Total Health Solutions turns MMA gloom into gold

Wednesday, August 31, 2005

NEW ORLEANS -- At first glance, it appears Jeff Friedman couldn't have started his business at a worse time: Dec. 8, 2003, the same day President Bush signed into law the Medicare Modernization Act, which mandated major reimbursement cuts for HME.
In December 2003, Total Health Solutions generated about $5,000 in revenue, and it crossed Friedman's mind that he may have " just created financial ruin."
Fortunately, his fortunes have increased steadily since then. For all of 2003, the company generated $550,000. In June 2005, the Total Health tallied $140,000 -- that's $90,000 more than June 2004, said Friedman, who expects to break even later this year with a monthly run rate of about $200,000.
Friedman strengthened his hand earlier this year, when he acquired a cross-town DME. He closed that location but pulled in most of the business by hiring three key employees, taking over the company's phone number and sending post cards to all customers, alerting them to the change.
Throughout his start-up, Friedman has stuck to his plan and built name recognition by spending $100,000 a month on advertising, mostly TV and radio.
"Everyday someone comes in and says, 'I heard you on the radio or TV,'" he said.
About 40% of his business comes from cash items, and that business in turn generates insurance business.
"I have people walking in my store every single day," he said. "They may be looking for a heating pad, but they are seeing everything else and down the road when things progress, they come back for a wheelchair, power chair or hospital bed."
Total Heath doesn't offer home respiratory therapy or custom rehab, but handles just about everything else. In particular, the company sells a lot of compression stockings, lift chairs, bath safety, incontinence supplies and women's health items.
In starting his business, relationships developed during his 25 years as a healthcare executive in New Orleans helped open doors to managed care contracts and other opportunities from the get-go, Friedman said.
HME consultant Jack Evans helped Friedman start Total Health. Friedman could have broken even earlier, Evans said, if he had not embraced a "spare no expense" strategy, as demonstrated by his dedication to advertising and a large, 3,400-square-foot showroom.
The payoff, Evans said, should be a multi-million dollar business.
That said, Evan's "would never advise a client" to start as large and grandiose as Friedman.
"He is one of the best business people I have ever worked with," Evans said. "From the day he opened, he ran it like a full-service HME."