DME ramps up biz

Monday, October 31, 2005

CHESAPEAKE, Va. - With national competitive bidding and further reimbursement cuts nipping at the heels of the DME industry, First Choice in Homecare launched a new business in September selling ramps, lifts and elevators.
"We don't want to hedge our bets with what will happen next with Medicare," said Dave Mills, one of three owners of the traditional DME company. "We're trying to diversify away from things that are insurance based."
Mills and his business partners, Doug Stiffler and Karen Caldabaugh, opened EZ Access in a 1,500-square-foot suite next door to First Choice. Right now, two employees - an administrator and an installer - staff the new company.
Ramps, lifts and elevators are increasingly becoming a bigger niche business for providers, but First Choice's spin on the idea is not only selling but also renting the equipment, especially stair lifts, Mills said.
"These are big-ticket items that cost $4,000 to $5,000," he said. "A lot of people need them for a finite length of time. What do they do with them when they're done?"
Not all providers can succeed with the niche business, but EZ Access' chances look good, thanks to First Choice, said Doug White, a consultant hired to help launch the new company.
"To do this, providers have to have an established business," said White, owner of Handi-Lift in Ashville, N.C. "For the small DME guy, at least from a rental standpoint, the cost of goods are too expensive, and it takes too long to get money back out of it."
First Choice, which generates about $5 million per year, has more than 600 oxygen patients and receives an average of 60 referrals per week, Mills said.
EZ Access plans to drum up business by tapping into its existing client base and launching a local advertising campaign (White says to make it, "you have to spend money to make money"). It also plans to target referral sources, even hospices.
EZ Access' goal, in its first year of business, is having "150 units out on the street," he said.