With tightened reimbursements, competitive bidding challenges and the additional regulatory issues that providers deal with, many in the home medical equipment industry are now finding it necessary to capitalize on new and growing revenue streams in order to stay competitive and healthy.
Here are five options for HME providers to consider. These alternatives can help you find new ways to care for patients while building your bottom line.
1. Partner with long-term care providers.
With your medical equipment expertise, you can help these organizations supply products to their customers and patients in an efficient way. Working with long-term care providers and supplying products to these types of businesses can open up entirely new opportunities for partnering in patient care.
2. Add retail sales.
The start-up costs of opening a storefront and stocking inventory for retail sale is likely high, but it could be cost-effective in the long run—given demand should continually increase as the population ages. Before jumping in, however, evaluate the demographics of your area. Consider the number of aged and aging people, and how they are currently being served by existing retail HME businesses. If the market seems viable and underserved, a retail storefront could be much more profitable than relying on third-party payers.
3. Sell online.
E-commerce-enabled websites can be a more affordable option than a retail storefront while offering many of the same financial rewards. However, instead of competing with local suppliers, online HME stores are competing with other online HME sellers everywhere, so providing value and standing out in the crowd can be a serious challenge. Many retail HME suppliers are “click and mortar” businesses, meaning they maintain both retail storefronts and e-commerce sites. But in today’s market, HME providers have to be flexible as our aging population more broadly embraces technology. Different age segments have different preferences for how they like to be contacted, how they want to pay, etc., so versatility is imperative.
4. Expand into parallel markets.
Many HME providers have diversified their offerings by adding home health services or even home infusion. While new markets can be profitable, there could be a learning curve that limits revenue at first. In addition, differences in regulatory requirements and resources needed to manage these different types of care, coupled with vastly different reimbursement rules, could make the prospect of starting new business lines daunting. Therefore, it makes sense for established HME providers to seek out other providers to partner with to provide comprehensive homecare services and products, rather than providing services on their own.
5. Focus on recurring supplies.
If you always wait for customers to order their recurring supplies, you will notice that many do not order prior to exhausting their stock. You can provide a valuable service to your patients while also maximizing your reorder potential by utilizing an automated system to ensure that patients get supplies before they are in desperate need. This will help you to better manage your patients’ usage of supplies as well as your inventory, and will help control costs to improve profit.