Diversifying Your Company's Product Mix

With reimbursement cuts mandated by the Medicare Modernization Act on the horizon, varying your company's payer sources should help to enhance revenue, but it should not be your only mode of change. At the same time, consider altering your product mix. In concert, making payer and product changes can create a renewed direction and focus for your HME business.

Evaluate Your Image

When thinking of your company today, what product and payer specialties come to mind? Is the answer what you want it to be, or do you need to modify your image?

Evaluate your company's position in the marketplace to determine if you are maximizing revenue opportunities. Some providers may find that it is best to remain focused on the core products for which they are well known rather than to reinvent their company's image. The time it takes to rebuild your corporate image may be too lengthy and costly, and you may already be typecast in your niche.

A pharmacist who has focused on diabetic supplies, for example, would not naturally add home-ventilator services and high-end respiratory products such as bi-levels. However, providing asthma equipment to a customer who already fills asthma prescriptions and over-the-counter needs at the pharmacy might be a more comfortable fit — and a first step to diversification.

Analyze your market position, and weigh the costs of change before completely overhauling your product selection.

Use Management Reports

A simple way to determine your new strategic direction is to study your company's trends via management reports. Begin the process by using reports that measure outcomes with such variables as revenue versus cash receipts, revenue versus costs and revenue by disease state. You may be surprised to find that you garner more revenue than you thought in certain areas.

There is no better way to detect latent revenue streams than to analyze data from these reports. To know how much respiratory business you currently have, for example, filter your revenue over the last six months by respiratory product codes (HCPCS codes). Further, look at your patients by diagnosis code to determine which diagnoses resonate most frequently.