For Dewey Darrow and Jim Hersh, branching out into the modifications market seemed a natural step. Nathan Colburn found that to be true as well—just in the opposite direction.

Darrow started New England Medical Systems Co, Essex Junction, Vt, in 1995 by catering to a 50-year-plus clientele, selling products such as adjustable beds, reclining and lifting chairs, and scooters. After deciding that he needed to include other items for his customers, he began changing the company’s focus to mobility and accessibility products and services, starting with stair lifts. “We found that if you had stair lifts, the next thing was platform lifts, then ramping, and then we got into the ceiling hoists business,” says Darrow. “We just kept adding products as the market called for it.”

Hersh created Personal Mobility Inc, Bath, Pa, in 1993, focusing on the sale of scooters and power chairs, and eventually expanding into home and institutional modifications. “We have really become more of a construction company. We have even stepped outside of the disability market and gone into the regular marketplace, which is really nice because we are not tied into one industry group and one buyer group,” Hersh says. “A lot of elevators are put in for people with disabilities, but not all. The market’s changing, and residential elevators are becoming very popular.”

Hersh also started Rehab Solutions and Design out of the same location as a distributor of bathroom products and ceiling lifts. While Darrow and Hersh expanded their equipment businesses into the modifications market, Colburn, co-owner of Accessible Systems Inc, Littleton, Colo, got his start 6 years ago as a home modification provider, and then moved into the equipment side of the business. “We started in the home modification business because we saw a niche. We saw contractors running away at the first sign of disability, and they did not understand the medical market,” Colburn says. “We saw DME providers running away at the first sign of installation or construction, so we offered a full-service company that could combine home modifications, installation, and equipment.”

There are certain advantages and disadvantages that should be weighed when deciding whether to include a modifications segment in an HME/DME business. Certain misconceptions can be an obstacle to success. “I think sometimes providers think it is going to be easier than it really is,” Hersh says. “One of the things you have really got to watch is how to price it. And to do the job right, you really need to get into construction and know what you are doing.”

“There are probably concerns among providers about getting outside their comfort zone—their store—and concerns about the service and reliability of what they are providing,” adds Colburn, “especially if they are unfamiliar with home modification.”

Jenny Siegle, Ms. Wheelchair Colorado (2004), maneuvers around the showroom at Accessible Systems Inc, Littleton, Colo, where customers can see an actual bathroom modification.

Referrals can be gathered from a variety of sources, including networking, attending conventions, home shows, hospitals, and other facilities—and memberships with home builders associations and word-of-mouth. “The associations are a great source of referrals because a lot of home builders have an understanding of home modifications, but do not have the medical understanding of whether something is going to help out in a certain situation,” Colburn says.

New England Medical Systems also uses a paid service that provides leads. “It is another marketing arm that helps limit the amount of in-house marketing that you have to do,” Dar-row says.

Modification projects can be as simple as installing grab bars or as complex as gutting an entire home and making it completely accessible. “You don’t have apples and apples in every situation. Every job is different. You have just got to make sure that you cover all your bases,” Hersh says. “Commercial jobs have to go by the Americans with Disabilities Act because everybody goes in there to use it. When you are going into residential jobs, you want to do all the work to meet the needs of that client, and to try to make that house as universally designed as possible so they do not lose the value of their home.

“We do not just go in and do all this work ourselves,” Hersh continues. “A lot of times, there is a case manager, an OT, and a PT involved in the case. We want reports from them, and we want to talk to them for a diagnosis and a prognosis. They don’t understand the construction end of it, but they know what this client is going to be like.”

The cost of a product, and its resulting installation cost, is often the biggest challenge of any project. “I think people are overwhelmed by the cost of some of the material today to make a place accessible, either inside or outside,” Darrow says. “There isn’t anything that is not doable, but is it worth putting the money into a place, as opposed to maybe finding a totally different residence that is easier to operate with?”

Accessible Systems faced such a challenge when it worked side-by-side with a customer who was left paralyzed by a spinal cord injury, actually looking at homes for him to purchase, and assessing his modification needs. “The best choice was well over $25,000 in modifications, but we were able to add vertical platform lifts to the garage to make a seamless transfer from the garage to the main level of the floor. We were able to do a complete bathroom overhaul that doubled the size of the bathroom, and gave a full roll-in shower,” says Colburn. “We were able to expand all the doorways in the house, so that the whole house was open to the wheelchair. A lot of times we have postage stamp-size bathrooms with barely enough room to maneuver on two legs, much less any type of wheelchair or walker. We do what the industry has termed in the last few years ‘extreme home makeovers’ because unfortunately for a person who is handicapped, there are quite a few areas in any home that are a challenge.”

Sometimes, the area outside of a home can be just as much, if not more, of a challenge as the areas inside. Darrow’s company is working on a difficult project that involves multiple layers outside, including lawns and a terrace. “This is one where we need to get the person just into the home,” Darrow says. “A lot of times, this presents a bigger problem than inside. Inside, you are dealing with walls that can be moved, doorways that can be widened; but outside, there are sometimes influences that you can’t deal with because of guidelines, rules, and regulations.” For the exterior of a home, Darrow explains that city and town ordinances can limit the amount of equipment allowed.

More Than Homes
Modification projects are not limited to homes. New England Medical Systems Co has 19 hospitals in different stages of development. Darrow says that workload has been affected by facilities taking “a proactive approach to curbing the cost of workers’ compensation claims.”

“Right now, the institutional market is one of the most brisk,” Darrow says. “In most cases, the injuries are coming from moving patients from room to room or from a stretcher to a bed within a facility. Now, the states have put out some guidelines about the weight a nurse or a caregiver can lift. That makes the ceiling equipment a good market. Our business last year was just phenomenal in the accessibility area.”

Modification projects can be as simple as clearing leg room for sink access or gutting an entire home for complete accessibility.

Offering a modification service requires a more involved insurance policy beyond standard policies because of the nature of the work. Besides general business insurance, construction liability and medical equipment liability insurance are also required. “You are covered three different ways, but you pay for it,” Colburn says. “That is probably the biggest concern for business owners. Medical equipment has a high degree of liability as it is; any time you modify a home, you have got a certain amount of inherent risk.”

Staffing needs are also a major consideration when working in the home modifications field. “You need to understand construction and the engineering of the home—an understanding of the electrical and plumbing, not just structural—and also be able to have some medical knowledge so that what you are building or modifying will work for that certain medical situation,” Colburn says. “A general handyman can understand the nuts and bolts, but it is important that they get the training to understand what a grab bar is going to accomplish and where it should be located—not just how to install it.”

Darrow and Colburn say they have been called upon to fix the work of other home modification companies. “It’s not uncommon to get a call from a business or an individual that has had a problem with somebody who’s come in from out of town to do the work, and they’re willing to come back, but they want to charge an arm and a leg for a service call,” Darrow says.

“I think it’s a matter of either not understanding the construction of the home modification business or not understanding the medical needs. Either they didn’t understand the needs or they were inexperienced,” Colburn adds.

While finding staff members with a combination of medical and construction backgrounds is ideal, it is not always possible. Each company profiled provides training, often in a classroom environment, and on-the-job for new employees. “For an HME business, what you really have to look at is whether you have the staffing available or whether you will have to hire some staff,” Darrow says. “To do accessibility equipment, you’ve got to have some mechanical ability, some carpentry experience, and some electrical experience. To find all of that in a person today is pretty difficult. What that might mean is that you are going to have to hire somebody, but are you going to be able to afford that person? Is there enough business to make that a profit center within your organization?

“Staffing is a big issue. It’s one thing to sell a stair lift, but it’s another thing after it’s sold to figure out who will install it and who will service it,” Darrow adds.

Each company has technicians on staff—some on a 24/7 basis—to handle problems and servicing. They also offer various warranties and service contracts, depending on the product.

Besides staffing, there may be other changes and additions required for a company looking into the modifications market. “You may have to add a lot more tools, your vehicle makeup may become a different fleet of vehicles,” Darrow says. “We’ve had to add flatbed trailers, enclosed trailers, vans that can pull the trailers; we’ve made a major investment, and that, depending on how far you get into it, is something you may want to do.”

As businesses grow, subcontractors are used when needed to handle heavy workloads, for either an entire project or just parts of it. “You cannot have a staff and be able to hit all of the highs and lows because the one thing with the disability market is that when people are getting discharged, there’s no time to say, ‘We can get to you in 6 months,’ like you can with a normal remodeling of a house,” Hersh says.

“The advantage to contracting out is obviously that you don’t have to perhaps hire and maintain an installation and service team—not always, but maybe,” Darrow says. “The disadvantage is [deciding] who’s going to be responsible, and the chances are 9 out of 10 of the calls are going to come back to you anyway because they’re going to remember whose invoice they put the ink on, and it’s probably yours. Second, most subcontractors today want to stay as far away from insurance as possible, or the type of insurance that’s needed in case there is an issue with responsibility. And in the end, how are you going to police the work that a subcontractor does?”

The added cost to a project and the effect on its completion time when using a subcontractor must also be considered. “Any time you subcontract, you give up the timing. They’re not necessarily on your timetable, so you’ve got a lot of coordination and communication to deal with,” Colburn says. “Also a disadvantage is that you’ve got to understand the cost there so that you can provide an accurate bid for the customer.”

There is also the potential downside of creating competition in the market when using a subcontractor. “Some are starting to look at this business as a viable business, but they’re still going to have to come to us for the equipment,” Hersh says. “We only went into the contracting end of it just to make it simpler for ourselves. The biggest problem we had was subcontracting out because they never did the job the way we wanted it, they never did it in the time that we needed it, and we were the ones taking the hit from the customers.”

While there are potential risks to contracting out, a subcontractor can add expertise to a project. “With the population being underserved as it is, I would encourage HME providers to at least network and possibly partner with the contractor or remodeler to ensure that there’s a level of quality and a level of knowledge so that we don’t see people continuing to leave their home and lose their independence,” Colburn says.

As with all industries, reimbursement has been a big challenge for those in the modifications field. Medicare reimbursement, if any, is small and does not cover all items. Some home modifications can receive funding through Medicare waiver programs.

The overwhelming majority of reimbursement in the home modification niche comes from private pay. “There are many, many months that it carries the rehab business,” Darrow says. “Private insurance has not really stepped up to the plate yet. They still are balking at this.”

To help avoid some reimbursement pitfalls, companies should obtain the required authorization paperwork for reimbursement, or obtain deposits before a job is started. Despite the potential disadvantages to being in the modifications market, those in it say they made the right choice, but they caution that each business owner should weigh the pros and cons before making such a decision. “Unless you’re really ready to step up to the plate and factor in all these things—increases in insurance; additional equipment; service, sometimes round-the-clock—unless you are really interested in that, maybe just take a look at what your real niche is, and enhance that,” Darrow says. “It is good business—it is cash business—but it brings with it hidden costs, and that’s sometimes a reason that maybe you should not be in that business.

Colburn advises others to start small, do what you know you can handle, and add on a little bit at a time. “I would encourage going into the modification business simply because the benefits to the customer are enormous,” says Colburn. “Right now, it is an extremely underserved group because they are forced to search for a product solution to their needs, and then search for a handyman or contractor or someone who’s going to take these products and try to make them work in the home, and usually the results are poor.”

Above all, Hersh says do your homework. “If you are going to do it, do it right,” Hersh says. “Figure out what you need to do, and get the right people to do it. And don’t expect it to make money right away because you won’t. You’re going to have times when you make mistakes. If you’re lucky enough to break even in the first year, that’s good luck.”

Danielle Cohen is associate editor of Dealer/Provider.