Saturday, November 30, 2002

MEMPHIS, Tenn. – Opportunity knocked for the founders of The Diabetes Store when Medicare announced last April that diabetic beneficiaries must use a third party for supply reimbursement.

Six months later, owners Amy Hargrave and Barbara Woody are glad they answered. Their new mail-order supply firm quickly stepped in to fill the reimbursement void for scores of diabetic patients in greater Memphis and the outlook is bright for serving a population that numerous studies have shown to be growing dramatically.

The partners have a long and interesting history. Not only were they teammates on the same pharmaceutical sales force, they were also competitors in the home diagnostics business. So when Medicare issued its reimbursement mandate April 1, launching a supply venture together seemed like a natural progression of their relationship, Hargrave said. Woody – a registered nurse – handles sales and education, while Hargrave coordinates intake and logistics.

"We were both thinking along the same lines and saw this as a window we could jump through," Hargrave said. "We both sold insulin as pharmaceutical reps and when we were competitors we learned different aspects of the diagnostics business. We knew that together we could make this work."

Yet despite the opportunities that come with a mushrooming market, industry veterans caution that diabetes supply has its share of pitfalls.

"It's a huge paper chase," said Wade Thompson, director of diabetes for medXpress in Columbia, S. C. "A lot of expense comes with documentation. The number one vulnerability is with the cost of the product, then with the cost of delivery and labor. We rely on economies of scale, purchasing power and efficiency, but even then it is difficult to make a reasonable profit."

So far, though, The Diabetes Store is making it look easy. In just a half-year, the company is experiencing triple-digit percentage growth – an average of 600% per month.

"It's incredible…we're quadrupling our business every month," Hargrave said, modestly adding "but when you start at zero, that's easy to do."

Though they won't disclose specific revenue amounts, Hargrave and Woody report they are getting "dozens of new referrals per day." HME