HME Business

With competitive bidding, declining insurance reimbursements and other regulatory pressures, solely relying on reimbursements from Medicare as a main revenue stream is no longer realistic. In an effort to offset those revenue pressures, savvy providers are looking to cash sales as the key to survival in the changing face of the durable medical equipment industry.

But how does a provider crack into retail sales? Here are some retail requirements industry insiders deem as most important:

•    Get a retail location.
•    Have an adequate showroom.
•    Use tools developed by the manufacturers to help sell the product.
•    Develop a marketing awareness strategy through advertising.
•    Select the right products.
•    Place products in the right location.
•    Develop a retail Web site.
•   Work with the manufacturer to customize brochures, catalogs and product displays.
•    Cater to existing customers while developing new ones.
•    Ensure that there is adequate parking.
•    Keep a clean, well-organized showroom.
•    Know your demographic.

If done correctly, there are no pitfalls. But that’s a big qualifier.
“Done correctly is a huge qualifier,” says Wallace Weeks of Weeks Group, a consulting firm in Melbourne, Fla., that helps home health care companies in the areas of strategy development, operations, information technology, marketing, finance and MMA preparation. “First of all the provider has to become a retailer. Becoming a retailer means number one having a retail location.”

But of course, that’s only half the battle. You’re going to have to mimic your friends in the retail industry to garner success.

Many of the providers in the industry are in an office or warehouse location that is out of sight and generally not set up like a retail trade, Weeks says. To achieve success in cash sales, not only must providers have retail locations, but they must also think like a retailer in terms of advertising, merchandising and customer service. Unfortunately, these are skill sets they have not yet been trained in.

“Over the years, providers have become better logisticians, more efficient with customer service and accounts receivable payment, and even more proficient in purchasing,” Weeks says. “But they haven’t by and large tried to become better merchandisers.”

To become better merchandisers, Weeks believes dealers should seek training from the retail industry, or; as Sandvold suggests, look to the manufacturer of the product for training — they are the experts.

“In this industry the focus could be placed more on aggressive need fulfillment rather than sales,” she says. “In that arena, the employee looks for the need and seeks to fulfill the need with a specific product. This eliminates the “order-taker” mentality and develops a “sales team.”

Cross training is essential because whether you want to be or not — any employee that has contact with the end user is a sales man— Sandvold insisted — from the receptionist to the delivery driver. “Having a base concept of sales will benefit the overall goal of the company.”

One way that dealers can become more like salesmen is by hiring people that know how to influence customers’ buying decisions through listening and asking the right questions. “A well-trained sales staff will be able to identify the customer’s need and recommend a high-quality product that meets that need,” Miller explained. The way the dealer chooses its product will also determine the effectiveness of the business.

“Choose products in demand because of their unique, functional qualities,” she said. “This allows them to sell the products quickly and use the cash from the sale to pay the manufacturer and grow their business.”

Engineering both cash and insurance sales into their DME model has proven successful for Ginger and Dean Davis’ business, Sheridan Surgical Inc. of Amherst, New York. The 10-year owners of the medical supply store offers wheel-chairs, seating and positioning equipment, scooters, stair lifts and ramps, orthopedic goods, compression stockings and more.

“We want to send the message out that we’re a one-stop shop,” Ginger Davis says. “We want it to be perceived that we have everything.”

In addition to lift chairs, aids to daily living and bathroom and safety equipment, disposable items such as diapers and bed pans work well as cash sell items. Comfort products, such as mattresses, medical gowns and rehab exercise equipment, are huge cash sale items for the Davises as well.

The Davises sell power equipment to customers who don’t qualify for it, but it’s what they want. They also sell a lot of stair lifts, which aren’t covered by insurance, and retails for $3,000 to $5,000.
Davis has found that the larger the showroom is the more providers sell. After remodeling and moving from a 1,000 to 2,000 square foot show room, sales doubled. Then when the company moved to a 6,000 square foot showroom, again there was an enormous increase in sales.

“The bottom line is the bigger your showroom, the more you will sell period.”

For providers searching for success in DME cash sales, it’s going to take well-trained, staff that is knowledgeable about the products. The Davises’ motto is not every one knows all the answers, but there has to be someone on staff that knows the answer to everything.

“Not everyone has been in a medical supply store so don’t expect them to know exactly what they want,” Ginger Davis says. “It’s up to you to help solve their problems.”

Quality customer service translates to doing all that you can to save the customer money. Davis says before a customer purchases an item, her employees ensure that it isn’t covered by the customer’s insurance first and then will go out of their way to achieve reimbursement for the clients whether it’s requesting a prescription from a doctor on their behalf or simply doing whatever they can to accommodate their needs.

“Realize that much of your clientele is either a stressed out caregiver or someone that is not feeling well,” Davis says. “If your staff cannot address their problems with a kind word or smile, they may be better suited in shipping and receiving.”