Mail order: Going nationwide

With the opening of its new $1.1 million call center in May, Home Care Delivered enters the national mail-order medical supply market and positions itself for 80% growth in 2006, say company officials. The 10-year-old company in Richmond, Va., carries ostomy, incontinence, diabetic and wound care products, a market that president and CEO Gordy Fox expects to explode now that the baby boomers are turning 60. A direct-to-consumer model offers customers a streamlined and discreet experience, he said. "Most of the products we provide are products that a customer would not go to a retail store to purchase," said Fox. "You need to have a breadth and depth of knowledge and products to help that consumer." Fox said the company markets strictly to health care professionals, including physicians, nurses and social workers. Customers can order by phone or online. With Home Care's continuity of care program, customers speak with the same patient care coordinator whenever possible. Building that relationship translates into further referrals from sources trusting their patients will receive good service. Despite reimbursement cuts and historically low margins on supply products, Fox stays competitive with efficient internal/external supply chain management. "You've got to be able to take the order all the way through verification and take all the documentation with the physician, with the payer, with the client and get all that through as seamlessly as possible," said Fox. "Then, how do you get the product from point A to B the most efficiently." With competitive bidding on the horizon, Fox said, activity-based costing will allow businesses to thrive. Processing an order economically preserves profit margins. Home Care derives 25% of its business from Medicare, the rest from Medicaid and private insurance. With Medicaid proposals to limit reimbursement on many supplies--most recently in Florida--Fox worries about the effect on consumers. "If these folks don't get the products they need, they may not be capable of staying in a low-cost channel," said Fox. "It behooves all payers to keep patients at home longer."