4 Day Formula

When it comes to providing home medical equipment, it isn’t business as usual for Fridley, Minn.-based 4 Day Medical Store.

First off, take a look at the name (which is a registered trademark). Does that really mean the company is open only four days a week? And if so, how does that work with Medicare’s standards?

The answers are: yes, and it doesn’t.

For five years, industry veteran Gar Matson has done what most in the industry don’t believe can be done: He’s operated an HME company without relying on Medicare or Medicaid. And, while he won’t release revenue figures for the privately owned company, Matson says it’s working out pretty well.

“If we hadn’t opened a second store [in Maplewood, Minn.], we would have been in fat city by now,” he says, noting that in growing from one to two stores, costs more than doubled. The investment in the second store set the company back a bit, “but we are rapidly getting to the OK point,” Matson says.

While it isn’t likely that the revenues are as high as in a traditional HME, neither are the costs —and there aren’t as many headaches, either. Matson has only two full-time and two part-time employees including himself, and he isn’t at all concerned about competitive bidding, the proposed oxygen cap, new Medicare standards or accreditation. And according to Matson, he has virtually no accounts receivable.

In an industry in which rules and regulations change as often as gasoline prices and a provider can wait for more than 80 days to get paid, that’s pretty attractive.

Inspiration in Arizona

If it weren’t for a tire company in Arizona, 4 Day Medical might never have existed.

Several years ago, Matson — who in the past had owned two full-service HME companies and sold them — was a vice president for another health care company. In that position, he traveled throughout the western part of the United States. On one trip to Arizona, he came upon the 4 Day Tire Store and learned the story of its evolution from a 16-hours-a-day, seven-days-a-week store to one that operated just four days a week.

It seems that the company hired a consultant to find out why it was losing money. The consultant discovered that 85 percent of the company’s business was done in four days. The costs to keep the business open on those other unproductive days were eating up the profits. So, the store scaled back its hours and days and became the 4 Day Tire Store.

A few years later, Matson was repping for a home care company in the upper Midwest. “As I was driving across South Dakota — and when you’re driving there you have a long time and a lot of miles to think — I said to myself, ‘Self, you’re too old for this.’ But I like the business and I like being in the business,” Matson recalls.

The tire company story sprang to mind. Why couldn’t that model work for home medical equipment, Matson wondered?

That was in June 2001. By October, he had opened a 1,200-square foot retail store in Fridley with hours of 9:30 a.m. to 5:30 p.m. Wednesday through Friday and 9:30 a.m. to 3 p.m. Saturday.

“I elected to be open on Saturday because none of my competitors at the time were open that day. They are now, but they weren’t then,” says Matson.

He also elected not to deal with Medicare. In 1990, Matson and several other investors had formed Transhealth, a full-service HME that had 65 employees when it was sold in 1994 to Apria. “About 30 percent of those employees were dedicated to collecting money, whether it be billing or intake or whatever,” says Matson.

“In this marketplace today, I would be willing to wager that every company has at least 20 to 30 percent [of its workforce] dedicated to collecting money. Well, that costs money.”

Like every other provider, Matson also knew Medicare was covering fewer and fewer products and cutting reimbursement on others. He decided to go the cash-and-carry route.

The business plan worked. Within six months of opening, Matson says, 4 Day was doing very well so he decided to open a second 1,200-square-foot store in Maplewood. At the same time, he agreed to lease the trademarked name to an affiliate store in St. Louis Park, Minn.

Within 18 months, 4 Day Medical had outgrown its original Fridley space and moved into a 2,500-square-foot building with an 1,800-square-foot showroom.

How It Works

The showrooms are filled with convenience HME. “Ninety percent of the [items] we sell aren’t covered,” Matson says.

“Insurance doesn’t pay for aids to daily living or a transport chair so it’s easier for a 70-year-old woman to take her 90-year-old mother to the doctor. Those kinds of things aren’t covered. Most insurance companies don’t pay for incontinence products. So that’s what we focus on — the convenience items. Nothing we sell is life support. We do ADLs, lift chairs, wheelchairs, scooters, rollators.”

In summer, you’ll find between eight and 10 lift chairs on the showroom floor, Matson says. But by winter, when more people are inclined to seek out the warm, comfy chairs, the number swells to about 14. There are always a couple of power wheelchairs on the floor and one of every style of manual wheelchair 4 Day Medical carries. There’s even a hospital bed.

All the products are discounted, Matson says. “Our motto is, ‘We are open four days a week to save you money.’ Everything on the floor is discounted from the suggested retail price, and everything is marked.

“We pride ourselves on customer service,” Matson continues. “That can get kind of interesting when you only have one person on the showroom floor and five or six customers!”

About 75 percent of 4 Day Medical’s customers are retired, Matson says, and the rest are baby boomers looking for a product to help better their quality of life or that of their parents. Perhaps surprisingly, few customers ask about Medicare. Most are expecting to pay for the item themselves and are looking for a good price, Matson says.

“I’m sure there are people who walk in with a prior authorization for a scooter, and we may lose those customers. Price isn’t an issue to those people. And a lot of times insurance covers products for those people who have a disease working, like [multiple sclerosis] or neurological diseases. We lose those customers.

“But on the other side, I don’t have to pay whatever billing people are making and whatever costs they incur. So it’s a trade off. Are we going to lose some business? Yes. But our costs are lower and I have very low accounts receivable. And our customer is not the person who is really ill; they just want a better quality of life.”

Discounting also is a key component to 4 Day Medical’s success, Matson says. He has plenty of competition; within an eight-mile radius of his Fridley store, there are four traditional HME companies. And then, of course, there’s the Internet.

It’s not unusual for a customer to come in with a quote for a product he or she has spied on the Internet. Matson is willing to work with his customers on pricing and, sometimes, he says, he can match or even beat the price.

“I don’t have to make a million dollars off every item I sell. I’d rather make 25 percent on something than 100 percent on nothing,” Matson says.

“You have to be competitive and you have to be able to work with the individual. I personally believe that every employee has a box to work within and they need to know the rules of the box. And those rules should be lenient enough that some guy is not going to walk out the door because you can’t cut $10 off a $1,500 item.”

Marketing Maneuvers

In his type of HME business, it’s all about retailing. And Matson says that didn’t come naturally. “I needed a lot of help with retail,” he says. Early on, he worked with an advertising agency to find out the best way to get word out to the public about 4 Day Medical. The answer was not salespeople.

“We have one part-time, elderly lady who calls on assisted-living facilities and senior high rises to pass out information about the store,” Matson says.

“We don’t call on doctors’ offices because people who go to doctors’ offices are sick. And insurance takes care of sick people.”

Instead, he advertises on cable TV and in newspapers, and he’s tried radio. The company also has a Web site, www.4daymedicalstore.com. “We put prices in our ads,” Matson says, “and they are at least 20 percent off the [manufacturer’s suggested retail price].”

4 Day also advertises the fact that the company services products on the premises and offers free loaners. Matson and his son Scott, who manages the Maplewood store and handles deliveries, do any repairs on lift chairs and scooters. “If a scooter breaks down, they bring it in and we give them a free loaner and repair the scooter,” Matson says. They also install lifts for scooters and wheelchairs.

4 Day doesn’t handle respiratory at all. Still, customers sometimes ask for continuous positive airway pressure supplies. Matson refers them to another company, he says.

All in all, Matson allows, it’s a most satisfactory business for him and for his customers. Occasionally, he says, he’ll get a complaint from someone about not being open on Monday. “But nothing we sell is life support,” he repeats. “And we are open by appointment.”

Then too, since he comes in on Mondays to take care of paperwork, pay bills and order items purchased on Saturday, he’s been known to open up for someone knocking on the door.

Matson knows his business model wouldn’t work for everyone. “But I think it would be great for a mom and pop or to have four, one in each quadrant of a city. I think there are a lot of markets this would work in — and some it wouldn’t work in, too.”

Whatever model an HME provider follows, Matson says, “you have to have efficiency in operations, you have to have a business plan — and follow it — and you have to pay attention to the rules so you can keep ahead of it.

“No one says you have to be the biggest, but you should be the best.”

Company Snapshot

4 Day Medical Store

• Based in Fridley, Minn.
• Two stores with retail showrooms and an affiliate store
• Non-Medicare HME specializing in “convenience” products such as lift chairs, wheelchairs, scooters, walkers and aids to daily living
• Two full-time and two part-time employees

Four Tips from 4 Day

In his three decades in the home medical equipment business, Gar Matson has learned some valuable business truths. Among them:

1. Have a well-thought-out business plan and follow it.
2. Whether you accept Medicare or not, “it’s harder to be the answer to everything for everyone,” Matson says. Do the thing you do best.
3. Know what your core business is and who your customers are, then market that core to them.
4. Acquaint yourself with the principles of retail. This will serve you especially well if you have a showroom.