Despite cut, don't rule out adding products
Q. How do I add products to continue growing my business when Medicare has cut reimbursement by 9.5%?
A. Since you already provide one or more of the product categories common to our industry, your first thought may be to rule out adding other products that were subject to these cuts. Don’t be too hasty in that decision. There are a few key areas to consider when deciding how to expand or diversify your business by adding new products. They include capacity, cost and customers.
First, take a look at your capacity to expand and diversify. Review your current product mix. Which do you provide: DME, mobility, respiratory, oxygen or retail? And within each of those, how well do you cover the category? For example, in the mobility area, do you offer manual and power wheelchairs, and scooters? What about lift chairs and ramps? Or, if you offer nebulizers, have you considered CPAP? Expanding the products within a category can take advantage of your existing staff, vendors and referrals.
Next, determine the costs for the product line. You need to consider the overhead and service costs along with the product acquisition cost. Can you offer this product without increasing your fixed overhead? Adding people, space or vehicles will quickly consume the profit of a new product. Where can you leverage existing overhead and staff to add this product without increasing cost? Discuss your plans with the product manufacturer. They may have introductory offers to get you started and be willing to provide a virtual inventory to reduce your startup costs.
Finally, you’ll need customers. Launching a new product to existing customers and referral sources will save the expense of gearing up a sales effort for a whole new group. As a start, walk over to your customer service staff and ask for their input or have them list every call they refer out to another company for a week. You’ll be surprised at how many callers were sent to a “competitor.” Those could be your customers, if you choose.
Jeff Souza is president of HME Advantage. Reach him at 888-880-4463 or firstname.lastname@example.org.