Step back from the familiar

Tuesday, June 30, 2009

Q. My facility isn’t retail friendly. Are there other ways to increase my non-Medicare business?

A. With national competitive bidding affecting many providers, expanding your non-Medicare business has become a greater priority. Retail is certainly one option to increase cash sales. But while it fits with the “traditional” business models for our industry, it may not fit well with your location, community or current product mix.

Now is the time to re-evaluate or perhaps redefine what business model offers both growth and profitability. The traditional HME business is based on patient referrals and third-party payers. It’s primarily a retail model: providing products and services to the “customer,” even if he or she didn’t order it or is not paying for it. While there are several ways to diversify your payer mix (i.e. private insurance, managed care, hospice, cash), the business is essentially the same.

But step back from the familiar for a moment and evaluate the key components of your business, aside from being or having a third-party billing service. Isn’t obtaining the right medical product to meet the customer need the core of what you do? Aren’t you the expert in finding the product and providing the services to ensure its proper use?

So, look to see where else you can use that expertise in your community. How and where are medical products used by “patients”? Examples include residential care (skilled-nursing facilities, group homes, residential care and assisted living); acute, intermediate or urgent care facilities; and practitioners (physical therapy, occupational therapy, chiropractic and physicians). The business model may look more like a wholesale, distributor or VAR (value added reseller). 

In each of these new models, the facility or the practitioner may be your “payer.” Your expertise in home medical products will allow you to diversify your business without adding retail space or inventory. While there may be tighter margins, the cost of billing, documenting medical necessity and delivery are reduced to one paying “customer.” 

So what business are you really in? Third-party reimbursement, equipment warehousing and rental, or acquiring and providing medical products that improve the health and independence of people in your community? 

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