Consultant's corner: ABCs of diversification
SALT LAKE CITY – When Stephen Hodges says HME providers need to have a diversified business model, he has three things in mind: Medicare, private insurance, and cash and retail. All three are needed to succeed today, says the president and CEO of HME Solution, a strategic consulting firm based here. Here’s what Hodges, who hosted a webinar recently on diversification, had to say about what providers should be including in their work plans for 2013.
HME News: Are providers doing a good job of decreasing their dependency on Medicare?
Stephen Hodges: We find a surprising number of people who are worse than 80% Medicare. If you consider Medicare and Medicaid together, it could be as high as 90% to 95%. Those are the customers that we’re coming across.
HME: You’re not suggesting providers abandon Medicare entirely, right?
Hodges: We’ve helped hundreds of providers with their bids in Round 1 and the low thousands in Round 2. No one can tell anyone what to bid, but we break down the process into pieces and host webinars for each piece. But after the bid is done, there’s another process for maximizing their referrals through their Medicare contracts.
HME: What should providers be doing in private insurance?
Hodges: We have access to more than 175,000 employer plans that cover more than 80 million lives. A lot of providers think that it’s easy for an insurance company to say no when they call—if the insurance company needs providers, they sign up providers. But if I had to start calling on 175,000 plans, it’s very difficult. You need a macro approach. Instead of doing what everyone else does—going in and asking for a contract—we figured out their needs and how to leverage those situations and provide access to a group of providers.
HME: What about the last component of a diversified business model: cash and retail?
Hodges: DME on the retail side is drastically underserviced. People are starved for someone who will provide these products and services. But it’s about more than renting 2,000 square feet in a retail mall vs. an industrial complex. Providers make deliveries every day and they have the physician relationships—why not get into physician supplies? That can be everything from gloves to more expensive items like exam tables. We’ve had successful companies doing that since the early 90s. It’s a good complementary business.