Building a Business Niche by Niche

Jack Palance had it right. In the 1991 comedy “City Slickers,” Palance slowly leaned over to Billy Crystal and divulged his secret to life: one thing.

That may be the secret to business, too, at least for some providers.

In the wake of the Medicare Modernization Act (MMA), HME owners are scrambling to optimize business plans and stay on track for long-term success. According to some industry experts, a good option may well lie in one thing — expanding your business to solve the problems of a specific customer group. In other words, your future could be hiding in one or more of HME's niche markets.

Specialty — or niche — business has a seductive sound, especially as the respiratory and mobility markets, long the mainstays of home health care, are being tested by regulatory and payer entities. And, say the experts, diversifying a company's product/service mix can be a counter to expected reimbursement cuts and competitive bidding.

Jack Evans, president of Global Media Marketing, Malibu, Calif., urges providers to diversify in order to prepare for future cuts and to help relieve dependence on Medicare and Medicaid.

“Providers who have diversified and whose businesses consist of a third Medicare-Medicaid, a third private pay or worker's comp and a third in retail cash sales are the ones who are going to survive all these changes in Medicare and competitive bidding,” he explains. “So, I think you have to diversify, and part of diversifying is finding a niche.”

Wallace Weeks, president of The Weeks Group, a strategy consulting firm in Melbourne, Fla., says providers must consider their own visions and values and examine core competencies to determine whether they should expand into, or focus exclusively on, an HME specialty.

Both Evans and Weeks agree that specialty marketing adds value to HME companies. And both say providers can successfully add niche products and services to their core businesses — but not without careful research and preparation. A market niche must fill a true need, they say, or it won't remain a profitable niche for long. Providers should survey the local demographics, examine the competition and talk to referral sources about unmet needs.

“You have to find out what the medical needs are for your own community,” says Evans. “Don't assume there is not an available niche that has not been filled.”

What cannot be underestimated, says Weeks, is competitive intelligence, which allows a company to anticipate market changes and make proactive decisions.