but it gets a little harder to get the cash,” Wegelin says. “We’re putting much more focus on it, making sure we don’t [deliver products] before we know that they’re going to be paid, or at least that we’ve got all the documentation and preauthorization on it; that’s No. 1. You won’t be around too long if you put out stuff for nothing. It’s easy to do when you want to provide a service to the patient because you know the patient needs it, but at the same time, we’ve got to make sure we’re going to be paid.”

Med-Equip also reaches a different kind of customer, for whom reimbursement is not as big an issue, since opening its newest store in the town of Spirit Lake, in Iowa’s Great Lakes resort region. “It’s a huge tourist area,” Wegelin says. “We do a lot with the people coming from large towns on vacation. Sometimes they’re easier, especially the ones that just live there in the summer. Money doesn’t seem to be an object. If they want a lift chair for grandpa, they’ll buy a lift chair. They’re not trying to figure out who’s going to pay for it first. Some of the things they’ve seen in the big city, we’re able to supply to them, even though they’re coming to rural America.”

Fair Business Practices
But rural America still represents the bulk of Med-Equip’s customer base, and the company seeks out potential customers on their own turf.

“We do a lot of the mobility and rehab rentals at state fairs,” Wegelin says. “At the Iowa state fair in particular, we take about 60 electric scooters and rent them, which in turn leads to a lot of sales throughout the state. We’ll get our name out there, and people use our machines and end up buying something. It’s quite a revenue generator for us. We have a big 42-foot trailer that we take down there.”

The fairs are not Med-Equip’s only community outreach. “We try to do a lot of education,” Wegelin says. “That’s kind of our focus, going out and doing more of these seminars, letting people become comfortable with their condition so they know how to deal with it. We use our own staff, and a lot of the information The MED Group provides. We also use vendors quite heavily to put on different events. It’s not expensive. Our time is our only cost.”

Looking toward the future, Wegelin mentions two areas in which the company could grow. “We’d like to get more of the action on the respiratory side,” Wegelin says. “We have tried to do a little more with sports medicine with the schools. We’re trying to get more into that younger age group.”

Through ongoing efforts to educate consumers, engage employees, and maximize reimbursement, Med-Equip hopes for continued growth and success, and it seems to already grasp what it needs to do to obtain it.

Keith Bush is a contributing writer for Dealer/Provider.