Making Retail a Reality

Imagine this scenario: The Centers for Medicare & Medicaid Services (CMS) announces that, due to the success (i.e. lower costs) of the mail order diabetes and CPAP programs, it is taking over the dispensing of all reimbursable HME/DME products directly to patients. Would I think this development meant the end of our industry? Quite the contrary—my feeling would be, what a great relief not to have to deal with Medicare anymore.

HME/DME retailers could now hang tags on upgrades of reimbursable products displaying photos of “their” products (i.e. Medicare’s junk) for comparison. On the back of each tag would be an explanation of how Medicare reimbursable products are shipped directly to the patient without any education, demonstration, setup or support. Retail HME salespeople could explain the value their store offers: “better and best” options and product demonstration, education, delivery and setup. They could also point to providing 24/7 support, recall and warranty work and a repair service. Traditional HMEs have never simply sold products at a certain price, but rather bundled service with all of their products. Service and education have always gone hand-in-hand with sales.

Within a few weeks of this imaginary announcement, stories would doubtless begin to appear in the news about an increasing number of accidents and possibly deaths among Medicare patients. AARP and other senior advocacy groups would call for a congressional investigation. After months of testimony and name-calling, the results would be obvious: seniors need support in utilizing HME properly in order to improve their quality of life.

Is Medicare a Medical Necessity?
Coming back to reality, I still feel the same way. Why settle for competitive bidding and audits when they bankrupt your business? Simply identify Medicare as a competitor and sell against them, as if they were another business trying to take over the marketplace. Selling against Medicare is actually easier than selling against an online vendor or mass merchandiser. For example, Medicare allows no choice in product selection. In contrast, HME retailers offer solution selling to match the end user with the best possible products and equipment for their medical condition.

Medicare does not provide any product training. HME retailers spend whatever time is necessary to ensure that the consumer understands the products and knows how to use them. Medicare will not maintain or fix any HME item. HME retailers offer warranty service as well as continuing maintenance and repair services. Medicare does not offer product support. HME retailers are available 24/7 to answer any questions a patient might have concerning the products and equipment they have bought.

Diversify Your Revenue Now
If you are still unsure how to cope with competitive bidding and audits, I suggest that you sell your business and move on. Or you can simply diversify. Many HME operations have left their traditional business location “as is” and begun opening retail-only locations.

These businesses occupy a much smaller footprint that can more affordably fit into a strip mall or busy retail shopping area. The entire space is utilized for showroom display with a customer service desk near the front, enabling salespeople to greet and service customers. Any insurance patients are redirected to the old location or connected with billers over the phone (the paperwork and product come from the accredited Part B location).

All traditional HME services are still offered via this original Part B location. All billers, warehouse staff and drivers work out of this location. These costs are therefore not duplicated in the retail locations, plus valuable retail floor space is not wasted on these activities. The retail HME is comprised of a showroom and one or more salespeople. You advertise on a continual basis, and your salespeople educate and sell your products.

The vast majority of the retail-only HMEs I have helped launch have not lost any customers because they were Medicare patients. Most adult children of seniors, Baby Boomers and family caregivers are happy to accept a cash discount—i.e. $50 or $100 off a lift chair or scooter—rather than contend with the hassle of insurance forms. Now that the competitive bidding reality has started to sink in, it’s become crystal clear: Retail really is the only way to go.