Diluting Exposure

Several years ago providers began to consider ways they could remove the threat of being put out of business by Medicare’s actions, and lately there have been reports of some successes. Some companies succeeded by adding products that aren’t covered by Medicare, others by increasing the focus on landing contracts with other carriers. And some decided to stop serving Medicare beneficiaries altogether.

As time goes on, providers will (unlike those who have already acted voluntarily) be forced to make a choice to: grow non-Medicare revenue more quickly than Medicare revenue, thereby removing Medicare as a threat to profitability; become reliant on keeping Medicare revenue and managing the inherent risk; or eliminate Medicare cold-turkey and rightsize the company to remain profitable.

Regardless of the choice or the timing, there will be at least one common act among those who will succeed: They will all adjust their marketing efforts. But that is a strategic change and, therefore, one that adds risk. Adding risk should always be done with caution.

Making the adjustment(s) could require management to deal with as many as four different elements of marketing. If you will be adding or subtracting products, or changing the mix of products, you will have to work through the other three elements: the distribution channels, pricing and communications that are necessary to affect the change.

If you choose to change only the payer mix, you must consider distribution channels. For example, if you intend to add and grow retail sales, new channels might include a retail store, the Internet and affinity groups. When changing the payer mix, pricing must also be considered. The most basic consideration for pricing will be based on the business decision to be either a low-cost provider, the best overall solution or perhaps a niche marketer.

Without exception, all HME providers who choose to stay in business will, in time, be required to adjust their promotional effort. Promotion creates demand for products and services. Without demand, there are no sales or profits. Promotion includes advertising, public relations, personal selling, viral advertising (word of mouth), point-of-sale displays, corporate identity and any other form of communication between the provider and its referral sources and consumers.

Making the communications effective is dependent on a few principles. First, we know that we get only a matter of seconds to convince a person to hear about our products or services. So, the company should have a concise positioning statement and captivating graphics.

The positioning statement is a brief description of how the reader should think of and remember the company. For example, HomeCare magazine uses “For Business Leaders in Home Medical Equipment.” This statement should always be a reflection of the company strategy, which, at its core, should be developed around the answers to the questions “What problem do we solve?” and “Who do we solve it for?”

Communicate the benefits of products and services. The benefits are the problems that the provider solves. There may be a need to communicate benefits at different levels, such as for a specific product. If an oxygen concentrator is quiet, that is good, but that is a feature, not a benefit. The benefit to a quieter concentrator is the enjoyment of the sounds the patient wants to hear, i.e. birds, music and family.

The most powerful sales tool available to us is the emotion of a prospective buyer. People buy for two reasons: to solve a problem and to feel better. The decision to buy is an emotional one. Use words and graphics that make an emotional connection. Generally, graphics (pictures, logos, etc.) coupled with words can make the emotional connection much faster than words alone.

Finally, all communications — whether advertising, brochures, Web sites, personal selling or community involvement — should pass the test, “Is it asking for the business we want?” It is one thing to accept business that may be less than the most desired, but it is downright wrong to spend company resources that ask for less than desirable business. Ask for what you want.

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Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. You can reach him at 321/752-4514 or [email protected].