New specialty service aims to boost supply sales

Monday, June 30, 2003

ORANGE BEACH, Ala. – A new specialty service has been launched to help sleep providers with replenishment of CPAP masks and other ancillary supplies for respiratory patients.

Marcus Kruk, president of a new firm called HME Services, says respiratory providers are missing out on potential repeat sales for CPAP users and other patients because they don’t follow up months down the line.

“Providers typically don’t have a tracking system for CPAP supplies,” Kruk said. “They have no idea of the patient’s anniversary date or even how many CPAP patients they have. They are missing out on so much revenue.”

In talking with major respiratory manufacturers, Kruk believes that up to 80% of sleep providers are involuntarily bypassing follow-up sales. As for how much revenue each dealer might be missing, he responded by saying “enough so that a $150 million a year company could gain $1 million in sales.”

For a flat fee of $36 per quarter, Kruk’s company will track patient data and make reminder calls during the year. The company’s software program contains all Medicare replenishment allowables, the cost of goods and each patient’s eligibility for replacement items. A calculator recognizes the patient’s name and whether product provision for that patient is profitable.

It’s an idea Ken Steiber is willing to try, as he recently signed up his company, Pensacola, Fla.-based Gulf Medical, with Kruk’s firm.

“It’s definitely an under-serviced area for us,” Steiber said. “As a small independent, we don’t have the resources to contact all these people, especially in light of declining reimbursement. Managed care margins are especially slim. If I’m making $15 on a CPAP mask, it’s not worth it. But if they can figure out how to do it on a mass scale and still give us a margin, it’s worth a try.”

Respiratory manufacturers are trying to help providers chase down this business as well, as both ResMed and Respironics have developed software designed to track patients that fall through the cracks. ResMed reports that more than 300 companies have installed the program in the past 18 months and that on average they’ve seen a revenue increase of between 17% and 33% for sleep-related items.

“A lot of providers will check on a patient during the first 90 days, but very few will follow up six and nine months down the road,” said Ron Richard, ResMed vice president of marketing for the Americas. “That’s where the big improvements can occur.”

Though it may be true that providers are letting a substantial portion of potential business go unrealized, some companies like Houston-based Health Management Services purposely don’t pursue it.

“We don’t feel that [product replenishment] should be pushed,” said President John Goodman. “We let patients know they can get replacements from us. We follow up to see how they’re doing, but we don’t put them on a regular replacement schedule. It may not be good for business, but we’re just not comfortable taking advantage of the situation.” HME