Diligence, education pay off in medical supply referrals
On the surface, furnishing medical supplies for the respiratory, ostomy and urological markets appears to be a fruitless venture. If a provider isn't careful and diligent in these areas - especially for ostomy - the referrals can hinder more than they help.
But vendors say it is possible to turn a profit supplying patients with these necessary support products if they take the time to educate referral sources and patients about them, and they are judicious about which products they carry and when to draw the line on new referrals.
Ostomy is by far the most difficult market to serve in the medical supply realm, notes Maxine Rankin, reimbursement specialist for ostomy and urologicals at Holliston, Mass.-based Invacare Supply Group.
"It's a tough market," she said. "Reimbursement is very low and the category isn't growing. There are approximately 750,000 ostomy patients out there and that number is fairly static. Due to better surgical procedures and drugs, not as many people need an ostomy anymore."
While no one is due to get rich from the ostomy market, there are ways to post a margin if providers are careful about what they supply, Rankin said. For instance, the two-piece pouch system has a higher reimbursement rate than the one-piece pouch. Unless the referral source specifically orders the one-piece, the provider can offer the two-piece to the patient.
Still, providers should use caution and be mindful of the rules, Rankin said.
"There are strict guidelines on what you can deliver," she said. "If you deliver more than the recommended amount, it's tough to get paid."
Partnering with the manufacturer is especially critical for the supplies market, added Todd Cianfrocca, national sales director for Stewartville, Minn.-based Rochester Medical.
"There are three things we want our providers to do," he said. "The first is to trace a sale - let us know where they're selling the products; second is to provide a documented follow-up and third is loyalty. Don't switch the patient to a product that is less expensive."
A specialist in the urology supplies market, Cianfrocca said there are various billing complexities that scare people away from it. Those who take the time to learn the nuances, however, can come away with some decent referral sales, he said.
"Not many know how to bill for urologicals," he said. "The perception is that Medicare will only pay for four catheters a month, but they will allow more under certain conditions. For instance, if a patient gets urinary tract infections in 12 to 24 months on a clean regimen, the physician can write a prescription for a sterile technique. Other exceptions are pregnant patients with spinal cord injuries and MS patients because they use immunosuppresant drugs and therefore automatically qualify for sterile catheterization."
Respiratory supplies may fetch the biggest return, but that's not really saying much, said Phil Cunningham, product manager for respiratory and rehab at The Aftermarket Group in Elyria, Ohio. At the same time, working hard to find products like tubing and filters solidifies relations with referral sources who appreciate providers that do everything possible for their patients.
"Become the complete product specialist and show them you are there for their patients," Cunningham said. "Bend over backward to get them what they need."
Conversely, the provider has to be cost-conscious and keep in mind that oxygen is a capped-rental item. The trick, Cunningham said, is to educate the referral source.
"You want to set the bar for the referral sources about your expectations on what you can supply," he said. "Set the ground rules for them so they're not constantly making you jump through costly hoops."
Respiratory is also an area that lends itself to cash sales for medical supplies, Cunningham said.
"Promote accessory products like cylinder bags - show the advantages of them," he said. "Show how compact they are and how much better they are than a cart. They can carry their oxygen rather than drag it around."
Clearwater, Fla.-based Genairex claims that its generic product line can help providers preserve margins through rock-bottom prices that reportedly are 25% to 40% lower than brand names.
"With manufacturers continually raising prices and reimbursement going down, how does the provider survive?" CEO Stephen Kuehn asked. "In our case we are generic to the name brands and therefore, less costly."
Still, name brands often resonate with referral sources who single them out in a prescription. How does the provider handle that situation?
"The provider can certainly offer to take care of the patient as long as the patient pays cash, but Medicaid patients typically can't pay so they need the flexibility of the generic," Kuehn said. "The challenge is that if they're using a brand name, the referral source is no longer the deciding factor. The relationship is between the provider and patient."
Honesty is the best policy when explaining the precarious financial dynamics of medical supplies to both referral sources and patients, Kuehn said. It is imperative, he said, that both parties understand how generics can provide both costs savings and satisfactory performance.
"Lay your cards on the table and tell them the truth - that generics are vital for you to continue serving them," he said. "Give them samples. Show them how the generic is comparable to brand names."
Genairex carries about 85 SKUs of generic equivalent products, which Kuehn says matches about 85% to 90% of the brands. Feedback surveys show that about 90% of the patients who use generics are satisfied with them, he said.
KEY REFERRAL SOURCES:
- Ostomy - Enterostomal therapy nurses, thoracic surgeons, oncologists
- Urologicals - Office- and hospital-based urologists, rehab centers, thoracic surgeons
- Respiratory - Institutionally based RTs, pulmonologists, sleep centers
- All categories - Discharge planners, case managers, homecare agencies, social service agencies, internal medicine practitioners, general practitioners, product end users.
- Ostomy - One-piece open-ended pouch, adhesive (stoma) paste, two-piece pouch system, deodorant for pouch
- Urological - External catheters, intermittent catheters, Foley catheters, insertion kits, irrigation kits
- Respiratory - Tubing, cannulas, cylinder carts, conserver regulators, bags, filters
KEY MARKETING TECHNIQUES:
- Ostomy - Look for ways to provide the two-piece pouch system, which has higher reimbursement.
- Urologicals - Learn the complexities of reimbursement and identify which patients may qualify for additional covered supplies.
- Respiratory - Bend over backward to find the right tubing and other ancillaries in order to impress the referral source, but draw the line so that your delivery costs don't outstrip reimbursement rates.