Diabetes: An undervalued market segment

Wednesday, February 28, 2007

Like its counterparts sleep medicine and bariatrics, industry observers classify the diabetes market as a hot growth category that shows no signs of cooling down. Diabetes has a few other characteristics in common with sleep and bariatrics: It has enormous potential due to the U.S. obesity epidemic, and, despite enthusiasm from others in the supply chain, it has a tepid adoption rate among HME providers.
Avi Weiss, director of home healthcare for Springfield, Ill.-based medical/pharmaceutical wholesaler HD Smith, chalks up provider reluctance to a preoccupation with more pressing issues.
"Everyone is taking a 'wait and see' attitude with accreditation and competitive bidding coming," he said. "It's such an intangible that no one knows where it will go. It will be difficult for providers to move into the diabetic market until they know what will happen with these other issues."
Ironically, though, many providers with a retail operation are most likely already carrying items useful to diabetics, such as wound care supplies, skin care products, mobility aids, nutritionals and compression hosiery. And while independent dealers may think it's futile to compete on price against discount mail order operations on glucose monitors, lancets and test strips, Weiss argues otherwise.
"While you have to accept Medicare assignment and buy the Medicare package strips, with the right programs and competitively priced products, you can take business away from the mail order companies by being a complete home healthcare provider," he said.
Targeting diabetics
Becoming a diabetes provider merely means keeping those patients in mind when it comes to marketing, promotion and merchandising, says retailing specialist Jack Evans.
"Diabetes is more than strips, lancets and glucose control--it's about leg health," said Evans, president of Malibu, Calif.-based Global Media Marketing. "It's about carrying products to keep the diabetic healthy. Products that promote circulation like compression hosiery are a natural niche. Diabetics have problems with slow-healing sores, so supply them with skin care products. They need to constantly check their blood pressure, so carry commercial blood pressure monitors. There are a lot of products that serve diabetics that go beyond glucose monitors and strips."
To maximize diabetic clients' exposure to all the products that may be suitable for them, Weiss suggests grouping them together in a diabetes section, which would include wound care, ambulatory products, nutritionals and skin care. Sales staff should be trained to consult diabetic customers about all their options, he said.
"You work so hard at getting people in the door, it makes sense to make sure they see all the relevant products you have for them," Weiss said. "Even if they don't buy everything at the time, you're planting a seed. They will come back to you, because they see you as a fixer, a problem solver. This is a relationship business."
Mark Howard, CEO of Carlsbad, Calif.-based Advanced Diabetes Supply/North Coast Medical, agrees with that cross-selling technique, calling it the "chip-and-dip approach," referring to how grocery retailers often group those products together for bundled sales.
"There is not one product in this category that could be considered a cash cow, but there are a lot of little products that fit well together," he said. "These could include control solution, needle cutters, sharps containers and alcohol swabs."
If the shoe fits
Because lower extremity circulation is a major challenge for diabetics, foot health is a critical component of the market. Operating a diabetic shoe business, however, does require significantly higher investment from both a financial and educational standpoint. And while CMS has authorized HME companies to serve as therapeutic shoe fitters, the agency is considering new regulations that would limit the scope of the job to certified pedorthists and orthotic/prosthetic specialists.
Still, Stephen O'Hare, president of Marietta, Ga.-based Pedors Shoes, says HME providers should consider certification through the Board of Certified Pedorthists because it gives them a higher level of credibility in the business, generates more referrals from medical professionals and ensures recognition from public and private insurance programs.
"Pedorthic certification is the best entry into the business," he said. "It is a fairly intensive program and includes a three-week course. I would strongly recommend it because we need HME providers in the diabetic shoe business. They play a very important role, providing a level of service that others don't. They fill in the gaps."