As HME providers wait patiently for the baby boom flood, they must also contend with others who all want a piece of the orthopedic soft goods action.
by Greg Thompson

Universally acknowledged, hyped and anticipated, the demographic
group known as the baby boomers is out there, and sellers of
orthopedic soft goods are eagerly awaiting their arrival. If you
happen to be in fitness-conscious Southern California, odds are
good that you will have to wait even longer. Provider Miriam Tenne,
co-owner of South Bay Home Health Care, has 21 years in the HME
business, and she is still waiting.

The exact parameters vary, but most peg the boomer birth years
between 1946 and 1964, putting the oldest at 63 years old. While
Tenne may be able to spot this age group taking strolls at nearby
Redondo Beach, she says it's not often she sees them walk into her
Torrance, Calif.-based shop looking for knee braces.

“I do not see the baby boomers just yet,” says
Tenne, who owns the business with her husband Joseph. “I
think boomers will really start to hit the market in about 10
years. A lot of my customers are 70 years old and up. And I see
more and more older customers who are 95 years old and driving to
the store. They need a knee support or a cane, and they ask for it
with a smile.”

However, as orthopedists gently encourage knee replacements at
increasingly younger ages, it may not take that long for the
post-surgery business to surge. After all, some 500,000 total knee
replacements are performed each year in the United States according
to a recent Reuters report, and that number is expected to multiply
because of the aging and overweight population. With a general
diagnosis of osteoarthritis, older patients are succumbing to
reduced cartilage that can lead to painful conditions.

Barbara Mauss, CPed, COF, sales manager for Swede-O, North
Branch, Minn., agrees that boomers are the undeniable market driver
for the long-term growth of the soft goods industry. However, she
warns that intense competition from chain stores and changing
reimbursement will force home care providers to innovate, change
their business model and incorporate more cash products.

“I have been in the health care industry for more than 20
years, and we have seen this over and over again,” says
Mauss, speaking from her office in Long Island, N.Y. “Certain
things that used to be reimbursable are no longer paid for, or are
reduced to low levels. However, cash is now, and it
immediately helps the entire business flow.”

Referrals Getting Tougher

Tenne agrees that active older adults will likely yield more
injuries and drive the market for braces, but exercise also
strengthens limbs, which may ultimately postpone the deluge. When
the flood hits, home care providers may not necessarily be in line
to reap the benefits. Self-dispensing orthopedists are already
standing in the way, some providers say.

South Bay does a solid business in soft goods, but lately not as
much as Tenne would like. She blames the less than robust activity,
particularly in the knee brace realm, on orthopedic doctors who
conveniently prescribe, then dispense, their wares.

“We do get referrals from doctors who send us patients who
need a wrist brace for $25, but the expensive goods — such as
the big knee braces — the orthopedic doctors will keep those
in their clinic, and they will dispense them to patients,”
laments Tenne. “And then they will bill Medicare or
insurance.

“This is the practice of every orthopedic doctor in our
area … If we try to interest physicians in back braces or
gain referrals for items that are more lucrative, they say,
‘We dispense it here where we measure the
customer.’” Tenne can't count on the orthopedists, but
says she still sees referrals from general physicians who refuse to
send patients to the drug chains.

Whether the patient arrives by referral or simply comes from off
the street, providers can actively battle the chains through
service, knowledge and personal attention.

“When you go to a chain drugstore, they may have many
kinds of braces, but they do not have the knowledge or the
manpower,” says Tenne.

For HME providers who are unable to compete on price, service
and customization are powerful draws. Emphasizing quality is yet
another smart tactic.

“HME providers have the opportunity to go to some of the
manufacturers or sales importers and get a better quality
product,” says Gerry Detty, president of Pro Orthopedic
Devices, Tucson, Ariz. “It might possibly be a bit more
expensive, but it will be a much more functional product. In the
long term, patients will be much happier with it.”

Swede-O's Mauss notes, “A few of our products are
customizable, and need a provider to make those changes.”

In fact, medically-focused carriers have a legitimate shot at
doing well with referrals, and in attracting customers who are
looking for genuine expertise, manufacturers say. Custom supports
for the geriatric and obese populations are ideal because
off-the-shelf sizing rarely fits this population. HME providers can
order custom fabrication products that will actually fit the
patient and function the way they are supposed to.

“They give us the measurements, and in eight hours we have
it fabricated and back out the door for delivery,” says
Detty. “Oftentimes, the additional benefit of this is that
the custom-fabricated items are reimbursable by insurance, whereas
off-the-shelf items are not.”

Mauss says for providers who wish to bundle small-ticket
purchases with other items, excellent deals can be struck with
distributors to reduce shipping and delivery costs.

With large chains typically out of the loop on many of the
latest innovations, scouring the market for new products can also
be a good tactic for HME providers. Pro Orthopedic Devices will
soon unveil several patented wraparound supports specifically
geared to the geriatric market, Detty says. The idea is that the
wraps will be easier to put on and take off than the traditional
pull-off sleeve.

Co-opting the so-called “green” environmental
movement is yet another way to attract customers, although the
technology may still be too expensive to realistically penetrate
the market. “We have been working for a while with a neoprene
manufacturer that is environmentally friendly,” muses
Detty.

“There is no petroleum used and there is less energy used
in production.” However, he says, “There is an extra
cost that goes along with this, and we have been reluctant to jump
into that wholeheartedly, because I don't think the market will
bear the added pricing that comes along with that.”

Faith in the Future

Whether they have arrived or not, it is clear that many
providers are looking for the baby boom influx. Despite difficult
economic times, boomers have the money and desire to stay
active.

“I do believe the hype of the baby boomers,” says
Brandon McFerren, area manager for provider Petersen Medical, Orem,
Utah. “I don't know that I've seen an actual spike, but we
have certainly experienced success despite some other harsh
industry situations. We have been able to maintain growth, and we
are trying to increase our numbers. I think there is opportunity
for growth in soft goods, and we are definitely trying to tap into
that and be prepared.”

Petersen's list of top retail sellers includes merchandise both
big and small. The six-shop Utah enterprise stocks everything from
respiratory, mobility and lifts to compression therapy, knee braces
and bath safety items.

McFerren agrees that going with the “cheap stuff” is
no way for independent shops to thrive. “For example,
neoprene has its pluses and minuses, but the higher-quality
neoprene products that we have come across have a better
marketability,” he says. “The lesser quality is
uncomfortable, gets hot, but the higher quality tends to breathe
better. And it gives customers a more free and natural
feel.”

Building trust, word of mouth and loyalty to the independent
store is something that McFerren attempts to spread throughout the
six localities of Petersen Medical. “My personal philosophy,
and something that we have really worked hard on, is that we
provide a customer service that a big chain just can't
provide,” stresses McFerren.

“I think that is an effective way to compete, because we
certainly can't compete on price and buying power. Work closely
with physicians because you rely on them, and they rely on you.
They expect their patients to be taken care of, and we do just
that. HMEs are also usually better set up to bill Medicare, and
that is yet another niche that chain stores cannot necessarily
top.”

Alec Palmer, national sales manager for Bilt-Rite
Orthopedics/Mastex Industries, points out that Medicare and
Medicaid no longer pay for elastic bracing (as of April 2009)
unless the devices have rigid panels. As a result, he and other
manufacturers have responded with changes in the production
process. “We have to do it to help everyone get paid,”
says Palmer.

Palmer thinks the new processes are worth the effort because he
believes growth will be nothing short of phenomenal.

“Potential is good because of the baby boomers, and with
more people retiring, there are increased needs for
orthopedics,” says Palmer. “Buying direct from the
company … is one way to make yourself more competitive. If
somebody needs a volume price and comes to us, we can provide a
discount and better pricing. If someone does not need a lot of
volume, a distributor may be the way to go.”

Ultimately, HME providers who make a strong awareness push can
likely overcome competition. In the case of orthotics and
prosthetics, there may be some conflict since both entities may lay
claim as the best source.

“Physicians are typically in a medical complex, and that
is where an O&P shop usually is, so physicians think that is
where they should send patients,” says Detty. “But HME
people should really advertise and state their case, because older
people are going to the HME providers.

“If we have people calling … we are sending that
older person to the HME store to find the compression stockings and
specialty shoes they need. Orthopedic soft goods fit in with those
other items of everyday living, and they make for a more
well-rounded offering to attract people to the HME
store.”

Experts Interviewed

Gerry Detty, president, Pro Orthopedic Devices, Tucson, Ariz.;
Barbara Mauss, CPed, COF, sales manager, Swede-O, North Branch,
Minn.; Brandon McFerren, area manager, Petersen Medical, Orem,
Utah; Alec Palmer, national sales manager, Bilt-Rite
Orthopedics/Mastex Industries, Croydon, Pa.; and Miriam Tenne,
co-owner, South Bay Home Health Care, Torrance, Calif.