Merlin Medical Supply

If you’ve ever wondered where the magic went in the home medical equipment world, look to Merlin Medical Supply in Camarillo, Calif. The 4,300 square-foot store situated in a shopping center some 60 miles northwest of Los Angeles is an eclectic combination: a full-line HME store and a magic shop.

It’s one example of an HME company that, despite the challenging reality of Medicare’s Competitive Bidding Program, rampant audits and plummeting reimbursement, continues to transition and move forward. “We need to be creatures of change,” says owner and President Paul Dwork.

Merlin is a company that’s constantly reinventing itself.

Changing the Past

Dwork learned about the importance of change early. He graduated from pharmacy school in 1975 and by 1977 had purchased Pepper Tree Pharmacy in Camarillo. “I figured I would have a wonderful time working in a small town that was growing,” he says wryly.

It didn’t work out that way. A chain pharmacy opened nearby two months later, and he lost 60 to 70 percent of his business in a matter of weeks. Dwork reassessed his business and the needs of the community and decided to add HME. “I built an area inside the pharmacy and I called it Rehab House,” he says, describing a space that featured a bedroom, bathroom, living room, kitchen and stairs. “This allowed patients to assess and evaluate their needs before they bought the equipment.”

Rehab House attracted the attention of other companies in the area, who began asking Dwork to assess and evaluate their patients. “I began servicing the public on a more intimate level, making sure they got the right advice,” he says. “My focus is the acute care needs of the patient.”

During the transition from a traditional pharmacy to a medical supply store, Dwork changed the name of the business to Merlin Medical Supply. If someone was prescribed a nebulizer, they would get medication from a dispensing pharmacy and Merlin supplied the equipment. “I’d supply the machine and then give them the consultation with the medication. I’d show them how to use the device and the medication and tell them what to expect.”

He later decided to drop oxygen and began focusing on high-end rehab. Merlin now specializes in rehab and has Rehabilitation Engineering and Assistive Technology Society of North America (RESNA)-certified employees, who are adept at fitting patients, programming chairs and fixing motorized chairs. “We can make modifications to patients’ lift chairs without requiring them to purchase a new piece of equipment. When someone trusts me with their equipment, I take it seriously. I never say no to anybody. When equipment breaks down, my goal is to repair it quickly. That’s their life, so you can’t say it is going to take three weeks to fix.”

When the mechanics of a customer’s lift chair failed, for example, Dwork tried to obtain parts from the manufacturer and was told they would cost $600 because the components were not available separately. So he redesigned a switch on the rehab chair at a cost of $1.50. “It will never break again,” he insists.

He’s alert to patient needs, and if there is no product on the market to help them, he invents one. Dwork created a special belt for hernia patients with additional complications when he discovered that belts available on the market were insufficient to their needs. He patented the GeeWhiz External Male Condom Catheter for men suffering from urinary incontinence. The latter earned the 2008 Medical Design Excellence Award and Medicare approval, as well as the Moving America Forward Award.

Dwork’s goal is to ensure patient satisfaction. “When people leave, they must be satisfied,” he says. “Good new spreads slowly, but bad word of mouth travels at lightning speed.”

Now he tries to be a one-stop shop by stocking a wide variety of items. The store is strong in accessibility aids such as ramps, stair lifts and walk-in bathtubs; urologicals; wound care; diabetic supplies and hearing, vision and orthopedic aids, in addition to HME. But you can also find a cane grip or a tracheostomy tray at Merlin. “I’m always looking for what people need,” Dwork says.

He believes that one of those things is a touch of magic. Dwork’s fascination with magic began in 1969, when he joined the U.S. Army and met a fellow recruit who was a magician. A longtime photographer, Dwork taught the magician photography, who taught him magic in return. He is now a member of Hollywood’s Magic Castle, the Brotherhood of Magicians and the Society of American Magicians. For years he’s held magic shows for adults and children, and he does at least one charity show annually, such as for hospice. It just seemed natural that he would carve out a corner of his store to feature supplies for magicians. “I call it my gift store,” he says. “It doesn’t pull in a significant amount of revenue, but I enjoy it.”

Changing the Future

Dwork has no doubt that Merlin will continue to evolve. There are too many changes occurring in the HME market for providers to remain the same, especially with the advent of competitive bidding. Merlin Medical Supply bid on CPAP, wheelchairs and diabetes products, but did not win any of the bids, a result that, in retrospect, does not bother Dwork. “I saw the bids that won, and the prices were just too low to allow providers to prosper. I think the government needs to take a step back and consider the harm competitive bidding will do by eliminating the small businesses that really care about people,” he explains.

Dwork believes that a better approach might involve Medicare looking to manufacturers to provide cost savings rather than slashing reimbursements to HME providers. “If you allow the manufacturers to contract directly with Medicare, you’ll see the price of goods going down so fast.”

Acknowledging that isn’t likely to happen, he’s looking closely at his own business plan. “My future looks good,” he says, adding that Merlin’s Medicare business totals about 28 percent of revenue with only 6 percent of that falling under competitive bidding. “I have a very positive outlook. I’ve already talked to my customers, who have promised to stay with me. I may have to modify my prices, but they’re willing to pay for the level of service we provide. I’m making changes today for what is going to happen tomorrow, but my belief is that I will be able to compete in this new landscape.”

Asked if he’d care to share any more of the tricks he has up his sleeve, Dwork says, “Magicians never reveal their secrets.”

Tricks of the Trade

Paul Dwork of Merlin Medical Supply in Camarillo, Calif., has developed a few tried-and-true strategies for success.

• Be a creature of change. Develop a business model that involves providing what the mass market can’t.
• Stay ahead of the curve by looking at product areas that are not driven by insurance companies, like products for people with macular degeneration.
• Never take the market for granted—stay involved and informed.
• Always listen to people, even when they are wrong. They are looking for an answer to a problem.

Learn more about Merlin Medical Supply and Paul Dwork at www.merlinmed.com, www.urinedevice.com and www.magicmagicmagic.com.