Building a cash-based side to your business is an attractive way to combat the negative effects of dwindling Medicare reimbursements—but these products won't sell themselves. When it comes to displaying retail items, Melanie Washington, retail manager of Visiting Nurse Services of Michigan (VNSM) Medical Supplies, Davison, Mich, literally thinks outside of the box.

In the bath-safety section of the Lansing, Mich, store, for example, a fully decked-out shower setup encourages customers to visualize the benches, long-handled sponges, and other handheld accessories in their own homes. Nearby, buyers get a feel for the several grab-bar models bolted to the wall. "We've got the products on display so that customers can see them, grab them, and touch them," she says.

The idea is to give customers the most hands-on experience possible. But making the products available on the show floor is just one of the many strategies that have boosted VNSM's retail business. Targeted marketing, hiring a design consultant, and choosing products that fit local needs have all served the company well. "We've seen a 20% increase in the past year, just in retail items," Washington says.

STOCKING THE SHELVES

VNSM is a division of McLaren Health Care Corp, Davison, which includes four regional hospitals as well as community-based physician practices and specialty care services, such as hospice care. The 12 VNSM stores are located throughout the hospital system's covered area—some are stand-alone, some are in the hospitals, and others are in Wal-Mart stores. Within the next year, VNSM plans to open a new location in Clarkston, Mich.

The hospital system is poised to provide care through every stage of a person's life—and the VNSM division plays a critical role in making needed products available. "Focusing on those retail supplies was another feature to keep that person within our system," Washington says.

As a result, the VNSM locations stock a wide range of cash-based items, including bath safety products, diabetes supplies, ADLs, ambulatory aids and accessories, lifts and lift mechanisms, nonmedicinal sleep aids, cushions and pillows, scooters, blood-pressure units, and specialty items. To make the retail experience both pleasant and efficient for patients, as well as providing maximum exposure to the products themselves, VNSM hired California-based consultant Jack Evans to offer pointers on store organization and design.

VNSM employees try out some products themselves to get a better understanding of the items they are selling and talking about.

In addition to encouraging the hands-on approach to displays, Evans suggested organizing products according to "disease process." The idea is to group billable items, such as diabetes strips and monitors, with related cash accessories, including diabetic socks, shampoos and conditioners, syringe clips, and even a freezer pack to hold insulin and related supplies.

Placing these items together introduces patients who are coming in for the first time to the wide range of products available to them. When staff bring new diabetic patients to this area, they are able to pinpoint other items they might find helpful. "A big piece of this is educating our staff to educate the patient," Washington says. "Some people come in and they don't know that there are shampoos or conditioners available, or that there are socks with wicking to prevent their feet from being damp."

This strategy has proved successful in several categories. In the sleep section of the stores, for example, VNSM complements its CPAP machine and mask offerings with a variety of nonmedicinal sleep aids, including special items designed for CPAP users. One pillow features a hollowed-out area to prevent mask movement and leaks while the user sleeps. Washington next plans to create "disease process" areas that support COPD and congestive heart failure products.

It is also important to consider the visibility of each product line in the store. Some products such as roller walkers move best when prominently displayed, but others require more discreet treatment to prevent customer embarrassment. Incontinence products, for example, are best grouped in low-profile sections with other women's products. "We try to display them in an area where there's not a lot of high traffic," Washington says.

At VNSM, sales of Medicare-covered items rose right along with increased purchases of cash items.

VNSM also provides a drop-shipping service through Independence Medical for most of its incontinence, urological, ostomy, and diabetic supplies. While this relieves VNSM of the inventory aspect of handling these products, it also means that these patients aren't coming into the retail locations regularly. To involve these customers in store happenings, Washington includes a flyer in every shipment announcing the product special of the month, such as 10% off diabetic shoes. In some cases, a manufacturer will even cover the cost of the printing, if their product is the featured special.

The hope is that patients will come into the stores to take advantage of the special and browse the rest of the product offerings. While the success rate of this campaign is hard to measure, Washington believes that having the VNSM name reach these patients every month builds brand recognition. "It's a constant reminder that we're here and available to them," she says.

While these efforts were originally made to boost the retail side of the business, Allen Hunt, VNSM's director of operations for medical supplies and infusion, was surprised to note the impact on the billable side. "One of the reasons that we went into retail in a bigger way was to decrease our dependence on Medicare, but we found that our Medicare business was also growing as the cash sales were growing," he says. "And that's not totally bad, either."

MOVING PRODUCTS

A vital part of moving retail items is making sure that they fill a need in the market. "You have to have a broad enough base to attract a diverse interest, but you can't be everything to everybody," Hunt says.

To choose product lines, Washington scours trade shows such as Medtrade for the latest trends, and Hunt adds that vendor sales representatives often alert them to valuable items throughout the year. VNSM also follows up on common requests from customers and even from the hospital system itself. For example, while supplements are not major profit generators for VNSM, the stores do carry a supplement recommended to participants in the hospital system's bariatric program.

Many product choices Washington has made through her own research. An accidental online find led her to stock a line of stylish women's sleepwear, designed for those who suffer from night sweats. The nightwear, which comes in a variety of styles, has become popular in several VNSM locations.

No matter the product, educating both staff and patients is key to generating sales. Washington notes that bath-safety items, such as bath benches and grab bars, are her best sellers because most patients are aware of them before they even walk through the door. In fact, the Safer Grip from Mommy's Helper, a portable balance-assist device that is essentially a grab bar affixed by suction cups, was VNSM's most popular sale last year.

To get the word out about lesser known items, VNSM has several marketing efforts, including advertising campaigns on television and in print, as well as staff visits to referral sources, pharmacies, and community groups, such as the area councils for aging.

One of the best ways to generate buzz about a product is for the staff to try it themselves. For example, when Washington brought home a specially designed water pillow, she noticed that she no longer suffered from neck aches at night. By sharing her story with coworkers, they were inspired to try it as well, and they were then able to educate the customers on the benefits.

Getting items out of the box and available for customers to try is a major priority at VNSM.

Washington also works to match products to the needs of her community. For example, vendors have begun to offer a wider range of colors and patterns for products such as walkers, canes, and even bath benches to move away from the "clinical feel" of the traditional white-and-chrome color scheme. Some customers want designer looks that match their home décor.

For example, at a grand opening for one of the VNSM locations, Washington noticed several women in attendance from the Red Hat Society, an organization for women over 50 known for their red hats and purple dresses. She pointed out how the designer canes in purple, red, and pink would complement their outfits. Since then, the stores have had many requests for these items.

VNSM also coordinates with vendors to help promote their products. This means choosing vendors carefully to make sure they will back up their merchandise. "We look at the product to make sure it's a quality item," Hunt says. "Can they keep the pipeline filled in getting us product? Is it an attractive product? Is the price right?"

Some vendors will help pay for television or print advertisements that feature their products, and others may even offer feedback on in-store displays. At the hospital locations, Washington has partnered with Jobst to host a "Healthy Leg Day." The event is designed to offer Jobst compression hosiery to hospital staffers who are on their feet all day. She promotes the event well in advance and educates the staff about the benefits of the products, which they are encouraged to purchase. Jobst charges her only for the items she sells.

Solidifying these vendor relationships is an area that both Washington and Hunt hope to grow. Vendors are often a good source for industry trends, and they can also provide support when a product is not selling well. "If a product that you bring in is not a mover, you've got a relationship with that vendor to say, ‘Could you take it back and credit us, and we'll bring in a different product that might work?'" Washington says.

STAYING COMPETITIVE

In the second round of competitive bidding, two of VNSM's service areas, Detroit and Flint, Mich, will be affected. This process forces HME companies to search for the right balance between quality and price to earn the bid. "Part of all of the plans we're putting in place is addressing: How do we continue to take care of these patients who have entrusted us with their medical equipment needs at a very high level, without compromising our financial viability?" Hunt says.

While the cost factor is certainly important, Hunt plans to continue investing in high-quality products, even if they come at a steeper price. "It's usually worth it to us to pay a little bit more for a premium product," he says. "That can hurt in a competitive bid situation, but we think it's the right way to go."

Not only will this strategy continue to protect the company from potential liability associated with lower-end products, but better products also have longevity—which helps keep service costs low. "That equipment is going to last," he says. "I'm not going to have to send technicians out there to fix it every 30 days."

Having a thriving cash-based business will also help offset Medicare profit reductions, and VNSM will continue to develop the retail side of the company. As part of this effort, the company has invested in brick-and-mortar improvements across the various locations to maintain quality in the markets they serve. "Not everybody wants to invest in brick-and-mortar, but you can't have a high-quality or high-end retail business if you don't," he says. The idea is to bring customers into the stores, where they can get the expert service they want and browse the variety of products offered.

But while the retail side of the business provides significant profit margins, it is also a very competitive arena, especially with big-box chains such as the Home Depot. Still, companies like VNSM have an edge with a wider selection of products and knowledgeable staff to help answer questions.

Recently, VNSM commissioned a market study to measure the impact of big-box chains on the HME business. "The market study showed clearly that when people are ill and they need a product, they want to go to an expert," Hunt says. "When you come into one of my stores, you meet somebody who knows what they're talking about, they're happy to take care of you, and they can speak intelligently to the issues—not only how much a product costs, but also what it does."

It is not always possible to compete on price with big boxes, especially on lower-end items, such as grab bars, which might be available for as little as $5 through a large chain. In cases where the customer needs only this type of item, which does not require a lot of service, the VNSM staff may alert them to Home Depot's lower prices. While this may mean missing a $5 sale, it encourages customers to come back when they need an item requiring more service. "They'll come back to us for a tub-transfer product or a rolling walker or even more severe needs because they know we're looking out for them," Hunt says. "They can trust us."

Washington notes that being a hospital-affiliated HME also gives VNSM an edge over chains as many patients already have a relationship with the system. For example, one of the hospitals offers a Joint Express class that prepares patients for hip-replacement surgery. The instructors refer class participants to the in-hospital VNSM location, where staff provide them with information about the devices they need, such as a raised toilet seat and safety rails. "That is keeping the patients in mind and making it convenient for them," she says.

Of course, cuts are inevitable in the competitive bidding climate, and service often becomes an unaffordable luxury in these scenarios. However, Hunt has no plans to compromise the level of service in his stores. He hopes that the brick-and-mortar investments will draw more patients into the retail locations, ultimately allowing VNSM to reduce the number of deliveries. "If we're local, and patients can just come pick up their products, I'm still going to be able to provide them a very high-quality level of service, but at a lower cost," he says.

In the end, having a knowledgeable staff is one of the greatest assets to VNSM when selling retail products. "Part of our job and part of our challenge is to let people know that they have an unknown need," Hunt says. "So, we try to educate people about the products and services that are out there that can help them stay independent."

Ann H. Carlson is a contributing writer for HME Today.

Photography by Michael Schimpf