Cape Medical’s Sheehan: We’re Not Standing Around Waiting on More Cuts

SANDWICH, Mass. — Even as many HME providers are hunkering
down and hoping merely to survive the storm of change sweeping the
industry, 33-year-old Cape Medical Supply announced this week it is
opening a 5,000-sq. ft. distribution and patient service center in
Canton, Mass.

The leased facility, the full-line company’s fourth location, is
situated near several major interstates and extends its reach from
Cape Cod to Boston and eastern and central Massachusetts. Cape
Medical currently has retail locations in Sandwich (headquarters),
Falmouth and Hyannis.

“Our strategic plan has called for pretty aggressive growth,”
said Gary Sheehan, CEO. “We saw a competitive opportunity. We’ve
been seeing continuing consolidation, and it’s really incumbent
upon forward-thinking providers to get their houses in order where
they can really accommodate their customers in a meaningful
way.”

Sheehan said Cape Medical has had to turn down customers from
the Boston area because it didn’t want to shortchange the services
it offers to Cape Cod clients. But with competitive bidding coming to
Boston in 2013 when Round 2 is implemented (it will be bid next
year), Cape Medical wanted to make sure it was a major player in
the market.

“We are positioning ourselves to participate aggressively in the
next round and we look at this as an opportunity to grow,” Sheehan
said.

Cape Medical has already hired a sales representative —
one of four full-time employees in the Canton location — to
get the word out to hospices, physicians and hospitals, some of
whom are already familiar with the company’s services.

“This is nothing but good news for [our referral sources],”
Sheehan said. “Our current relationships confined us to, ‘If you
have a patient from Cape Cod who needs something [on the Cape],
please call us.’ Now, we can go to them and say, ‘We can take care
of all your people.’”

Expected to be fully operational by Oct. 1, the Canton location
will include two CPAP fitting rooms, 1,500 square feet of
administrative area and 3,000 square feet of warehouse space, but
no retail, Sheehan said. The other three locations have retail
space, and “I think we are pretty satisfied with the retail now,”
he said. Core back office functions such as customer service,
billing and reimbursement and management will continue to be housed
in the Sandwich location.

Elsewhere in the business, Sheehan said he and his team have
created considerable efficiencies in order to shave costs. But
those efficiencies have not meant cutting service. To do so, he
said, would play into Congress’ thinking that HME companies do not
provide service — and it also would send referral sources to
other companies.

“Referral sources are still going to have a choice,” he said,
“and as payers insert themselves more and more, there is a
qualitative advantage between company A and company B. We feel we
would have the qualitative advantage with our referral sources.

“In that environment,” he continued, “you can’t be the company
cutting services. If you don’t have the fortitude to go back into
the company to see how to run it better and more profitably, then
you shouldn’t be in the business.”

While Sheehan doesn’t like competitive bidding or other industry
challenges any better than anyone else, he thinks it is better to
look at the possibilities rather than the problems. “It’s the hand
we’ve been dealt,” he said.

At a time when many HME companies are struggling just to stay
alive, Sheehan said he anticipates growing his $5 million annual
revenue with the new location regardless of competitive
bidding.

“There’s a lot of business out there, but if you’re standing
still and waiting for the next cut to come, if you’re not expanding
or you’re cutting your marketing budget, if that’s your strategy,
then you’re not going to be around too much longer,” Sheehan
said.

“We are moving forward very aggressively. We are not standing
still waiting for the government to take some more [money
away].”

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