From Kathleen Weir Vale's vantage point as CEO of a Texas home medical equipment company, the HME business isn't just one of continuing drama, declining reimbursement and more downs than ups. It's also an industry of possibilities.
Vale's HME company, Hope Medical Supply in San Antonio and Corpus Christi, recently opened a state-of-the-art rehabilitation equipment showroom in its San Antonio location.
Sounds a bit dicey, doesn't it? After all, rehab is included in the competitive bidding project that goes into effect in 10 areas across the country in July. Its Medicare reimbursement has already been sliced and diced, and requirements for even getting what reimbursement there is are on shifting sands.
But Hope Medical, which has done a solid, if simple, rehab business for a long time — it was, in fact, the exclusive Everest & Jennings wheelchair dealer in the area in the days when that company was the hallmark of HME's mobility segment — saw an opportunity and seized it.
“It's a matter of survival, as I see it,” Vale says. “We must broaden our customer base and our lines of business and penetrate more deeply into the market. And I know we are swimming upstream here, but that's kind of the way we operate. You just kind of have to have nerves of steel and go forward and work hard and trust you are doing the right thing. It is all a throw of the dice.”
In the Genes
Seizing opportunities seems to be in Hope Medical's genes. The company dates to 1941, when it started as an ambulance company. Within a decade, it expanded to offer what were then called “sickroom supplies.” The company also supplied products to hospitals and doctors' offices.
“We are arguably the longest-standing DME company in Texas,” Vale says. “The boys [riding the ambulance] would give people a card that said, ‘If you need a wheelchair, call Hope.’”
Soon, the company was supplying not only wheelchairs but medical gases, high-tech equipment and instrumentation. In 1974, the company sold Hope Ambulance to concentrate solely on HME, and in 1976, it opened a location in Corpus Christi, which allowed it to service all of south Texas. In 1996, it took the then-bold step of becoming accredited through the Joint Commission.
All of those moves included an element of risk, and so did establishing a rehab showroom. But for Hope Medical, it seemed like the right, and the best, thing to do.
“Many purchase decisions just became too complex and the equipment too high-tech to simply order over the phone. The customer needs the option of having a hands-on experience to make the best choice,” Vale says. “We decided we needed a good place to receive rehab clients, and let them touch and feel and try out the equipment.”
The company hired a rehab manager, Sam Esquivel, a graduate of Texas A&M with nine years of experience in rehab, who quickly got his Assistive Technology Supplier certification. “Sam is very savvy in the area of rehab, and he brings a heightened sophistication [to Hope Medical's rehab business],” Vale says.
They set about designing a comfortable, welcoming space to showcase the equipment and allow clients room to try it out. “We had to reconfigure things,” Vale says, noting that the showroom takes up 2,000 square feet of the San Antonio facility. It is in a style that she calls “industrial chic.”
“It's lovely,” she says. “It's got the concrete floors and warehouse tile walls, but it's finished off nicely, and it's got lots of equipment.”
The effort required a large outlay of cash. “It cost a bunch of money,” says Vale, without giving specifics.
With great fanfare, Hope Medical opened its rehab showroom in October. Mayor Phil Hardberger, and the area's councilwoman, Sheila McNeil of the 2nd District, attended and applauded the company not only for its new enterprise but also for helping the economic development of the Warehouse District where it is located.
Rehab Redux
The showroom and revamped rehab business have not only helped the district, they've been a boon to Hope Medical's business, too, Vale says.
“I think it's made a huge difference. We're having more walk-ins, we're having more business. The customers love to come in, and they know it's exclusively for them. There is plenty of space; everything pertinent to them is there.
“I think we see how essential it is to this line of business to have a lovely customer reception area,” she adds.
Vale is convinced that getting the word out to physicians, referral sources and clients has sparked interest and drawn people into the showroom. Hope Medical sent detailed information about the showroom to the referral community and also sent invitations with supporting information to clients.
“There's tremendous interest in the referral community,” she says, noting that even some physicians have visited the showroom “and they have been duly impressed.”
She expects this segment of Hope's business to continue to grow. But Vale isn't complacent about the company's future. Her south Texas marketplace is a tough one. “San Antonio had a competitive bidding demonstration in 2002. We've had a lot of attrition in our market,” she says. “A lot of little companies have gone out of business.”
With the bulk of Hope Medical's business lodged with Medicare and managed care, she's wary of declining reimbursement in all HME arenas. “The biggest challenge is trying to figure out how to turn a profit, operate more efficiently, cut our expenses,” she says. “We have to work harder for half the money.”
Ever on the lookout for opportunities, Hope Medical is concentrating more on sales these days than rentals. “We are turning away from rentals [and] more to sales because of the capped rental situation,” Vale says. “It is looking like we are returning to a sales organization rather than a rental equipment provider.”
The company is moving more into such things as CPAP supplies and urologicals, Vale says.
“It's a departure from what we have been doing, and it's more labor intensive to make those changes, because each and every recurring transaction must be verified for eligibility, benefits and deductibles, and preauthorizations have to be obtained.”
So Hope Medical is a work in progress.
“It's important to look at each and every line of business and assess the profitability and the prospect of continuing profitability,” Vale says, noting that her company focuses its employees' efforts on profitable lines of business.
“While we are not able to abandon less profitable areas of business, we can de-emphasize them. We have a commitment to be a full-service HME company, and we believe that our profitability over the years is due to that,” she says.
She believes that profitability will continue. “I think ultimately we will be all right. It does take some grit. But if we are one thing, it's survivors,” says Vale.
Survival Kit
Survival in the home medical equipment business is growing increasingly tougher these days. Kathleen Weir Vale, CEO of Home Medical Supply in San Antonio, offers these guidelines to help you stay in the game:
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Let your customers know what you are doing and let them know everything you can about the equipment and your services. Be an information resource.
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Be compliant in every way, at every level. Don't cut corners in compliance.
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Be sure what you are doing is profitable because it is your survival.
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Make safety your watchword in your business.
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Work about twice as hard as you ever did before.
