HC: Tell us about your background in HME/DME.
MK: After working as a pharmacist and hospital pharmacy manager for 10 years and starting up two home infusion companies, I was hired to be a vice president for Apria Healthcare. Ironically, they had me sell off their California home infusion business because it was losing a million dollars a month due to their low pricing. I learned as much about the respiratory/DME business as I could and, realizing I couldn’t change Apria, I decided to start my own respiratory/DME company. So a year and half later I handpicked the three best people I saw at Apria and started Allstar Oxygen Services in 1999. The company was about 55 percent oxygen, 40 percent CPAP and 5 percent DME. We were recognized as the fourth fastest growing private business in the San Francisco Bay Area between 2000 and 2003 by the San Francisco Business Times. I am a DME industry expert for the Gershon Lehrman Group and rate in the top 5 percent of their consultants. Then I opened a cash-only retail medical equipment store in 2010, Allstar Medical Supply, to diversify away from Medicare with competitive bidding looming over the industry. The store is doing very well now, so I wrote The Next Step: Retail Home Medical Equipment to describe how I approached this new business and the steps I took to get here.
HC: What inspired you to write the book?
MK: There is a lot of anxiety in the HME industry with Medicare competitive bidding (MCB) on the horizon. I feel like I was in denial for a long time, hoping somehow CMS would realize the error of their ways and competitive bidding would be stopped before it does serious damage to this industry. We help people get home from the hospital and save the health-care system billions of dollars, so it makes no sense to target home DME. But MCB appears to be a runaway train headed straight for the DME providers with nothing to stop it. Whenever I attended Medtrade and other industry meetings I always enjoyed the camaraderie with the other business owners and managers, discussing industry issues, business problems and sharing ideas. Many of the people I’ve talked to are thinking about selling retail medical equipment or are already selling it and thinking about expanding. I wanted to share with them my experiences in retail and what I tried and found that works to help them grow and protect their businesses. The industry is still headed for a lot of uncertainty and chaos, but cash retail sales is one area with a lot of potential that can provide an island of stability.
HC: Could you share your book’s top three or four messages?
MK: Retail medical equipment is a very different business from the Medicare DME business. Instead of an inexpensive light industrial warehouse space you have to be located in a more expensive, high visibility retail shopping area. Rather than marketing your business to referral sources with an outside salesperson, you also must now market it directly to the public. The look and layout of your store, along with the product selection, will be important to your success. Customer service and inside selling are skills you must learn and master. Before jumping into cash retail sales there are a number of questions you need to ask yourself, such as where is the best location, how can I optimize the appearance and store design to facilitate customers coming in and buying, which products should I carry and how can I learn about them? You’ll also need to think about advertising and how you should go about it, and possibly hiring an outside salesperson. These are just a few of the questions I’ve tried to answer in my book. Since I began in home health care in the 1980s, I have always fantasized about owning a cash business and not having to rely on third party payers. The Medicare-driven DME business is now the most challenging with all of the reimbursement reductions, qualifying restrictions, never-ending audits and now competitive bidding. Rather than open a pizza parlor or a frozen yogurt stand, the retail HME business provides an opportunity to get away from third party payers and utilize my health-care and DME knowledge while really helping people. Having gone from the hospital to home infusion to Medicare DME, retail medical equipment sales is the next step in the health-care continuum.
Mike Kuller, RPh, is the owner of Allstar Medical Supply and author of The Next Step: Retail Home Medical Equipment. Learn more at www.retailhomemedical.com.
