For most DME providers, diabetic supplies are a niche business that supplements their primary product lines and not something they expect will make or break their business. For others, such as Diabetes Plus Inc in Warren, Mich, and Neighborhood Diabetes Shoppe in Wakefield, Mass, diabetes supplies have become a lucrative primary business. But no matter if providers make diabetes supplies a niche or a primary part of their business; there are clear strategies to make this product line lucrative.

DME providers can capture business by offering products that pharmacies—which dominate the diabetic market—do not, says Jack Evans, president of Global Media Marketing, a consulting firm in Malibu, Calif. Because diabetes patient often need much more than just insulin and glucose monitors—including special custom-made footwear, compression stockings, and other monitoring equipment—there are many opportunities to sell these patients on additional products, he explains.

One of the keys to establishing a loyal group of diabetic customers for the long-term is getting to them early in their diagnosis. “For HME, you have to capture these patients when they learn they have type 2 diabetes,” Evans says. “The pharmacy has the medications and a lot of the supplies, but they don’t usually have custom shoes, so that’s how the HME can often get the referrals from the pharmacies.”

And while large chains, such as Walgreens, have entered the arena, Evans says that there is still plenty of room for the independents who are good at planning and strategizing.

“You have to first look at your competition and see if anyone else is in this niche. If so, are they doing a good job or a mediocre job? Do they offer the shoes and socks? See what holes you can fill,” he says. “If no one is becoming a one-stop shop, do that. If no one is offering just shoes, then do that. It is a tremendous growing market, and you have to look at your own community and see what your competition, both pharmacy and HME, are providing.”

Profitable but Tough
However, despite the rise in the overall number of Americans with diabetes, making it as a diabetes product provider can still be a challenge. Morgan Jones of Victory Drugs in Bellflower, Calif, provides diabetic supplies, but it is a small part of his business.

“It is profitable, but it is tough—like the whole home health care business,” he says. “The government is looking for ways to cut [Medicare reimbursement], so I think there is going to be a contraction of providers.”

And it is not just traditional full-service HME providers that find diabetes-related products challenging. Providers who concentrate their business on the diabetes niche also admit that, initially, profits can be low.

“There were a few years there where we didn’t get paid a lot,” says Mark Gielniak, vice president of Diabetes Plus Inc. “We kind of took that on the chin. When you are developing [a business], you are going to run into that until you build up a sufficient patient base.”

Snaring Patients
For providers that specialize in diabetes products, like Gielniak, it is imperative to actively attract patients, and referrals may come from sources other than medical professionals. For example, Louis Belmonte, president and owner of Neighborhood Diabetes Shoppe, has developed a number of partnerships with other DME dealers to capture their diabetes business.

“We’re using each other as leverage to expand brand awareness of my company or a particular brand of glucometer,” he says. “It’s kind of you scratch my back, I’ll scratch your back, and the person who wins is the person with diabetes.”

Evans adds that another way to attract patients is with advertising, if the provider can afford it. But traditional advertising may not work for every business. For Gielniak, traditional advertising was not as useful as he had hoped.

“We have run ads in the newspapers in the past and that has not been very effective,” he says. “We have advertised on cable television. For a while, that didn’t work out too badly, but that was 10 years ago. That, again, is not very effective. What we find is that if you hook up with some doctors and nurses ...they’ll refer their patients to you as long as you do a good job.”

Encouraging Repeat Business
However, just getting patients is not enough. Keeping them coming back is a key element of success. Belmonte has done this by effectively creating a niche as a local supplier of diabetic supplies. Being a local business allows him to react to local needs and serve his customers personally.

“When a person is newly diagnosed and the health care provider can’t really get the patient to comprehend how to test his or her blood sugar and record the results, we’re there to help that provider out,” he says. “We’ll go to the patients’ homes and sit down with them and educate them on how to properly use their equipment. As a local resource, we’ll put together free education programs that give a general overview of diabetes to educate some of these people on how they can improve their self-care habits.”

Gielniak adds that giving his patients a wide range of choices has also helped. “A lot of times, when you go to a full-line DME provider, they might carry one or two kinds of monitors,” he says. “Even with some of the really big companies, you’re going to have only a couple of choices of monitors. We always looked at giving people pretty much any choice that they wanted.”

By giving customers a large selection of products and instruction on how to use the equipment properly, Gielniak’s company can stand apart from its competition. “There are a lot of mail-order companies in this business, and they just send out the product to people’s houses and hopefully they get the repeat business. But they never get to build up the rapport with the customer,” he says. “I would say 90% of our patients or higher [take advantage] of the free instruction on how to use the equipment. And that gives us the opportunity to sit down with them at our offices, or the hospital, or the home, or wherever they might be at the time. We give them a free 30-minute, 40-minute, up-to-an-hour instruction, and go through the entire operation of the meter. It gives us the chance to build a relationship with them, and based on that, you get a much higher repeat rate in business orders, as well as a lot of referrals to friends and families.”

Both Belmonte and Gielniak have done one other thing to help ensure their success. They have created an insurance mix that includes both Medicare and private insurance.

Insurance Mix
Belmonte says that he began diversifying into private insurance when it seemed that Medicare reimbursement was about to change. “We saw the grumblings of some sort of Medicare reform about a year and a half ago, and we knew that, unless we prepared for the worst, it could crush us,” he says. “We took the stance where we would get more aggressive in going after the managed care contracts, and also complementing our diabetes supply business by putting together a billable education program for diabetes health care and nutrition.”

Working with multiple payors allows Gielniak and Belmonte to continue to provide superior service to diabetic clients without risking financial disaster from Medicare or Medicaid cuts.

“It’s nice to know that we’re not just providing products, because a lot of companies can provide the same product,” Gielniak says. “We’re helping people cope with the disease.”

Neighborhood Diabetes Shoppe’s mission statement actually requires it to help people and make a difference, and everything the company does is qualified under that mission statement.

“As long as we keep that focus on our mission, we’ve been successful, because we’ve made a difference in people’s lives,” Belmonte says. “When we promise something, we deliver. People tell us we make a difference, and their nurses and doctors know we make a difference.”

C.A. Wolski is associate editor of Dealer/ Provider.