Universally acknowledged, hyped and anticipated, the demographic group known as the baby boomers is out there, and sellers of orthopedic soft goods are eagerly awaiting their arrival. If you happen to be in fitness-conscious Southern California, odds are good that you will have to wait even longer. Provider Miriam Tenne, co-owner of South Bay Home Health Care, has 21 years in the HME business, and she is still waiting.
The exact parameters vary, but most peg the boomer birth years between 1946 and 1964, putting the oldest at 63 years old. While Tenne may be able to spot this age group taking strolls at nearby Redondo Beach, she says it's not often she sees them walk into her Torrance, Calif.-based shop looking for knee braces.
“I do not see the baby boomers just yet,” says Tenne, who owns the business with her husband Joseph. “I think boomers will really start to hit the market in about 10 years. A lot of my customers are 70 years old and up. And I see more and more older customers who are 95 years old and driving to the store. They need a knee support or a cane, and they ask for it with a smile.”
However, as orthopedists gently encourage knee replacements at increasingly younger ages, it may not take that long for the post-surgery business to surge. After all, some 500,000 total knee replacements are performed each year in the United States according to a recent Reuters report, and that number is expected to multiply because of the aging and overweight population. With a general diagnosis of osteoarthritis, older patients are succumbing to reduced cartilage that can lead to painful conditions.
Barbara Mauss, CPed, COF, sales manager for Swede-O, North Branch, Minn., agrees that boomers are the undeniable market driver for the long-term growth of the soft goods industry. However, she warns that intense competition from chain stores and changing reimbursement will force home care providers to innovate, change their business model and incorporate more cash products.
“I have been in the health care industry for more than 20 years, and we have seen this over and over again,” says Mauss, speaking from her office in Long Island, N.Y. “Certain things that used to be reimbursable are no longer paid for, or are reduced to low levels. However, cash is now, and it immediately helps the entire business flow.”
Referrals Getting Tougher
Tenne agrees that active older adults will likely yield more injuries and drive the market for braces, but exercise also strengthens limbs, which may ultimately postpone the deluge. When the flood hits, home care providers may not necessarily be in line to reap the benefits. Self-dispensing orthopedists are already standing in the way, some providers say.
South Bay does a solid business in soft goods, but lately not as much as Tenne would like. She blames the less than robust activity, particularly in the knee brace realm, on orthopedic doctors who conveniently prescribe, then dispense, their wares.
“We do get referrals from doctors who send us patients who need a wrist brace for $25, but the expensive goods — such as the big knee braces — the orthopedic doctors will keep those in their clinic, and they will dispense them to patients,” laments Tenne. “And then they will bill Medicare or insurance.
“This is the practice of every orthopedic doctor in our area … If we try to interest physicians in back braces or gain referrals for items that are more lucrative, they say, ‘We dispense it here where we measure the customer.’” Tenne can't count on the orthopedists, but says she still sees referrals from general physicians who refuse to send patients to the drug chains.
Whether the patient arrives by referral or simply comes from off the street, providers can actively battle the chains through service, knowledge and personal attention.
“When you go to a chain drugstore, they may have many kinds of braces, but they do not have the knowledge or the manpower,” says Tenne.
For HME providers who are unable to compete on price, service and customization are powerful draws. Emphasizing quality is yet another smart tactic.
“HME providers have the opportunity to go to some of the manufacturers or sales importers and get a better quality product,” says Gerry Detty, president of Pro Orthopedic Devices, Tucson, Ariz. “It might possibly be a bit more expensive, but it will be a much more functional product. In the long term, patients will be much happier with it.”
Swede-O's Mauss notes, “A few of our products are customizable, and need a provider to make those changes.”
In fact, medically-focused carriers have a legitimate shot at doing well with referrals, and in attracting customers who are looking for genuine expertise, manufacturers say. Custom supports for the geriatric and obese populations are ideal because off-the-shelf sizing rarely fits this population. HME providers can order custom fabrication products that will actually fit the patient and function the way they are supposed to.
“They give us the measurements, and in eight hours we have it fabricated and back out the door for delivery,” says Detty. “Oftentimes, the additional benefit of this is that the custom-fabricated items are reimbursable by insurance, whereas off-the-shelf items are not.”
Mauss says for providers who wish to bundle small-ticket purchases with other items, excellent deals can be struck with distributors to reduce shipping and delivery costs.
With large chains typically out of the loop on many of the latest innovations, scouring the market for new products can also be a good tactic for HME providers. Pro Orthopedic Devices will soon unveil several patented wraparound supports specifically geared to the geriatric market, Detty says. The idea is that the wraps will be easier to put on and take off than the traditional pull-off sleeve.
Co-opting the so-called “green” environmental movement is yet another way to attract customers, although the technology may still be too expensive to realistically penetrate the market. “We have been working for a while with a neoprene manufacturer that is environmentally friendly,” muses Detty.
“There is no petroleum used and there is less energy used in production.” However, he says, “There is an extra cost that goes along with this, and we have been reluctant to jump into that wholeheartedly, because I don't think the market will bear the added pricing that comes along with that.”
Faith in the Future
Whether they have arrived or not, it is clear that many providers are looking for the baby boom influx. Despite difficult economic times, boomers have the money and desire to stay active.
“I do believe the hype of the baby boomers,” says Brandon McFerren, area manager for provider Petersen Medical, Orem, Utah. “I don't know that I've seen an actual spike, but we have certainly experienced success despite some other harsh industry situations. We have been able to maintain growth, and we are trying to increase our numbers. I think there is opportunity for growth in soft goods, and we are definitely trying to tap into that and be prepared.”
Petersen's list of top retail sellers includes merchandise both big and small. The six-shop Utah enterprise stocks everything from respiratory, mobility and lifts to compression therapy, knee braces and bath safety items.
McFerren agrees that going with the “cheap stuff” is no way for independent shops to thrive. “For example, neoprene has its pluses and minuses, but the higher-quality neoprene products that we have come across have a better marketability,” he says. “The lesser quality is uncomfortable, gets hot, but the higher quality tends to breathe better. And it gives customers a more free and natural feel.”
Building trust, word of mouth and loyalty to the independent store is something that McFerren attempts to spread throughout the six localities of Petersen Medical. “My personal philosophy, and something that we have really worked hard on, is that we provide a customer service that a big chain just can't provide,” stresses McFerren.
“I think that is an effective way to compete, because we certainly can't compete on price and buying power. Work closely with physicians because you rely on them, and they rely on you. They expect their patients to be taken care of, and we do just that. HMEs are also usually better set up to bill Medicare, and that is yet another niche that chain stores cannot necessarily top.”
Alec Palmer, national sales manager for Bilt-Rite Orthopedics/Mastex Industries, points out that Medicare and Medicaid no longer pay for elastic bracing (as of April 2009) unless the devices have rigid panels. As a result, he and other manufacturers have responded with changes in the production process. “We have to do it to help everyone get paid,” says Palmer.
Palmer thinks the new processes are worth the effort because he believes growth will be nothing short of phenomenal.
“Potential is good because of the baby boomers, and with more people retiring, there are increased needs for orthopedics,” says Palmer. “Buying direct from the company … is one way to make yourself more competitive. If somebody needs a volume price and comes to us, we can provide a discount and better pricing. If someone does not need a lot of volume, a distributor may be the way to go.”
Ultimately, HME providers who make a strong awareness push can likely overcome competition. In the case of orthotics and prosthetics, there may be some conflict since both entities may lay claim as the best source.
“Physicians are typically in a medical complex, and that is where an O&P shop usually is, so physicians think that is where they should send patients,” says Detty. “But HME people should really advertise and state their case, because older people are going to the HME providers.
“If we have people calling … we are sending that older person to the HME store to find the compression stockings and specialty shoes they need. Orthopedic soft goods fit in with those other items of everyday living, and they make for a more well-rounded offering to attract people to the HME store.”
Experts Interviewed
Gerry Detty, president, Pro Orthopedic Devices, Tucson, Ariz.; Barbara Mauss, CPed, COF, sales manager, Swede-O, North Branch, Minn.; Brandon McFerren, area manager, Petersen Medical, Orem, Utah; Alec Palmer, national sales manager, Bilt-Rite Orthopedics/Mastex Industries, Croydon, Pa.; and Miriam Tenne, co-owner, South Bay Home Health Care, Torrance, Calif.
