Since competitive bidding was introduced in 2013, reimbursement rates for HME retailers dropped by an average of 46 percent, according to recent data. Many providers could no longer depend on private insurance or Medicare and Medicaid to be their primary sources of revenue. Today, the most successful HME providers generate less than 40 percent of their sales dollars through the traditional reimbursement process. For these model organizations, the majority of revenue is earned at the point of sale in a retail outlet.
Smaller suppliers, hit hardest by competitive bidding, will find it most difficult to shift to a retail-based format. Most of these companies simply weren’t built to cultivate a positive buying experience for individual customers. They were designed for efficiency, distribution and reimbursement—warehouses instead of showrooms, basic, reimbursable merchandise instead of feature-rich products, and billing-oriented staff instead of customer-focused salespeople.
Altering an entire business model is difficult, but luckily HME providers have a lifeline: a market segment primed for HME shopping in a retail setting. This group, the baby boomers, are fiercely loyal and easily swayed by traditional advertising and helpful salespeople. They value an in-store shopping experience, and have more discretionary dollars to spend than any other age group. To ensure the survival and growth of their business, HME proprietors can tap into this market by establishing point-of-sale (POS) technologies that boost retail sales.
Facilitating a Pleasant Shopping Experience
Although they’re aging, baby boomers are young at heart and want to avoid looking or feeling old. This means they avoid standard gray reimbursable crutches, transport chairs and wheelchairs. Instead, they are willing to pay more for upgraded, colorful equipment that allows them to retain some individuality. By stocking these upsell items and displaying them prominently in your retail space, your HME business can cater to boomers and sell more products with higher margins.
Once customers have selected their equipment, the checkout process itself doesn’t have to be complicated. The software your company already uses for inventory management or workflow tracking could have built-in POS capabilities, most of which can process reimbursement and cash purchases within the same transaction. With these, there’s no need to purchase clunky cash registers or other bulky POS equipment.
By incorporating existing software, you will reduce the startup costs and employee training time that come with the purchase and implementation of a new POS system. An easy-to-use platform will streamline the buying process for baby boomers, which will cap a positive shopping experience and ensure they become repeat customers.
Protecting Your Business from Cash Mismanagement
The influx of cash into your business operations comes with inherent risks. Your employees will be handling more cash than ever before, which increases the likelihood of costly errors and fraud. Hiring trustworthy staff members and training them on proper cash handling protocols is the first step toward reducing these risks, but, as cash transactions become more common, the right quality controls are necessary to protect your business.
To reduce risks, some software solutions on the market allow you to monitor cash drawer discrepancies, implement managerial safeguards, and analyze cash transactions with audit details. Further, as you track each individual purchase, you will be able to identify the best and worst selling items in the retail and reimbursement arenas, and adjust your inventory accordingly.
The Digital Storefront
According to a report published by Synchrony Financial, baby boomers value the personal touch of traditional retail shopping but are also equally as comfortable as millennials with shopping online.
HME providers can build a simple online storefront through which their customers can add items to a shopping cart, pay with a credit card, and have their purchases delivered to them directly. If your organization publishes an e-newsletter, it could include special online only offers or a link to your website.
HME providers worried about competing with massive online giants that boast lower price points should remember the boomers’ brand loyalty. Just as baby boomers prefer smaller physical storefronts such as CVS and Walgreens to big-box retailers such as Walmart, they’ll favor an easy-to-navigate website to an online superstore. Even when faced with lower prices, they’re likely to stick to familiar brands with excellent customer service.
Location, Layout Drive Retail Sales
To optimize your retail space for cash sale maximization, deploy the techniques used by successful chain retailers in your area. A windowed storefront serves as a constant advertisement for your business, so make sure to change the display at least monthly, and it will continue to catch the eyes of passersby. Since the front third of your store will account for 80 percent of your sales, pack it with your most popular products.
If your operations are headquartered in a business park or industrial zone, consider opening an auxiliary retail storefront in a high traffic area, ideally near a drug store, hospital or medical center. Proximity to health-related businesses boosts the likelihood that their customers will also become yours.
If you choose to open a separate retail space, the entire operation doesn’t have to move. The showroom and retail space can be relocated to a high-traffic area while primary HME functions and staff can remain at a less expensive location.
When the idea of transitioning into primarily retail operations seems daunting and unfamiliar, take solace in the fact that a demographic exists with the resources and need to purchase high-margin products. If you can provide exciting, feature-rich products and create a comfortable environment for baby boomers to shop, they’ll reward you with brand loyalty.