Great debate: To niche or not?

Friday, April 10, 2015

YARMOUTH, Maine – HME providers have long debated whether it’s best to specialize or diversify, but these days, the 800-pound gorilla that is Medicare is driving those decisions, they say.

“It would be great from a patient care standpoint to be specialized,” said Woody O’Neal, vice president of Pelham, Ala.-based O2 Neal Medical. “But I don’t think the market is going to allow that. The market doesn’t value it as much as it used to.”

Case in point: Prior to the implementation of the competitive bidding program, O’Neal’s company was about 85% respiratory. These days, it’s split 50-50 between respiratory and HME.

“Providers can adapt,” he said. “If anything, we adapt well—we’ve had to over the past few years.”

Provider Gary Sheehan has taken the opposite approach. In 2014, Cape Medical Supply converted half of its retail showroom at its headquarters in Sandwich, Mass., into a sleep center and is tightly focused on growing that business.

“The margins are so tight, you have to be very operationally sound at whatever business you’re in,” said Sheehan, CEO. “It’s difficult to be efficient if you’re in all kinds of different categories and markets.”

Still, it can be scary to step away from lines of business that a provider has done, and done well, for decades, Sheehan says.

“You don’t want to be viewed negatively in the market,” he said. “We’ve handled all of those transitions and announcements with a great deal of care and attention. We want to be careful not to damage the brand.”

Ultimately, its up to providers to decide what’s best for their businesses, says Kevin Hill, whose own company focuses on respiratory.

“Retail might work for some people, but not respiratory,” said Hill, owner of Tyler, Texas-based CPS Medical. “But respiratory is good for me. That’s what I know.”