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
to survive.
"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
business plan.
"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.
"Pride Mobility is already working with a different product to
help in this regard," reveals Wendy. "Invacare has also has
provided support and help. They know and we know that you can't
keep replacing thousand-dollar products once a month and only
getting a low amount of dollars for it. This policy is going to go
through in January 2011, so in the back of my mind I hope somebody
stops it. "We are not going to get out of mobility, but we can't
afford to do it the same way."
No Debt, Good Deals
Since the Jacksons are steadfast in their commitment never to
yield on personal customer service, they must save every possible
dollar through rentless efficiency that includes a Web-based
computer configuration linking all three stores. Factor in
accreditation from the Waterloo, Iowa-based Healthcare Quality
Association on Accreditation and the operation can only be
described as lean and mean.
"Small companies often take their money and run, but if you want
to build a company you have to constantly take that money and draw
it back into the business in the form of logical growth," adds
Dallas. "Whatever that takes, whether it is having more vans out on
the street, better computers or better product lines, you need to
grow and watch the bottom line to succeed."
As "cash-and-carry" business owners, Wendy and Dallas avoid debt
like the swine flu. They do not have loans out for anything, so
everything that comes in is paid for on the spot, or through a
typical 30- to 60-day payment plan. Avoiding the need to borrow
money to make payroll requires a keen eye on cash flow and living
within their means.
After a decade in the business, the Jackson's product line has
expanded beyond the main core of power wheelchairs and scooters to
include diabetic shoes, hospital beds, bathroom safety, ambulatory
aids, seat lift chairs, mastectomy and orthopedic supplies. A
beefed-up service department ensures that any customers who have
problems will find their way back to the store. When they do,
honesty is always the best policy.
"We have turned people away and told them that they only need
new wheels and not a new scooter," explains Dallas. "That honesty
goes a long way. If you sell things to people that they don't need
or want, a bad reputation will spread."
Staying away from problematic equipment categories has, in some
ways, been just as advantageous as expanding product selection.
Wendy's time as a nurse familiarized her with DME such as lift
chairs and power chairs, but she knew little of the ins-and-outs of
oxygen. Plenty of vendors and referral sources urged the Jacksons
to get into the oxygen business. When they started researching the
prospect in earnest, Medicare implemented the 36-month oxygen
cap.
The cap, combined with other complications, ultimately caused
the Jacksons to stay away. "There is money to be made, but you need
to have 24-hour on-call people," laments Wendy. "It just didn't
feel right. We also had good companies locally that were doing
oxygen. We also have relationships with Apria and Lincare. Those
national chains don't want to do the beds and DME, so they refer
those patients to us. A lot of companies that deal with oxygen also
happen to sell some DME. We are all DME, and we don't sell O2.
Nobody can compete with us in DME service."
At first, referral sources were reluctant to send patients to
two different places, preferring instead a one-stop shop for DME
and oxygen. Thanks to some diligent relationship-building, nurses
now see the value of splitting the orders, preferring to send
patients to the personal care offered by Jackson Medical Supply.
"People fight to get us now because they want that personal
service," muses Dallas. "That tells me we are doing the right
things."
Emphasis on Service
Since 2001, the original Vacaville incarnation of Jackson
Medical Supply has flourished as a retail-rich sales environment.
In late 2003, the Jacksons opened their second store, selecting a
site in the city of Woodland, 35 miles to the northeast. In 2005,
their third location — 25 miles southwest in Vallejo —
opened its doors.
The two branches closely mimic the flagship in terms of layout
and ambiance. The Vallejo store, at 3,500 square feet, is the
largest, while Woodland is the coziest at 2,500 square feet. All
three stores devote roughly 60 to 70 percent of floor space to
retailing.
"We try to keep the store set up in a way that facilitates
traffic flow from front to back, yet still making customers feel
they can freely walk around and take a good look," says Wendy. "In
each store, toward the back, we have secluded space for
incontinence products. This space is defined by shelving and
dividers, which make the area clearly separate, but without closing
it off."
Efficiency, lack of debt, and astute product selection all add
up, but devotion to the "cow town" of Vacaville has made the
Jacksons familiar and trusted business leaders. Networking among
all three local chambers of commerce in which they do business has
made referrals common. Dallas is president of the local Rotary
Club, and Wendy is a board member of the California Small Business
Association and the downtown Vacaville business improvement
district.
Even with all that exposure, the Jacksons do not neglect
marketing, choosing to spend money last year on television
advertising, opting to go one month on and one month off to cover
their three different municipalities. "We had three or four
different styles of commercials," says Wendy. "One was to educate
about our mobility systems and the second to tout our overall
capabilities. The third advertised our commitment to service, and
the fourth described our ability to solve problems. The ads were
all capped with a message to buy local."
As employers in the community with annual revenues topping $1
million, the Jacksons foster loyalty among their 14 employees with
sound medical benefits, 401(k) plans and bonuses. When it came time
to find help with documentation requirements and marketing efforts,
they did not hesitate to hire a mobility product specialist. Now
this college-educated woman is helping the Jacksons bring in sales
for big-ticket items such as PWCs and scooters.
"We believe you must have somebody who actually goes out and
beats the bushes and takes responsibility," says Dallas. "It is
complicated now, and someone must follow up on procedures with the
doctor, make sure the paperwork is exactly right and ensure the
doctor knows what he really needs to do — and patients know
what they need to do."
The mobility specialist acts as a personal contact that goes to
the doctor's office to collect the paperwork/prescriptions, and
meets with patients to be sure they qualify and really do need a
power wheelchair. "She will also do the home evaluation," explains
Wendy. "These are all functions that we performed since we opened,
but I was doing it and I just could not keep up with the
volume."
Homage to Ace
Paying homage to Ace Hardware is one of the overriding goals of
Jackson Medical Supply. Like the famous chain, the Jacksons greet
every customer who walks in the door. "The other thing about Ace
Hardware is they have everything from the smallest little spring to
parts that can go into exhaust fans," says Dallas. "We mimic that
philosophy with a whole depth of products we are able to sell."
Despite the focus on over-the-counter sales, impulse buying is
not emphasized at Jackson Medical Supply stores. "We promote what
we call 'consultative sales,'" says Dallas. "We see middle-aged
couples who have never been in a store like this and are usually
here because a parent is going through health problems. They need
someone to hold their hand. That's what consultative sales is all
about. It's not about hard-selling or going for the impulse
buy."
It's true that slightly lower prices can be found elsewhere in
the area, but Jackson Medical Supply usually comes close to
duplicating them. And, sometimes — when vendors offer special
pricing — the company beats its higher-volume
competitors.
In each store, inventory is maintained at low levels. The
Jacksons opt for just-in-time replenishment because it minimizes
the amount of capital tied up in stock. "We never want to be stuck
with a large quantity of items that become obsolete," says
Dallas.
Reliance on this technique does not appear to stifle the ability
to obtain price breaks from its vendors. "With just-in-time, you
speak with suppliers a lot, which allows you to nourish more
productive relationships than would be the case if you just ordered
from them once or twice a year," says Dallas.
