Two Dreaded Letters

Saying and hearing “no” after receiving or making a request is unpleasant for most. In fact, it is so unpleasant that many will go to great lengths to justify agreements that clearly should be rejected.

For example, late on Friday afternoon a provider is asked by a referral source with a history of bad referrals to make a delivery of a low-cost, low-margin product to an address 35 miles away from the warehouse. Should the provider say “no?”

One manager recently declared it was an unconditional policy of his company to say “yes.” Such decisions may be debated for a long time to come, but there are two indisputable truths: These situations are unprofitable. There is no excess profit to support wasteful decisions in home medical equipment companies.

There is a solution, however, that can get you to the equivalent of “no” without ever being asked to say the dreaded two letters. The solution is easy to state but not so easy to achieve: Don't let your company get in a position to be asked the question. Following are some practical ways to create an environment where questions that should be answered with “no” are rarely, if ever, asked.

• Be sure about the solutions that should be offered. The solutions you should offer must align with the vision, values and competencies of your company, and with the needs and resources of your customer. Once those are known, the solutions that meet the test should be prioritized according to profitability. Profitability is impacted by both the cost of goods and the cost of people doing the things necessary to process the sale (i.e., intake, delivery, billing, collecting, purchasing, warehousing, etc.).

  Since the cost of labor is greater than the cost of goods, it is imperative to consider all of the labor costs associated with the product.

  It is also important to remember that the profitability of a product is not the same with all payers. Some payers require activities that others do not. So, even if the reimbursement is the same, the profit may not be. It is best to measure the profit of a product by payer or payer type.