Untangling the Web

Wednesday, April 30, 2008

From a commercial standpoint, the Internet has proved to be a tremendous success for some enterprising companies while profits have been elusive for others. That begs the question about how HME companies can best harness the Internet's tremendous power: E-commerce? Online information? Marketing? Advertising? Business-to-business communication? Consumer-oriented portals? And how necessary is the Internet as a business tool?
Industry observers contend that providers shouldn't limit themselves when examining how the Internet can serve their needs-that every company must determine how they can use the online environment to their best advantage.
"The providers I've seen that are going to the Internet are using it as an opportunity to augment their cash business," said Greg Bosco, director of merchandising and marketing for Hollister, Mass.-based Invacare Supply Group. "Most are using it as an ordering tool. They can't invest in a significant amount of inventory, so a Web site means that when customers come into a store looking for a product they don't have, they can order it on (our) Web site. That's what it's about for us."
Dave Jacobs, vice president of durable medical equipment for Mundelein, Ill.-based Medline, agrees that sales and distribution appear to be the favored method of utilizing the Internet, based on its development in the marketplace.
"The situation is different now from a consumer standpoint because people are much more comfortable buying things online," he said. "Web sites have gotten more savvy about getting people to buy through the information they provide and by providing security for personal information."
Does that mean HME providers are capitalizing on it, though? The past few years have seen the growth of "pure" Internet HME sellers and they are reportedly making inroads in the marketplace. Still, the impact of these companies is negligible, Jacobs said.
"It's still a small segment of the population that buys this way," he said. "We've seen a fair amount of growth by Internet-based retailers, but it's not clear whether it is at the expense of brick-and-mortar businesses."
Just about any type of home medical equipment is available online and some Internet-based companies offer steep discounts. While this may seem to be ideal for consumers who shop for HME strictly on price, it raises some legitimate questions about whether the Internet is an appropriate sales channel for equipment that some people depend on for their lives.
"We're not opposed to the Internet as a sales channel, but it has oversimplified and cheapened [product provision]," said Hillary Theakston, director of communications-Americas for Poway, Calif.-based ResMed. "Not that the Internet is inherently bad, but without proper appreciation for service and rules protecting how patients are served, there is opportunity for abuse."
Ben Cheah, ResMed's director of sales operations, adds that the Internet has evolved in the HME industry "like an e-Bay." Buying and selling medical equipment as commodities creates an artificially low price range and often omits the most critical part of the transaction, he said: expert instruction and follow-up service.
"They end up doing things with the products that clinicians should be doing-making adjustments on their own and not getting any clinical guidance on it," Cheah said. "What we end up doing is referring them to their local brick-and-mortar provider for personal service."
Not all Internet-based providers sell products to customers without offering proper support, however. Lisa Stein, CEO and founder of Columbus, Ohio-based Revolutions, created the SpinLife Web site as a complete, full-service enterprise.
"I would pit our customer service staff against anyone in the country," she said. "We provide a tremendous amount of product support with all the major manufacturers."
View the Web as a portal
The Internet is undoubtedly a powerful vehicle for reaching potential customers and referral sources, but how can HME providers best grasp its potential? It begins with an attractive, highly functional Web site, said Mike Mallaro, CFO and CIO for Waterloo, Iowa-based VGM.
"To capitalize on the power of the Internet, providers must present their qualifications, capabilities and offerings to the prospective patients, caregivers and medical community on the Web," he said. "This fundamentally changes the way HME providers solicit business."
When considering how to use the Internet, providers may also want to look at its behind-the-scenes capabilities as well, said Brian Williams, director of sales and marketing for Harrisburg, Pa.-based Computer Applications Unlimited.
Web-based software programs can serve as the platform for most, if not all, of a company's functions, whether it's patient records, billing, administration, accounting, inventory or clinical processes. Because the Web is a portal, users can access virtually all applications through it. What's more, the Web's "real time" nature is conducive to instant information updates and faster claims submissions, Williams said.
"It is so much more efficient and generates a positive cash flow," he said. "That has become more critical than ever in the industry today." HME