From the trenches

Saturday, November 30, 2002

Pharmacist gives lowdown on Rx + HME
CONYERS, Ga. - No one has to sell pharmacist Jeff Reagan on the benefits of selling home medical equipment. His 18,000-square-foot location, Reagan Home Care Pharmacy, includes 2,000 square feet dedicated to HME. Home medical equipment generates $1 million or 30% of his annual revenue. HME News talked with Reagan about the potential HME holds for pharmacists.

HME: If you didn't do HME, would you be less profitable?

JR: Yes. It contributes a far greater percentage to the bottomline. Reimbursement for prescriptions is just so small now. The average pharmacist does $2.5 million a year, 85% of that in prescriptions. They are averaging less than 3% (3.5% according to NCPA) pre-tax profit on prescriptions. HME is easily double that.

HME: Despite that profit potential, my perception is that there are some pharmacists doing a lot of HME but most just seem to dabble. Is that accurate?

JR: Yes. I think we'll see some migration into HME, but I don't see a huge influx because the prescription volume will be increasing so much (as boomers retire), and there are only so many hours in a day.

HME: Besides billing, what barriers do pharmacists face when building a rental business?

JR: The rental business is also very difficult because most pharmacists don't think that way. In our situation, the outside marketing is stronger than the walk in. So much of the rental business is done over the telephone - people needing a hospital bed and oxygen rarely walk into our facility - and pharmacists haven't been taught to do that. HME