The Retail Connection In HME

Why sell HME retail? Just do the math. After 30 to 40 percent reimbursement cuts annually from Medicare for the past several years and with competitive bidding rolling out nationally, whatever profit margin you once enjoyed will be reduced by at least two-thirds.

In contrast, if you view every Medicare patient as a sales lead, then you will focus on meeting their complete home health care needs instead of billing only for their Medicare-reimbursable products.

Your patient's reimbursable item now represents your basic revenue, while the related, add-on products represent your increased profits from additional sales per customer.

Why Retail?

There are two components that both traditional DMEs and retail HMEs share.

The first is Medicare billing, as they must either outsource the billing or purchase billing software and hire qualified billers. The other is referral source marketing, because all HMEs must generate patient referrals by calling on their clinical referrals sources on a regular basis.

But one significant change in the home health care marketplace — our customer base — illustrates the difference in traditional and retail business.

Ten to 20 years ago, seniors were both our customers and the end-users. But today, they are primarily the end-users as they are older and less mobile. Our customers are now their adult children or other relatives who are their family caregivers.

This difference impacts our product selection and the ensuing growth of retail sales. Seniors are Medicare recipients who are accustomed to receiving their basic “entitlements” without any additional costs. They are focused only on meeting their medical necessities.

However, their adult children and/or family caregivers are more concerned about maintaining and improving their overall daily quality of life. They are willing to pay out-of-pocket for products and services that they think will better meet the health care needs of their loved ones.

The end result today is that to close sales in a retail HME store, you need to offer a complete product selection. This usually means at least two choices for every product: a basic option and then an upgrade.

In the big ticket categories such as lift chairs and scooters, this usually translates into numerous good/better/best product options. And by demonstrating the best product first and then working down to the basic option, retail salespeople are usually able to sell over half of their customers an upgraded model.