Five HME Retail Mistakes

Let’s hear it for the status quo! I have been surprised that the majority of responses to my recent columns and articles have been so traditional. Whether HME owners are industry veterans or recent transplants, the majority that have responded are struggling to understand why their retail revenue has not become bigger and better. However, their business practices fail when compared to almost every HME benchmark Bruce Brothis and I have collected and documented for them throughout the years.

Non-Retail Location

“We are close to the major interstate even though our location is not that visible. We have been at this location for 20 years and would lose all of our patients if we moved. Everyone knows our location after 40 years, so we are putting up a large sign to attract retail customers.” These are the types of comments I hear about why HME business owners believe their current locations are the best, even though new customers cannot find them and they rarely have anyone shopping in their new retail showrooms. To have a successful retail showroom, your location must be highly visible and easily accessible. If your existing location does not fit this model, then open a second satellite location that will.

Insurance Staff as CSRs

“We have the most dedicated staff. Why should we change just because they are billers? Our insurance staff knows our patients, so they are the best to help them when they come in.” Different skill sets are needed for different jobs. Your billers might be the most knowledgeable staff and know your patients the best, but that does not mean they would automatically make the best retail salespeople. Hire salespeople to sell and reimbursement specialists to bill, and watch your retail sales grow monthly. Salespeople are natural “people” people and are great at greeting, talking and selling.

Infrequent Advertising

“We used to advertise but really didn’t have any effective plan. We advertise occasionally for holidays, but it doesn’t seem to make a difference.” The majority of traditional HME providers I know place one ad and give up after a mediocre response. What they don’t know is that statistically people do not even notice an ad before seeing it two to four times, and they do not respond before four to six or more times. Advertising is a long-term commitment, not a one-time effort. Whether you advertise in print, on radio or on TV—sign a contract to benefit from a lower rate and to begin, advertise weekly for one month in print or two weeks every month on radio or TV.

Target Hospital Referral Marketing

“We are finally just starting to get to know the discharge planning staff at our local hospital, so our retail will begin to take off soon. We are opening up near the medical center since that will be our major source of retail customers.” Different businesses have different respective referral sources. Retail HME providers do not always benefit from the same referral sources as do traditional reimbursement-driven HME businesses. Most of them target chain drug stores, independent living and assisted living centers, as these attract the same retail customer demographics: females 45 to 55 years old who are also family caregivers.

No Sales, No Profits!

“We only have 2-percent net, but our sales are growing every year. We are selling high volume but just don’t have much net profit annually. We have grossed $40,000 the past two years and will reach $60,000 this year.” Sorry, but these numbers are pathetic. We use benchmarks for a good reason: they give us a clear understanding the financial health of a business. Usually, retail HME providers break even by the end of their first year, grossing between $60,000 and $80,000 monthly. Sales will double the second year and grow at least 50 percent annually for the next few years. These retail operations usually net between 8 and 12 percent. If your numbers are much less, see above, because you are doing something wrong, i.e., bad location, wrong staff, no advertising or the wrong referral sources.