HME providers for years have constantly heard about baby boomers, as if they were an approaching oasis of business opportunity in a desert of evaporating Medicare reimbursements. Providers now stand on the edge of this oasis. Born from 1946 through 1964, Baby Boomers began turning age 65 last year. For the next 17 years, they will continue hitting that retirement milestone at a rate of about 8,000 each day.
Recently, we polled members of HomeCare magazine’s editorial advisory board about how providers should best respond to this landmark event. We asked how the Baby Boomers will affect the HME industry and what providers should be doing right now to prepare goods and services for this gray wave.
Big Impact on the HME Industry
Most responders agreed that the Baby Boom Generation will have a profound impact on providers, and that it is already causing monumental changes in the HME industry.
“The impact of the Baby Boomers will be tremendous on our industry,’’ said Louis Feuer, president of Dynamic Seminars and Consulting—and a Baby Boomer himself. “This is a group that is working longer and is balancing lives with many of our parents being elderly and our children being faced with a myriad of economic and financial issues. We must look at products that bring balance to our lives—from telehealth products to senior monitoring devices.”
Mary Ellen Conway, president of Capital Healthcare Group, agreed that HME providers will have many customers in coming years, but there is going to be less Medicare money available to pay for their care. “There are certainly going to be many more beneficiaries entering the Medicare program over the next 15 years, but since they are leaving the work force and are not being replaced at the same level with new workers, the Medicare trust fund is going to continue to suffer,” she said. “We can only imagine how Medicare will cut the benefit and continue to cut reimbursements across the board.”
Editorial advisors were quick to name the new needs of Baby Boomers, and made suggestions on how HME providers could meet them. “Aging boomers will demand better service, cash options and create huge demand,’’ said Allison Cherney, president of Cherney and Associates, Inc. “Look for major changes in the industry.”
Michael Hamilton, executive director of the Alabama Durable Medical Equipment Association, said the Baby Boomer Generation offers opportunity for success—and failure.
“Anyone who does not prepare for this market very carefully will not survive, or at least thrive, for many years,’’ Hamilton said. “Those who do survive could experience exponential growth for the remainder of the owners’ lifetimes and on to another generation.”
Darren K. Tarleton, president and CEO of Mobility Warehouse in Stockbridge, Ga., said his company has already felt the effect of the Baby Boom Generation. “Our cash sales have steadily risen over the past few years,’’ he said. “We find that these individuals want to be self reliant and are willing to pay for goods and services out of pocket. The biggest roadblock I see for the average HME provider when it comes to servicing the Baby Boomer Generation is location. A large number of dealers are located in warehouse-type districts to control costs and not in retail settings.”
Sarah Hanna, vice president of ECS Billing & Consulting, Inc., said the Baby Boomer Generation has a history of powerful expression, and it will now express itself with high-end purchases.
“They were the generation that saw the birth of rock ’n’ roll and Motown,’’ Hanna said. “I would imagine they want something that doesn’t look like what their parents had. They will pay higher prices or pay the difference between what Medicare allows and the price of an upgrade to get what they want.’’
Cindy Ciardo, CEO of Knueppel Healthcare Services, Inc., of West Allis, Wisc., said Baby Boomers are better educated, more savvy and more technology-oriented than previous generations of seniors.
“They want to take control and promote independence for themselves,’’ she said. “Most have a higher than average income and are concerned about comfort and quality of life. As a result, HME companies may have to address these attributes with a good, better and best inventory selection and merchandizing strategy.’’
Colette Weil, managing director of Summit Marketing, said Baby Boomers expect more than their parents did. “Boomers expect retailing to reflect sophistication in service, in store layout, convenience and technology,’’ she said. “Boomers embraced technology late in their careers. They will not stop just because they have retired. On the contrary, they will use technology to manage their retirement, hobbies, photos, travel and much more. Additionally, boomers seek selection. It you don’t have it, they will seek it out on the Internet.”
Preparing for the Gray Wave
All this poses challenges and risks for providers, many of whom have spent decades dealing with Medicare-reimbursed items. Now they are in a heavy retail environment and face new customers. Weil said providers need to take hard look at baby boomers and understand their wants and needs.
“Study boomers, talk to boomers, and read everything you can about boomers,’’ she said. “Ask boomer caregivers, what are the expectations of boomers? What would they want from you? Don’t wait. Learn about their shopping habits, and embrace their diversity and needs now.”
Here are some quick tips from Weil:
- Modernize immediately.
- Re-merchandize and promote regularly.
- Promote and appeal to their interests—their desire to stay fit, travel and spend time on their hobbies, grandchildren and investments.
- Keep your branding materials, website and social media professional and top-notch. Engage boomers to participate in your strategy, not just serve as a passive recipient.
- Ensure that employees reflect the professionalism you would expect from a leading service provider associated with health care.
- Be active in your community in areas that are of interest to boomers.
Ciardo said providers must diversify products and payer sources. “Add cash products that compliment or relate to insurance-covered core items to offset reimbursement reductions. Train staff to upsell—selling a deluxe product on insurance-covered items and collecting the cash upgrade.”
Update showrooms using POP displays and attractive signage to make the area easy to navigate, she said. “Make your website a resource center—establish your company as the go-to place for information because you have the most-educated staff.”
Understand that Baby Boomers are mobile, Hanna said. “Studies show that they are more likely to travel more than any other U.S. adult, so they will look to higher quality items with more bells and whistles to help make them mobile outside the home.”
Hamilton said providers must adjust their attitudes about customers. “Recognizing their needs will be different, especially in the areas of healthy lifestyle products, which are beyond those needed for an illness. They will also have more disposable income and more willingness to pay for the best. Preparing for these differences will take time, effort and a considerable attitude adjustment.”
Conway said providers should take a long, hard look at products involving home modification. “The experts think that the home modification programs are going to be the most needed services. Allowing seniors to age in place with accessible homes is very desirable, and the Baby Boomer Generation may have the income and resources needed to make these changes and accommodations. We have seen an increased number of inlaw suites or similar renovations that will accommodate grandparents within the family home.”
Cherney said providers must take their marketing game up a notch.
“Think like real marketers with premium, mid-range and low-end pricing and services, especially for items not covered by Medicare,’’ she said.
And finally, Terry Pageler, president of PowerCore, Inc., had a word of caution about the dangers of wasting energy on products and services that place a heavy burden of paperwork and regulations on providers.
“As more regulatory inefficiencies are added, more provider energy is being burned as ‘heat’ unrelated to care itself,’’ he said. “Just as my car doesn’t go as far when the energy octane is lowered, neither will we go as far as regulatory-caused entropy expands.”
