The much-hyped promise of the baby boom generation is by now ingrained into the national consciousness. Home care providers and health care clinicians of every stripe agree that demand will grow for at least the next couple of decades. With competitive bidding complicating the outlook for so many major product categories, the focus inevitably shifts to the diversification offered by cash-based aids to daily living (ADL) products.
In addition to the natural effects of aging, elective surgeries are driving the need for ADLs. According to most estimates, orthopedic surgeons perform about 200,000 hip replacements every year in the United States. For total knee replacements (arthroplasty), the number hovers right around the half-million mark. Even with CMS watching every dollar, those numbers will probably go up even more thanks to recent research that demonstrates considerable bang for the buck in joint replacements.
The June 2009 issue of Archives of Internal Medicine featured a study that concluded knee arthroplasties were "cost effective across all patient risk groups." Essential Medical Supply feeds the knee/hip trend by offering kits that home care providers can sell to surgical patients who need extra help after post-surgical stints in rehabilitation facilities. The kits normally include five items: a reacher, sock aid, shoehorn, dressing stick and bathing sponge.
Boosting referrals in the ADL category depends on building solid relationships with the therapists who recommend these kits. Education is crucial, but offering new twists can spark the interest of veteran therapists. One such twist could be to offer customized kits tailor-made to therapists' favorites.
"Different rehab professionals will have different preferences," says Michael Hoepner, national sales manager for Essential Medical. "We offer custom hip kits, and our providers have been very successful with these. We do have prepackaged kits, but as long as a store is willing to place an order of at least 20 kits, we will customize it to a rehab center's needs."
With rehab facilities responsible for much of the ADL business, providers who are keenly tuned in to therapist needs will be the ones reaping the benefits. "Yes, the dollar figures are relatively small when compared to the Medicare reimbursable items in home care," adds Hoepner. "But if you get to the right referral sources, the volume you will generate can be tremendous."
According to Hoepner, increasing retail and ADL sales is "as easy as talking to patients about their daily lives." Learning the ailments and struggles of patients is a sure way to solve their problems and generate word of mouth.
Beyond attracting new customers, HME expert Miriam Lieber of Lieber Consulting believes the ideal place to start is with existing patients. Oxygen providers, for instance, can begin by checking their COPD patients to see what products they currently have, then suggesting items to help.
"[Some patients] don't even know what their needs are unless you help them, and that requires education and exposure," says Lieber. "There may be ancillary products that would make their life more comfortable, but providers think patients will be unwilling to pay. However, if you have a thousand patients and you can sell to 10 percent, that is better than nothing. Talk to existing referral sources and see what more they might need that you are not already providing. It is worth a try."
Caregivers and Consultative Sales
It's true that competitive bidding may yet be derailed, but as of now, "winning" Medicare providers in the first nine metropolitan areas affected by the program are staring at a 32 percent average cut in 2011. To minimize damage in the New Year, making up for lost income is high on the priority list. With raw consumer need as a major factor, the market for ADLs is an exceedingly bright spot in a sea of uncertainty — and for providers looking to shore up financial deficits, it could be a big help.
"In light of the losses from the bid categories, affected suppliers will almost certainly have to offset losses with ADLs," says Wayne Stanfield, a partner in Carolina Med-Plus and president and CEO of the National Association of Independent Medical Equipment Suppliers. "The ADL market is strong, but it could be a bigger portion of the revenue for most suppliers."
Stanfield points out that much of the ADL market is controlled by big-box retailers and chain drug stores, so capitalizing on the market depends on the ability to emphasize the value-added knowledge that only HME companies can offer.
In the case of items such as high-end canes, for example, providers can explain and even demonstrate the nuances that contribute to price differences. Nicholas Webb, a partner in a firm that manages the commercialization strategy for new market entrant Palo Medical, says the company's aPallo canes are a prime example of a product that requires the consultative approach for proper sales.
"Our product offers providers increased profit, because instead of selling a $7 cane, they are selling a $70 cane," says Webb. "It gives providers the ability to use the consultative expertise that consumers could not get at a Walgreens. DME providers do a wonderful job of explaining that this cane has a high intensity light to illuminate pathways and prevent falls in the middle of the night. The other benefit is the fact that the aPallo cane allows users to get up from a seated position. All of this requires the expertise of a dealer who understands mobility benefits."
Carrying a higher quality cane, says Webb, is one way for providers to demonstrate something unique to patients and caregivers who are often willing and able to afford the equipment. "Most of the canes, and a lot of the mobility assistive technologies, are purchased by caregivers," explains Webb. "Those caregivers, almost exclusively, live in a higher income demographic. Our strategy is to create something that's got a lot more value."
Todd A. Nelson, director of retail sales and business development at Mobilegs (Mobi), notes that consumers are looking for more from crutches. He believes people are more willing than ever to ponder new ideas for the venerable walking aid. From a design standpoint, the company's mobilegs and mobilegs Ultra feature soft saddles, saddle pivots, hand grips and universal rocker feet — all attributes that Nelson says provide the value that consumers want.
Matt McElduff, president of Carex Health Brands, agrees that opportunity and value go hand in hand with success in the ADLmarket. New takes on familiar items can spark the market and add extra interest during consultative sales. "Our best seller is the reacher," says McElduff. "We have one with a horizontal and vertical clasp for an easier time picking things up. Adding a locking feature and a swivel to the reacher adds even more benefits. We also recently upgraded our standard cushion to a memory foam that is higher quality."
Believing that customers will pay a little more is not a stretch when demographics and customary prices are taken into consideration. "A lot of times these purchases are made by a caregiver who is a woman in her 50s, who is taking care of a mother or a father," explains McElduff. "She wants something of high quality that will last a long time. ADLs are typically $5 to $50, so it usually pays to get a higher quality product."
There has always been a segment of HME providers who believe cheaper is better, but Jason Saint-Amant contends that mindset only works if providers wish to meet large chains on the same terms. Instead, he says providers should seek an elevated playing field.
"It's always been a challenge to convince some dealers that the lowest-priced items often accomplish very little in adding value to the customer's well being and to the dealer's business," says Saint-Amant, sales and marketing manager for HealthCraft Products. "In this industry, lowest price generally means fewer features, less functionality and, ultimately, less independence for consumers."
In the final analysis, success in ADLs depends largely on selection, Saint-Amant says. For example, HealthCraft sells grab bars that retail for under $30 and also offers the SuperPole with SuperBar that retails in the $250 range. "One grab bar will provide you support when stepping into the tub, and it has a low price," explains Saint-Amant. "One SuperPole with SuperBar is priced higher, but will allow you to get on and off the toilet, in and out of the tub, while also providing a centralized support bar for the entire bathing and toileting process — without ever having to drill one screw into the wall. Which of these two products will serve the customer better and position the dealer as the go-to place for ADLs?"
Since most serious falls happen in the bathroom, Saint-Amant believes the bath safety market is poised to grow by leaps and bounds. Unlike other products, however, some patients may rebel against the clinical aesthetics of some less-than-attractive products.
Fortunately, more manufacturers are heeding these concerns and keeping style in mind with newer designs. "Consumers are demanding that ADL products and bath safety items offer the same type of styling and visual appeal that you would find with any other household item," says Saint-Amant, pointing to HealthCraft's new Invisia Collection as the company's latest venture into "combining safety with style."
Battling the Big Box
With market pressures driving more providers to boost ADL cash sales, it's no stretch to assume that buyers at Walgreens and Walmart will be looking to do the same thing. Bradley Gale, president of Health Circle, a manufacturer and distributor, advises providers to battle the big boys with better service, better selection and inviting displays.
Health Circle offers bath safety items, among other things, and only a few of these pieces of equipment — such as a 3-in-1 commode — are Medicare-reimbursable. Most are cash items that generate interest with uncluttered displays. "A bathtub and a toilet helps people to see the products as they would appear in their homes," explains Gale. "And don't always go for the bottom of the market, because then you are just in a price game. Instead, offer a little better for someone who does not need the cheapest thing. A lot of people play the bottom of the market, but you should offer good, better and best if you have the floor space."
Promoting the business as a trusted care center, says Gale, can set home care providers apart. And just to be safe, he adds,"Whatever Walgreens is carrying, don't carry it."
If you do offer other value-added products, put simplicity first. "Displays tend to be too jumbled," cautions Gale. "Devote floor space to fewer products so people can adjust their eyes to what they are looking at. If it looks confusing, it is confusing."
For ADLs, occupational and physical therapists tend to be the best referral sources, so providers should let them know who and where they are. "Stock brands that pros know and trust because that gives them a level of confidence," adds Gale. "Determine what new needs you can cover down the line."
Consultants Offer Words of Wisdom
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Wallace Weeks, founder and president of the Weeks Group, Melbourne, Fla: "The biggest plus is that ADLs offer cash sale opportunities, and they can be merchandised similar to impulse items in retail locations of DMEPOS stores. The most challenging aspect arises when a provider wants to make them a significant or sole product category. The marketing is a pure B-to-C play, and that does not work in an organization that is accustomed to B-to-B, as most providers are. It requires a separate business model, and e-commerce should be a large part of that model."
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Louis Feuer, founder of Dynamic Seminars & Consulting, Sunrise, Fla.: "Each home care provider, in light of competitive bidding and/or whatever potential reimbursement cuts come our way, needs to look carefully at the full line of ADL products. They are products that reach out to the needs of a large consumer base, require little technical expertise and training, and are easy to store, deliver, and maintain — all while impacting the lives of so many. ADLs have extreme value for post-op patients, as well as the elderly. Their low cost and low revenue may be compensated by the vast need within the health care community and senior population.
"The challenge is developing a marketing plan for reaching out to the extensive consumer base. The marketing arena extends from assisted living facilities and private homes to public facilities. Providers must extend the reach of their business through educational programs, expanding the list of referral sources and reaching the not sick — rather than those who only care for people with a special diagnosis. Senior centers, health fairs, retail stores and expanded catalogues are just some of the locations and areas that needed to be targeted for spreading the message."
Experts Interviewed
- Bradley Gale, president, Health Circle, Rochester, N.Y.
- Michael Hoepner, national sales manager, Essential Medical Supply, Orlando, Fla.
- Miriam Lieber, president, Lieber Consulting, Sherman Oaks, Calif.
- Matt McElduff, president, Carex Health Brands, Sioux Falls, S.D.
- Todd A. Nelson, director of retail sales and business development, Mobilegs (Mobi), Minneapolis
- Jason Saint-Amant, sales and marketing manager, HealthCraft Products, Ottawa, Ontario
- Wayne Stanfield, partner, Carolina Med-Plus, Concord, N.C., and president and CEO, National Association of Independent Medical Equipment Suppliers, Halifax, Va.
- Nicholas Webb, president/CEO, Lassen Innovation (representing Palo Medical)
