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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