Keeping medical supplies in HME

 - 
Sunday, June 30, 2002

Since the Balanced Budget Amendment of 1997 substantially reduced the margin on home oxygen reimbursement, full-line HME providers have been gradually pulling out of the lower-margin medical supply markets. Some estimates say the $1.5 billion in supplies business HME companies were doing five years ago is dwindling by about $90 million per year as HME providers quit taking assignment on ostomy, urology, wound care and other supplies.

Specialty providers like Shield Healthcare and Express-Med are buying the supplies portion of an HME provider's business. Vendors of supplies like Independence Medical and Coloplast have broken ranks with a long-standing taboo that prohibits vendors from servicing end-users.

Although one in five HME News readers does not object to such cross-channel navigating, according to a May 2002 HME NewsPoll, three in four object to the breakdown in the old distribution paradigm.

Invacare, frustrated by the proverbial sucking sound it hears in the medical supplies market, surveyed its customer base and found provider opinion to be roughly analogous to the HME NewsPoll, which was conducted later.

Invacare used those results to sound a broadside against those who would violate the provider-vendor covenant: don't buy products from companies that would compete with you for end-user business.

What makes the matter all the more frustrating to Mike Perry, Invacare's, vice president. of distributed products at the Invacare Supply Group, is that HME providers think the supplies business is a struggle.

"We still believe that the patient is one of the most important assets the HME has," said Perry. "The last thing they want to do is split [that business] with anybody and run the risk of losing it."

When Invacare acquired its supply group (formerly known as Suburban Ostomy) in January 1998, about 10%-15% of its medical supplies business with HMEs was drop-shipped direct to the patient's home. Today the percentage of HME providers who elect to go with the Home Delivery Plus option is roughly 50%.

At Complete Medical Supplies, which launched its Drop-Ship Direct program five years ago that percentage is about 35% and growing 10%-15% annually. Seth Klein, Complete's president, expects that percentage to top out at 50%.

"Customers who walk in the door can't wait a day or two days for the goods to show," he said. "Nobody uses us exclusively for drop-shipping. It's always a healthy mix."

At one time, drop-shipping looked like a trend in the HME industry. Medline launched a program. Graham-Field's GF Express speedy delivery arm was drop-shipping beds in New York. Today, the trend is not about drop-shipping supplies, but dropping them. Companies like Complete, Dedicated Distribution and Invacare say it doesn't make sense to lose a chronic patient. Nor does it make sense to drop a business line before you've tried drop-shipping one.

"We've never had a customer come back to us and say we want to do it the old way," said Steve Budra, senior director of marketing at the Invacare Supply Group. HME

Distributed Lines
AmeriSource Bergen
Featured products
- ostomy/ wound care
- incontinence
- diabetes/ diagnostics
- ambulatory aides
- bathroom safety

Featured brands
- none submitted

Number of SKUs
16,000

Dedicated Distribution

Kinray
Featured products
- respiratory
- ostomy
- DME
- wound care
- incontinence

Featured brands
- Hollister
- Mentor
- Sunrise
- Jobst
- Kendall

Number of SKUs
10,000

Complete Medical
Featured products
- physical therapy
- mobility products
- physician supplies
- wound care
- respiratory

Featured brands
- Medical Depot/Drive
- Kendall
- Johnson & Johnson
- Jobst
- Scott Specialties

Number of SKUs
8,000

DHC Healthcare
Featured products
- mobility
- bath safety
- incontinence
- nutritional
- respiratory

Featured brands
- Invacare
- Carex
- Kendall
- Ross
- Sunrise

Number of SKUs
5,000

Her-Mar
Featured products
- stethoscopes
- blood pressure kits
- diagnostic sets (EENT)
- respiratory
- surgical instruments

Featured brands
- Welch Allyn
- Littmann
- Mabis
- DeVilbiss
- Her-Mer

Number of SKUs
5,000

Pinnacle MedSource
Featured products
- respiratory
- DME
- diabetic shoes
- mobility products
- pressure management

Featured brands
- Rubbermaid
- Respironics
- Puritan Bennett
- Pride
- PARI

Number of SKUs
2,500

Medline
Featured products
- urologicals
- respiratory
- solutions
- needles
- syringes

Featured brands
- 3M
- Hudson
- Kendall
- J&J
- Sims-Portex

Number of SKUs
60,000

Cramer Decker

Featured products
- respiratory
- transfilling equipment
- cylinders
- regulators
- carts and racks

Featured brands
- Catalina Cylinders
- Sherwood
- Ceodeux
- ProRack
- Medical Industries America

Number of SKUs
731

Invacare Supply

Featured products
- diabetic
- urologicals
- ostomy
- wound care
- incontinence

Featured brands
- Convatec
- Hollister
- Kendall
- Mentor
- Bard

Number of SKUs
8,000

Home-Aid

Featured products
- DME
- ostomy
- respiratory
- diagnostic
- diabetic

Featured brands
- Invacare
- Convatec
- DeVilbiss
- Omron
- Roche

Number of SKUs
5,500

MSP
Products
- respiratory
- DME
- incontinence
- urological
- enteral
Brands
- Kendall
- Allegiance
- Nova Ortho-Med
- Mentor
- Ross
Number of SKUs
25,000

Rochester Drug
Products
- ambulatory
- bath safety
- diagnostic
- orthopedic
- soft goods
Brands
- Guardian
- Essential Medical
- Jobst
- Millenia Medical
- TFI
Number of SKUs
6,000

United Distributors
Products
- DME
- respiratory
- mobility
- pharmacy
- retail
Brands
- none submitted

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