Start fresh

Thursday, April 30, 2009

Q. I’ve always been a (fill-in the blank: oxygen, rehab or DME) provider. What does it take for me to add (fill-in the blank: oxygen, rehab or DME) to my product mix?

A. Diversifying your product line is an important and scary prospect with all of the changes in the HME industry. And while there are certainly barriers to overcome, the benefits of adding a new or complementary product line can contribute to both the profitability and stability of your business. That’s if it’s done properly.

To succeed, you need to consider not only the product but also the people and the processes necessary to meet customers’ needs. When diversifying, product acquisition is often the first thing a provider thinks about. I would caution, however, that you keep this in proper prospective. The product costs may be only 20% to 25% of the expense.

People and processes are what make up the majority of the costs; they will determine your success or failure. You need to evaluate your existing staff for knowledge of the product line you’re looking to add. Your evaluation must include details about the equipment, medical conditions involved, service and training, and, of course, reimbursement. Identifying the required knowledge and skills to provide oxygen or any other service should start with your existing staff. That’s how you find out what outside resources are needed for additional staffing and training.

Now it’s time to look at the processes. What do you currently have that can be leveraged to implement a new product line? As part of this process, you need to review warehouse space, delivery methods, customer follow-up, and sales and marketing. Each of these offers the chance to share or increase your overhead costs.

Launching a new product line gives you the chance to start things fresh. You can evaluate, for example, what delivery model for oxygen works best for your market. There are great opportunities for new business in our industry, even with products that have been around for years. 

Jeff Souza is president of HME Advantage. Reach him at 888-880-4463 or