Is there life without Medicare? It's a question thousands of home medical equipment providers have been asking as they try to fend off the effects of devastating hits to their businesses from the Centers for Medicare and Medicaid Services.
For Homecare Suppliers of Kansas City, Mo., the answer is yes. In fact, there is abundant life without Medicare, according to Pam Billings, director of operations and finance for the family-owned, Web-based company.
Billings, her husband David and his brother Brandon started Homecare Suppliers in August of 2005. The company specializes in mobility assist products such as stair lifts, wheelchair ramps, wheelchair and scooter lifts, bath lifts, walk-in bathtubs, bed rails and dumbwaiters, as well as other daily living products. Vendors include Harmar Mobility, Standers, Summit Lifts, Sterling Stairlifts and Ascent Dumbwaiters, among others. Sales have increased consistently each year, Pam says, reporting that revenue for 2008 topped $800,000.
How did a small, family-run operation like this grow to selling stair lifts and other products around the nation? It's all a matter of thinking outside the Medicare box.
Sidestepping the Big M
While the Homecare Suppliers model isn't suitable for every provider, it suggested itself to the Billingses. Pam Billings was working 60 hours a week in a local company's human resources department. She was yearning for a break when, at a dinner party in March 2005, a friend mentioned the business of selling stair lifts.
She talked the idea over with her husband and brother-in-law, who has a background in computers. Her husband suggested she "give it a try."
Pam spent the summer researching the product, the industry, talking to other HME providers, studying the demographics and identifying the target market and how best to appeal to that market.
"We did feel there was a strong base," she says, noting that two stair lift companies were within driving distance of her home. "There was a strong familiarity [in the area] with the products; the market was open and there was a lot of product knowledge in existence."
They decided to go into the business, with Pam taking care of the office and financial details. David would do the installations and servicing, while Brandon would direct marketing and Internet design.
From the outset, the trio determined they would not work with Medicare or Medicaid. There was too much turmoil in the Medicare segment, says Pam, and it was tainted with the appearance of fraud and abuse, something her husband, a police detective, particularly wanted to avoid.
They don't even accept private insurance. "We do not carry any product that private insurance, Medicare or Medicaid would reimburse for. We do that purposely. We do not want to confuse any consumer who would think we would file [a claim] for them … Any products you buy through us do not have HCPCS numbers. You can't get reimbursed," Pam says.
As well, she adds, "we have no intention in the next five years to own or to rent property, so our model didn't lend itself to Medicare and Medicaid."
Because insurance is not involved, the company has been able to handle payments differently as well.
"We found that most companies get payment up front," Pam says, adding that Homecare Suppliers does, too, when the company completes an Internet sale. But when sales are local, the installation is completed before customers pay. "We wanted to be unorthodox and say, 'We trust that you are going to pay us,'" she says.
In the three-and-a-half years since the company began, "we have never had someone not pay us and we have never had a bounced check," Pam relates.
Setting Their Sites
Homecare Suppliers initially set out to work through the Internet only as a way to differentiate the business from the local brick-and-mortar competition. Brandon developed a Web site patterned after those of Fortune 500 big box companies.
But the Billingses soon realized that pairing Internet sales with site visits was the way to go. "We kind of filled a void because [our competitors] were brick-and-mortar and had a prototype in their showroom, but they didn't make site visits. So we filled that gap," Pam says.
Now, Pam makes the site visits, spending as long as two hours with customers to evaluate their needs. She answers questions and leaves behind brochures and other pertinent information. She does not make follow-up phone calls "unless we have left something unsaid," she says. But she does make sure that customers have her contact information in case they have questions.
"If it's not good for them, we won't sell it," she says. "We really try to counsel [people] and see if it is a good product for them and a viable solution for them.
"Our number one thing is that we are consumer-motivated," she continues. "In everything we do, whether it regards a Web site or a sale, we put the consumer first. We will spend 45 minutes on the phone and not sell anything. But [our customers] will get the product they need and, oftentimes, we will refer them to a brick-and-mortar company. We go the extra step."
The company has reaped great success with the site visits; out of all the site visits made, an average of about five a week, only three sales haven't closed.
But Web site sales were different. "We had this huge barrage of people coming to our Web site, but they weren't buying from us," Pam recalls. Potential customers from Washington to Maine were calling to ask if Homecare Suppliers had a nearby dealer and how they could see the products.
"We would try to find them someone locally so they could see the product," Pam says, "but we began to run into [the problem that] no one had a demo for a bath lift, or 'We do, but you have to come here to see it,' and 'No, we won't do a site visit.'
"We needed to develop something that would be an alternative that would bring the product into the person's home," she continues. So the company introduced an online product video for self-installed stair lifts so customers could see how the stair lifts work. "Our first video was an installation guide … It was very unprofessional, but it got the job done," she says.
Next, the company developed a bath lift video. Then several manufacturers allowed the use of their videos on the company's Web site, www.buyastairlift.com.
As the company has added new products, it has continued to expand its online videos. Today, the Web site features more than 40 planning videos in its online library. Potential buyers can see not only what various products look like, they can also view the installation process and even see how to measure for a stair lift or install a bath lift in a tub.
The online videos have been a boon to sales. "I've had people tell us, 'I'm buying from you because of your video,'" Pam says, adding that complaints are rare.
"More than anything, the video has actually in some ways lowered the number of sales of our bath lifts," she says frankly. "This is good because people will buy bath lifts without understanding the limitations. A traditional bath lift won't fit in a Jacuzzi bathtub or, if it is beveled, the suction cup won't stick. Bath lifts are not returnable. In the past year, we haven't had any complaints about that. I think [the videos] have provided a better understanding of the product."
The videos also have opened the door to selling across the nation.
For stair lifts, however, customers must call Homecare Suppliers "so we can understand their situation," Pam points out. Once the correct product has been identified, Pam learns where the customer is located and refers the buyer to one of 20 installers the company works with across the country. The product is sold uninstalled, and the customer pays the installer directly.
If Homecare Suppliers doesn't know of an installer close to the customer's home, "we can sell it uninstalled," Pam says, noting that buyers receive written instructions and an installation video.
Planning Ahead
Pam reveals another boon to the bottom line. "We found one item that was our bread and butter, that we could have a pretty lucrative markup on, that was more to the luxury side and that people would come to us for," she says (although she declines to name what that one item is). She believes it is in every provider's best interest to find such an item — cash only, a luxury product that appeals to a niche market in the area.
"It will keep the lights on," she says. "As long as you sell enough of that product, everything else is gravy."
As the nation's Medicare-dependent providers try frantically to stay afloat in a constant sea of change, Homecare Suppliers appears to be sitting in a peaceful oasis. The Billingses have never regretted that they don't deal with Medicare. "I am glad we made the decision [not to go into Medicare or Medicaid]," Pam says.
Business is steady, she says. There was a lag in September when the economy first went into a tailspin, but business has picked back up and the company has set goals for the year.
In addition to beginning a newsletter and an online blog, Pam says, the company would also like to expand its product offerings. Right now, she is looking for a product that would help her mother (and others like her). Her mom, who is first vice president of the American Iris Society, has arthritis and is unable to garden anymore. It would be wonderful to find a product that would enable her to do at least some gardening, Pam says.
And it would be another opportunity for Homecare Suppliers to fill a void.
"We're trying to think outside the box again — no one is thinking of this or no one is doing that," Pam says. "That is what keeps you moving ahead — when you are constantly thinking ahead."
5 Tips for the Trade
Pam Billings, director of operations and finance for Kansas City, Mo.-based Homecare Suppliers, has discovered five key elements that have enhanced the company's business.
- Don't look at other medical supply companies as the
enemy
"The goal is to join forces to fulfill the customers' needs. There is enough business for everyone," Billings says.
- Build a relationship with your customer
Try to understand their perspective and their needs. "Our philosophy is, let's do what's best for the customer," she says. "We put ourselves in the consumer's shoes. They aren't coming to us because they love our Web site or our products. They are coming to us because they have to have [those products]."
- Set a minimum budget for overhead and meet that
goal
Everything else is gravy. (Billings acknowledges this might be tough for brick-and-mortar businesses.)
- Be willing to think differently
If the customer doesn't have a bank they can get a loan through, then do rentals. "You've got the product, and if the customer defaults, you can take your product back," she says.
- Every customer does not equal a sale
"You need to be OK with that," says Billings. Some companies, she believes, may forget why customers are there. "All it does it sully the reputation of DMEs and, eventually, those are the ones that go under because they are so focused on making the sale."
