Despite uncertain times, one constant is that demand for HME products will increase.

Yes, HME is definitely a good business to invest in for the future. I find myself repeating this after our seminars whenever attendees ask how our industry can survive in the face of mandatory accreditation and competitive bidding. People still need medical equipment—what is changing is who will be paying for that equipment.

THINK SALES—NOT PROVIDER!

I am a firm believer that our industry needs the equivalent of a national licensure program—mandatory accreditation—if only to generate some positive PR and focus on the good we do for our patients, customers, and communities. And yes, we need to eliminate those who take advantage of government reimbursement and perpetuate the "fraud and abuse" that generates attention on Capitol Hill and in the national press.

I also believe competitive bidding, as now structured, is doomed for failure. We are simply creating a two-tiered home health care system in which Medicare recipients will receive lesser quality products and minimal—if any—service. When will our government learn that we provide products and services? We do not simply sell OTCs off the shelf, but provide medical equipment and supplies along with the education, delivery, care, and compassion that make home care such a rewarding experience.

A PRO FORMA APPROACH

When writing pro forma strategic marketing plans for new HME businesses that are applying for bank or venture capital funding, I am finding long lists of just why our HME market has been growing, and will continue to grow, at double-digit annual rates. These trends reach beyond the standard aging of our population, increases in technology, rise of managed care, and growth of the family caregiver market.

MEDICAL NECESSITY VERSUS LIFESTYLE

As our average life expectancy continues to increase, Americans are working and living longer. The concept of "senior" or being old has even changed from 55 years old to 75 years old over the past two decades. With aging Americans desiring to maintain their independence, mobility, and dignity, they are using more home health care products for longer periods of time.

An increasing number of HME products are being labeled "lifestyle enhancements" and wellness products, as opposed to medical necessity products. They sell for retail, out-of-pocket cash instead of being reimbursable. Plus many traditionally reimbursable items are more profitable to sell for cash because their reimbursement rate has dropped so low that the cost of intake, billing, and documentation outweighs any profits. The Advance Beneficiary Notice (ABN) is becoming a helpful tool in selling upgraded products as seniors apply their Medicare reimbursement for the basic entitlement product to an upgraded version.

Demographics is another cause of this shift from medical necessity to lifestyle products. The Baby Boomers have become the primary HME customers in caring for their aging parents. Although seniors are still the end users of these HME products, their adult children are the consumers who usually make their in-store purchasing decisions. They demand brands, product selection, and more efficient and higher levels of customer service before they buy.

As a result, Medicare reimbursement is no longer the primary factor driving an HME product's sale. This growing consumer demand has also resulted in more distribution locations opening to supply these HME products in almost every retail environment: drug chains, grocery chains, mass merchandisers, big box outlets, HHC superstores, mail order, and Internet.

Jack Evans

THE MEDICARE PATIENT AS A CASH SALES OPPORTUNITY

Traditional HME businesses have relied upon Medicare and Medicaid reimbursement as their dominant source of revenue. They process the insurance intake, deliver the product, and bill the third party. Every day, any given HME will deliver truckloads full of rental beds, wheelchairs, and concentrators.

In contrast, retail HMEs focus on the end user for each piece of rental equipment. Who is the end user? What is his disease state? What is his degree of mobility and/or stability?

By asking all of these qualifying questions, these HMEs are able to recommend and sell for cash all of the related add-on products that each end user needs to maintain or improve his daily quality of life. For each piece of rental equipment provided, these HMEs sell between $200 and $400 of retail add-on products.

For example, wheelchair users might also need a portable aluminum ramp, tray table, backpack, or pouch. Home care bed users also need sheets, wedges, cervical pillows, chucks, a memory foam mattress pad, bath safety products if they are mobile (or personal care items such as urinals or bedpans if they are not), reachers, and ADLs for eating, dressing, or reading. And oxygen users also might need mobility and bath safety products plus ADLs.

THE ONLINE HHC CONNECTION

One in three Americans reports that the Internet has changed the way they manage and maintain their health; 62% say that they have used online health tools, and more than half report an improvement in their health management due to personal technology. Use of the Internet by US adults to search for health-related information has increased from 72% in 2005 to 80% today.

What does this mean for HME businesses? The Internet is another important sales tool in marketing and selling Boomers' home health care products. Internet HME sites immediately expand a retail business's sales territory beyond any physical geographic radius. The largest growth appears to be fueled by customers who live in rural areas and third-world countries since they typically do not have local access to HME and supplies.

How do you develop a successful Web-based HME business? It's no different than retail: become a destination in any given product category or disease state. Don't just stock the top-selling products. Offer selection both within the core product category plus all of the related products as well. Educate your current and potential customers about all of the available products that will meet their home health care issues, then help them determine which specific product best meets their respective HHC needs.

BECOME YOUR LOCAL HHC DESTINATION

In any given community, there are usually a number of outlets for buying HME: independent HME providers, hospitals, drugstores, and big-box mass merchandisers. But what determines which store will become that community's HHC destination?

Ask any pharmacist or nurse. They usually know where to send patients and customers. Why? Word of mouth and reputation. These old-fashioned values still drive viral marketing. Many businesses sell medical equipment, but few do it right!

FOUR TIPS FOR SUCCESS

For more information and articles on retail/cash sales, visit the free online archives. Specific articles include: July 2007 Bath Products and Beyond by Jack Evans April 2007 Show Off Your Showroom by Ed Lemar March 2007 Boost Your ADBs (Activities of Daily Business) by Joe Groden

1. Create a retail showroom. HME products are not OTCs that simply sell off of a shelf. They need to be displayed out of the box so that customers can touch and feel how they will help the end user. Don't use your front end as a storeroom for rental equipment; create a showroom that visually educates your customers on how these products are used together to foster greater independence and quality of life.
2. Offer a complete product selection. Stock your showroom with at least two options for each product line, a basic "good" option and at least one upgraded version (better or best). If this is your core product within a category, definitely offer a good/better/best product selection.
3. Train your salespeople to educate first, then sell. No one knows about medical equipment until they or someone in their family suddenly has a health care problem. Train your salespeople on all of the products you sell and enable them to spend the time necessary to educate and demonstrate these products to your customers. Your sales will increase geometrically according to the training and professionalism of your sales staff.
4. Practice superior customer service. Know your repeat customers' names. Educate them on the appropriate HME for their medical condition and demonstrate the respective products for them. Follow through on every purchase and delivery with a call to ensure they are comfortable and satisfied with the product. And follow up with their referral sources to let them know about the education you provided.

Jack Evans, president of Global Media Marketing, Malibu, Calif, is an educator and marketing specialist in home health care. He works with HME providers and drugstores to develop retail layout, merchandising, sales training, marketing, and advertising programs. He can be reached via his Web site: www.retailhomecare.com.