All DME All the Time
Dallas Jackson and Wendy Wigmore Jackson, RN, know that
government reimbursement rarely goes up. Coupled with a relentless
commitment to personal service, that simple truth has guided the
husband-and-wife owners of Jackson Medical Supply, a three-store
HME operation on the eastern edge of Northern California's San
Francisco Bay area.
Predicting whims in Washington is never an easy task, but home
care providers who wish to stay ahead of the game must be nimble,
creative and patient. When grumblings about competitive bidding
grew louder, the Jacksons responded by adding to their base in
Vacaville with two additional stores (Woodland and Vallejo). The
new locations served patients in areas where the giant chains were
not doing the job, say the Jacksons, who distinguished themselves
with the mom-and-pop approach.
Back then, their dependence on Medicare hovered around 20
percent of overall revenues. Since that time, the number has crept
up to 30 percent. It's still low enough to offer peace of mind, but
Wendy acknowledges the figure is more than they would prefer.
So far, the long arm of competitive bidding has not ensnared the
Jacksons. However, Round 1 bid prices released in early July
average out to a 32 percent cut across the affected categories. The
couple agrees such a cut would greatly impact their business, but
even under such conditions they both believe they would find a way
"Currently, we do very little in scooters through Medicare,"
says Wendy. "If and when those prices went nationwide, we probably
would stop doing [power wheelchairs] through Medicare and only do
cash-basis chairs. The amount of work it takes to do a PWC for
Medicare is long, tedious and time-consuming. Unfortunately, the
customers in need of power mobility are the ones who are going to
suffer the most."
The problem is that competitive bidding is not the only concern.
Higher taxes amount to yet another cut in pay, and it's a variable
that Wendy and Dallas are already incorporating into their 2011
"You have to know your competitors and your marketplace, but you
always have to anticipate what government is going to throw at
you," says Dallas, who worked in Northern California's financial
district for many years before finding his true passion in the DME
world. "Government policies can knock the wind out of you if you
don't plan ahead. Next year taxes are going up 25 to 30 percent
because they are taking away some of the Bush tax advantages. Some
mom-and-pops are going to be taxed at the highest rates, because
even little companies make more than $250,000 a year."
For the Jacksons, most of the money eludes their pockets and
gets funneled right back into the business. "One of the keys of our
success is that right from the beginning pretty much all our
profits went back into our company," says Wendy. "We are always
upgrading things. We upgraded by buying two stores … along
with new computer systems."
When the 9.5 percent reimbursement cut hit the home care world
in January 2009, the Jacksons worked around it by increasing volume
and focusing more on walkers and hospital beds. The cut did inflict
some pain, but Wendy responded by negotiating vigorously with
vendors. "We are not the biggest company on the block," she says.
"But I play hardball, and in return we are loyal."
Elimination of the first-month purchase option for power
mobility is yet another obstacle that all mobility providers must
soon deal with. The new policy is causing the Jacksons to rethink
their inventory. "Your biggest concern is your capital outlay, and
it goes back to working with vendors," says Dallas. "Most of the
power chairs are lightweight, and they are good for inside, but
they are made from materials that are easily broken and scratched.
They have plastic parts. Someone can have one for two weeks and it
looks like six months, and under the new rule we will have to
replace the parts."
The Jacksons are looking to carry sturdier models that can take
everyday abuse and hold up over a long period.
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