Suppliers sleep their way to success

Sunday, October 7, 2007

YARMOUTH, Maine - Sleep therapy and power mobility products top the list of items driving revenue growth for those HMEs fortunate enough to be growing these days. Additionally, respondents to the October HME NewsPoll reported that the failure of nearby providers is, not surprisingly, a boon to them.

"We are seeing more of our competition dropping out," said one anonymous NewsPoll respondent. "The lack of PMD revenue, along with the drop in respiratory drugs and other factors, are leading many (HMEs) to no longer service our areas, and thus we are seeing an increase due to reduced competition."

Another anonymous supplier said his profits on a $1.2 million annual gross are down by $43,000 this year, but his revenue is rising thanks to the failures of nearby businesses. As a consequence, he's reducing his showroom space, from 5,000 to 4,000 square feet. That is not to say consumers aren't paying out of pocket for home medical equipment.

"Internet sales are out of control and flea markets too!" said this provider.

Suppliers also credit relatively stingy payers for top-line growth. Hospice has become a more attractive business for many. So have HMO contracts. Not surprisingly, no one is thanking Medicaid for any business boost.

Suppliers are going after existing customers for more business and getting tough about collecting from payers when they're due. Others say feel-good tactics--"motivated sales team, excellent customer service and a dedicated delivery team," according to Rich King, president of ProMed DME--are stimulants for success.

Sleep products, more than any other, is where everyone says the money is, said respondents. CMS would agree. After levalbuterol and scooters, no product category surged higher on the Medicare reimbursement ladder than the full-face mask (A7030), which grew by 64% in 2006.

"We treat each CPAP referral as an ongoing revenue source by teaching the patient how and when to reorder masks and supplies," said one supplier.

However attractive the growth in Medicare's sleep business, the real driver here is among non-Medicare patient populations. Gradually, suppliers seem to be building non-Medicare business lines.

"Our growth comes from private-pay items and up sales," said Rob Summitt, president of Summitt Group. "We are no longer depending on Medicare and insurance alone."

One supplier with a 3,000-square-foot showroom says it's not unusual for his business to rack up $2,500 or $5,000 in sales a day.

"Our business strategy has been retail showroom," he said. "We have and support a showroom with 11 lift chairs on display, 12 scooters, five power chairs, two dozen walkers and all kinds of other DME home medical stuff. We advertise like crazy in magazines, TV, radio, etc."