Today, O&P means 'opportunity and profit'

Friday, January 25, 2013

As the HME industry gradually shifts from a reimbursement-based to a cash-based business model, providers are taking a fresh look at categories once thought to be unprofitable. Orthotics, prosthetics and soft goods is one of these categories, and manufacturers are now making a strong push to convince providers that the market has enormous retail potential.

While the category has been exempted from Medicare competitive bidding, its main attraction for HME companies is cash sales. And with a stratified demographic base of product users, O&P and soft goods can be sold to young and old alike. 

“Young people are more involved in sports and exercise, and with these activities the potential for injury increases,” says Wendy Miller, director of facility accreditation for Board of Certification/Accreditation, International (BOC) in Baltimore. “Since the provider is not limited to one particular customer base, the potential for expansion is limitless.”

Sports medicine products for athletes provide a major boost for retail sales, yet the core demographic for O&P and soft goods remains the heavyweight boomer generation, adds Linda Lavi, vice president of marketing for Grand Prairie, Texas-based Alex Orthopedic.

“While the increased awareness in health and wellness has expanded the market for these products to younger customers, the true growth potential with them actually lies with the baby boomers,” she says. “This segment will provide tremendous growth in these products for many years to come.”

Even the boomers’ grandchildren are providing sales opportunities, says John Corden, vice president of sales and marketing for South San Francisco, Calif.-based Ita-Med.

“Pregnancies among the boomers’ kids are rising, and our Gabrialla product line was developed to capitalize on this market trend,” he said, describing the company’s elastic abdominal binder designed to provide balance, support and weight distribution for expectant mothers.

The Latino/Hispanic market is also a huge growth area, which is why the company has produced bilingual packaging for several years, Corden says.

Selling expertise

The O&P and soft goods category contains plenty of cash-friendly commodity items, but providers positioning themselves as a comprehensive and exclusive source for these products need to promote their clinical expertise and have certified personnel available, Miller says.

To help independent HME providers differentiate themselves in the marketplace, BOC is introducing a new certification called the Certified DME Specialist. The new title indicates a person is certified to provide equipment delivery, product set up and patient education.

“It provides additional assurance of compliance and customer satisfaction,” she said.

Because patient fittings comprise the core of O&P services, providers must have a certified orthotic fitter and certified mastectomy fitter on staff, Miller said.

“The market for post-mastectomy products is unique in its specialized care and potential for repeat business, which is why they need to have knowledgeable people on staff who can answer customers’ questions,” she said.

Expertise, Lavi adds, is a key component of retail sales.

“In a true retail environment, a comprehensive product selection, along with patient education and self-selection information, is critical,” she said. “Knowledgeable staff, capable of promoting add-on sales, for instance with mobility products, can also play an important role in the sales of these items.”

Furnishing prospective customers with a wealth of information helps influence their selections and increases their chances of purchasing, Corden said.

“Provide the customer with enough easily digested information to make an informed decision—people really want to know what they are buying,” he said. “They want to know all the features and benefits and how will it help them. That is why it is so important to have this information right on the product packaging.”

‘Change or die’

The shifting business dynamics of HME are forcing providers to innovate and try new sales tactics to survive. 

“Mom-and-pop” operations find themselves in a precarious situation when it comes to competing with large national chains, especially for soft goods. 

Suppliers recognize the threat and are trying to help by offering aggressive pricing and unique items for their provider customers.

“Small ‘mom-and-pop’ stores will continue to see tremendous pressure from the larger stores, national chains and online retailers,” Corden said. “It is now a matter of change or die for them. Their only chance of survival will depend on offering products and services that can be easily differentiated from the larger competitors. Most importantly, they need to offer consumers the value they are looking for—a combination of education, personal attention, features and benefits along with price. The key is not just price, but value.”