For 54 years, Binson's Home Health Care Centers has been a staple of the Michigan home medical equipment community. But that doesn't mean it's stayed the same.
Indeed, says Ken Fasse, executive vice president and COO, “Our basic philosophy has been that if you are not growing, you are probably dying.”
Binson's is not dying. And in an industry beset by all manner of threats — competitive bidding, shrinking reimbursement and tightening red tape, to name but a few — it is not even embattled.
The reason? It appears to be a trio of strengths: diversification, reputation/longevity and being proactive when it comes to market changes. Like all HME companies, large or small, Binson's has felt the effects of declining product markets, competition from nationals and crippling legislative and regulatory mandates. But over the years, the company has discovered that some legendary adages are true.
“Don't put all your eggs in one basket”
From day one, Binson's was diversified. When pharmacist George Binson took over a drug store in 1953 in Center Line, Mich., population 10,000, it had a retail pharmacy and a soda fountain.
“Then, with the dawn of the beginning of the [HME] industry, we began to provide basic [durable medical equipment],” says Fasse.
The soda fountain gave way to canes, walkers and hospital beds. That was the beginning of Binson's retail HME segment, a division that has grown and prospered over the years. The company has expanded beyond basic HME to carry a full complement of products, including rehab, mastectomy, orthotics and diabetic supplies.
“We have 26 locations, and they are all retail-based,” says Fasse, noting that pharmacies are in only two of the locations. “That is one of the mantras, that all of our operations have a retail showroom and they are pretty dedicated to the retail side of the business.”
Each location has a “deep inventory” of products, according to Fasse, and the showrooms range from about 2,500 square feet to a formidable 16,000 square feet in the Southgate location. “We have a very large showroom in Center Line,” Fasse adds, noting that the main facility totals 64,000 square feet. “It's got every product line available, slat walls, carpets, it's set up very nicely. That's kind of the hub of the whole operation.”
Another thing Binson's has always had, Fasse says, is experienced staff to service its retail customers from both a clinical and a sales standpoint. Registered nurses, licensed pharmacists, credentialed therapists and various other specialists are all part of the 500 employees who make Binson's run.
While retail has required a significant investment, it has also generated a significant amount of revenue. Fasse estimates it pulls in about 18 percent of Binson's total annual sales. “It's grown every year for as long as I can remember. It grows about 5 to 15 percent a year,” says Fasse, who has been with the company for 29 years.
But the company's diversification extends beyond retail. In 1992, recognizing that large corporations such as those in the state's automotive industry were carving out networks to take on ancillary services like health care, Binson's created Northwood.
Today, Northwood is a manager of home care products and services, says Fasse, who is Northwood's president. “We currently manage about 2 million lives,” he says, noting that the organization has hundreds of HME companies around the country under contract. “We do benefit management, utilization management and we're a third-party administrator, so we process claims.”
Northwood's sister company, Northwood National Provider Network, was established to service General Motors employees, Fasse says. “We cover about 900,000 lives and we have a network of over 4,000 DME locations in the country. We administer that program.”
“Don't put off until tomorrow what you can do today”
It is likely that Binson's is successful because it is proactive. “Adjusting to changes in the market and being proactive and developing solutions” have been key to the company's success, Fasse believes.
He points to the company's joint ventures with hospitals. “In the mid-'80s, there was a joint-venture proliferation. Every hospital in our area was looking to create a joint venture with a DME company. So, instead of sitting back, we understood that these hospitals were looking to get into this business and we partnered with them,” Fasse says.
“We have a number of joint ventures with hospital systems,” he adds, reeling off the names of Bon Secours/Cottage Home Medical in Eastpointe; H-Care Hurley/Binson's in Flint, Davison and Saginaw; Crittenton Home Medical in Rochester; and CareLinc in Reed City, Grand Rapids, Lansing and Kentwood.
The company was also one of the first, if not the first, to service at-home ventilator patients, Fasse says. Recognizing that few HME companies were entering that field, Binson's worked at it until it became the largest home care ventilator company in the nation, Fasse says. But when the marketplace changed, being No. 1 wasn't enough. Binson's exited the ventilator business five years ago to concentrate on traditional HME.
Binson's was also one of the first HME companies to seek out accreditation. That was in 1989, Fasse says, and while it has changed accreditation companies over the years, it has seen to it that each of its locations maintains its accredited status.
Binson's penchant for proactive moves has extended into technology. As the Medicare and managed care portions of its business have become more complicated, the company has made costly investments in technology.
“We've established some systems to manage the whole business, especially the retail,” Fasse says, noting that the systems can perform margin management, track inventory and provide point-of-sale data and other key information.
“This has been invaluable to us,” Fasse says, adding that having such systems in place better positions Binson's to deal with changes in the industry because the company can forecast its inventory better, control its margins and take a more targeted approach in its marketing.
He knows that many companies worry about the cost of the new technology, as well as the time it will take to learn it. But it's worth it, he says, especially if a company is to compete successfully in the current HME climate. “You have to take the time [to install and learn new systems] and make the investment,” he says.
“A good name is better than precious ointment”
All of this wouldn't matter at all if Binson's didn't mind its reputation. For years, Binson's motto has been “Home care you can really trust.” It has hung on to that philosophy even as it is changing its motto to “Developing better products, better services, better lives.”
That idea goes out to customers through direct advertising campaigns. Fasse says Binson's advertises its services primarily through radio but also utilizes billboards and some TV spots to get its message of good service across.
“It's been very successful,” Fasse says of the company's advertising campaign. “But you've got to make the commitment financially and you've got to maintain that [advertising] consistency.”
The advertising campaigns have aided the company as it has opened new locations. “We want to bring immediate recognition,” Fasse explains.
The end result, he says, is that “we are recognized as a resource” not only by patients but by caregivers and others.
Will all this stand the company in good stead for the future? Fasse thinks so. “I think what we have done over time is going a long way in dealing with these new challenges,” he says. ”The fact that we are very diversified, we have a very strong retail component and we are streamlining some of the product lines and consolidating some of the purchase lines to drive down product costs [will pay off].”
While the company is not in one of the first metropolitan statistical areas for competitive bidding, Binson's does have “an operation and a platform that we are extending to in the South,” Fasse says, and that is in one of the top 10 MSAs. He adds that Binson's will likely bid in at least one product category.
Whatever happens with the bid, Fasse does not fear the future. “I think regardless of what happens with competitive bidding, [the HME industry] is going to continue to be the most cost-effective mode for health care, and there is going to be a continued demand for our services …
“It's going to be difficult in the short run, but I think the future is going to be bright for those that can withstand the current challenges.”
5 Tips for Success
If you're feeling overwhelmed with all that's happening in the home medical equipment industry and wondering if there is any way to save your business, here, courtesy of Ken Fasse, executive vice president and COO of Binson's, are five things you can start doing right now that will make a difference.
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Manage your margins. Know your product costs and know your product cost by payer. If you don't have a system for doing that, get one.
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Find operational efficiencies wherever you can — in distribution, order intake, etc.
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Control labor costs. Remember that the most profitable companies keep their labor costs under 30 percent of sales.
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Learn everything you can about competitive bidding so you can be prepared. Don't wait until you are in a bidding area. And make sure you understand the contract award process.
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Don't take any referral source for granted and don't assume they know everything your company does. Maintain a continuous contact with all referral sources and make sure they know what your products and services are.
