Cape Medical Supply: From the beach to Beantown

Thursday, August 19, 2010

SANDWICH, Mass. - There may be a lot of doom and gloom permeating the HME industry right now, but provider Gary Sheehan is not only expanding, he's expanding into a Round 2 competitive bidding area. Here's what Sheehan, CEO of Cape Medical Supply, had to say about the company's new 5,000-square-foot location in Canton, Mass., which will expand its geographic reach from Cape Cod to the greater Boston area.

HME News: What was behind Cape Medical's decision to expand?

Gary Sheehan: It's fairly obvious to those of us in the industry that you're going to need some additional scale in the coming years to survive given the top-line margin pressures. Additionally, we feel like our competitive advantage is a level of service and care, and a back-office efficiency that is scalable. We don't think that the success we've had to date is something unique to Cape Cod or any other smaller economy. We feel like we can deliver that same level of service and care in a larger market and Boston is recognized as the healthcare capital of the world. If we're going to be a leading-edge healthcare company, we feel like that's the place we want to be.

HME: How did Boston being a Round 2 competitive bidding area factor into your decision to expand there?

Sheehan: Our expansion into Boston has been a multi-year process of really examining our company and the macro trends in the industry and the opportunities that exist. Throughout the process, there have been a multitude of changes. Competitive bidding is on; it's off. There are a lot of different things that are happening. But we continue to feel like intelligent growth is the way for us to succeed in the future. So when it was confirmed that Boston was in Round 2, we said, "OK, we're going to have to pay attention to the back end very closely, manage the expenses side of things very well and continue to deliver on that service promise." We feel we can do that.

HME: What was your reaction to the, on average, 32% reduction in reimbursement?

Sheehan: The cuts being as steep as they were--I don't think that's any more troubling for us than for anyone else. It's bad news no matter if you're trying to stand still or if you're trying to grow. We feel like, given the volume of the cuts, you should be a little bit more aggressive about growth. I know that can be somewhat counterintuitive.

HME: What's Cape Medical's strategy for making inroads in a market as big as Boston?

Sheehan: We've hired additional representation for that marketplace. We've actually worked with a surprising number of these people in the past. Because of its status as a center for health care, a lot of people from Cape Cod still go to Boston for routine and non-routine medical care, so we were getting a fair amount of discharges already. What happens now is that the message changes to, "The same level of service and care that we delivered to you for your Cape-based patients we can deliver to you for all of your patients."

HME: You make it sound easy.

Sheehan: We know it's going to be a slog. But nothing good has ever been easy. So we're just planning to put our heads down, work really hard and make what we can of it.