A Blueprint for HME Success
- By Laurie Watanabe
- May 01, 2007
See sidebars to this article:
- What is Home Accessibility?
- Home Accessibility Resources
With the final rule finally out and the Centers for Medicare & Medicaid Services (CMS) now actively seeking supplier registrations and bids, it’s become impossible to deny the reality of competitive bidding any longer. Whether or not you’re in one of the first 10 metropolitan statistical areas (MSAs) to initiate competitive bidding, the message is clear: CMS wants to pay less for the DME it buys, and that’s not good news for suppliers who bill Medicare. Consider that Medicaid programs and private-pay insurance often align their coverage criteria and payment policies after Medicare’s example, and you may be wondering: How can I protect my business?
One possible way is to diversify into cash-pay products and services — and that’s where home and environmental accessibility come into play. Expanding into the home accessibility market can improve cashflow without the Medicare-billing paperwork and can complement your existing DME business.
We asked industry insiders why they believe home accessibility can be a boon to mobility/rehab suppliers, and how you can determine if your business could benefit.
Fact 1: The Boomers Are Coming
If you’ve been in the mobility/rehab business for any time at all, you’ve heard the statistics about baby boomers, the next great anticipated wave of DME purchasers.
According to Baby Boom Headquarters (www.bbhq.com), 75.8 million people were born in the United States from 1946 through 1964. Today, they account for 28 percent of the population. The eldest baby boomers turn 61 this year, while the youngest turn 43.
The DME industry has been hearing and saying for some time now that baby boomers would drive the market by purchasing product for themselves and for their parents. Boomers as a generation have more disposable income now that their kids are on their own. Boomers believe in spending to make their lives more comfortable. They’re less likely to quietly accept limitations as they age, and as a group, they are determined to stay active and independent.
Thus far, however, the DME industry has yet to feel the full impact of baby boomer spending, because boomers are also healthier than previous generations. By and large, they say they feel younger than their chronological ages and continue to look forward, judging from the myriad of news specials that aired last year, when the eldest boomers turned 60 and the “60 is the new 40” slogan became famous (check out the Web site that celebrates being 60: www.turningsixty.com).
That means boomers as a whole have not yet needed a barrage of scooters, wheelchairs, rollators and walkers to get around. But mobility equipment won’t be the only DME that boomers need. Boomers are already proving determined to age in place rather than resigning themselves to moving to nursing homes — and as they build custom homes, buy new homes or renovate current homes, they’re seeking to include the types of access equipment that you are already familiar with.
Says Harmar Mobility Marketing Coordinator Mike Brockmeier of the baby boomers, “They’ve worked hard, they’ve played hard, they’re not going to quit. They’ve amassed enough income that they can afford this type of equipment, and they’re not willing to give up their mobility. They’re not willing to give up their lifestyle. If this is the type of equipment that’s going to keep them mobile, they’re going to spend the money on it.”
Fact 2: You Already Know Your Future Customers
Whether your client just purchased a custom power wheelchair with programmable drive controls and multiple power seating functions, or a lightweight travel scooter that breaks down in seconds, the fact is that someone who uses seating and/or mobility equipment can also benefit from home/environmental access products.
Therefore U.S. Rehab President Jerry Keiderling says if you’re currently selling such equipment, it makes sense to consider expanding into the home/environmental accessibility field. “It’s a good move,” he says, “because you’re working with the same clientele. You already have the clientele who need assistance, either mobility assistance or bath safety assistance or ambulatory assistance, things like that. On the accessibility side, it’s the same client. They need that to be functionally independent in their home. Just because you can provide them a wheelchair to get into their bathroom, how do they then get into their shower or how do they actually get to the toilet or can they really use the sink? Can they get from one level of their house to the other level? If they need to be functionally independent in their home, they need to be able to use their whole home.”
Mike Brockmeier agrees that home accessibility can be a great idea for current DME suppliers. “Our approach is that it’s going to work for just about everybody. A lot of our dealers have been (selling) scooters, they’ve been selling wheelchairs, they carry crutches and canes and things like that, and they’ve watched their cashflow decrease. (Home accessibility) is the type of product (that’s needed) by the same kind of customer who is going to be shopping for a wheelchair or scooter. They have to be able to get in and out of their home, and they have to be able to use the bath facilities. Every person who comes in and needs a power wheelchair also needs a way to carry it in their automobile and a way to get it in and out of their house.”
Asked if a certain type of supplier — for instance, rural vs. urban or mobility vs. rehab — has the advantage when it comes to successfully expanding into home accessibility, Dave Henderson, national outside sales manager for EZ-ACCESS, says, “No certain type of provider seems to have a categorical advantage in this market. The key seems to be the amount of groundwork a provider is willing to make to be part of the market. This is not a market that you just ‘fall into.’ Rather, it is a market that must be sought after and fully developed.”
Door Motion Technologies’ Dave Carambula also believes a dealer’s success in home accessibility is tied to the effort he or she wants to invest.
“We find that HMEs come in basically two types,” Carambula says. “A: Cash-and-carry commodity suppliers selling walkers, scooters, canes, disposables, bedpans and the like, and B: Full-service providers of both product and services, such as installation, modifications of more complex aids to daily living, such as platform lifts, chairlifts, residential elevators, handicap-accessible vehicles and the like. The former don’t want the hassle of technicians, installers, quotations, materials, insurance and such needed to do this higher level of service. In both types there is profitability, and those that provide a wider range of services have the potential of significantly adding to their revenue.
“Of course, the complexity levels are of a higher order, and provider A becomes significantly less important and valuable to the population it services, because at that point they are competing primarily on a price basis. On the other hand, provider B has a wider clientele, caters to a wider income breadth, (and is) able to provide to the higher end of the client financial spectrum, as well as the lower end. Income potential to the provider is higher, probably commensurate with the complexity level… as it should be.”
Fact 3: The Homebuilding Industry Lacks the Expertise to Go It Alone
True home accessibility often requires modifying the home itself: widening doorways so wheelchairs or scooters can pass through, providing enough space for such vehicles to turn, replacing or complementing steps and stairs with ramps or lifts, providing room under sinks and work spaces for wheelchairs to fit under and installing grab bars in a shower and adjacent to the toilet. Smaller modifications can include replacing doorknobs and cabinet handles with easier-to-turn varieties, and relocating thermostats and light switches so they’re easily reachable from a wheelchair.
Generally speaking, the cost of investing in home accessibility equipment is “comparable” to the cost of investing in other sorts of DME, says Jerry Keiderling. “You don’t necessarily need inventory at all. Some demo product is nice and suggested, because you need it in your showroom to let people know you have it and it’s available. But usually, everything is ordered per the job, per the situation.”
Of course, manufacturers have a vested interest in ensuring that dealers can afford to carry display/demo units in their stores, and Mike Brockmeier says, for example, that the newly created Harmar Access division “works with all of our dealers to make sure they can get displays on the floor to show their customers. We have substantial discounts for display-type models.”
Regarding the home modification portion of the market, Keiderling — whose U.S. Rehab offers a Certified Environmental Access Consultant (CEAC) program — recommends that rehab technology suppliers diversifying into home accessibility “work with a qualified contractor. In other words, the rehab provider is consulting on what is best needed for that individual’s functionality, and specs out and orders the product and sub-contracts out the labor for installation.”
U.S. Rehab recommends that route, Keiderling says, “because there are too many building codes to be aware of. Contractors know them. The problem is contractors can do the work, but they don’t know why they’re doing it. They don’t understand anatomy, physiology, diagnosis, prognosis — they don’t understand range of motion and things like that. If somebody tells them to widen a door by three inches, they’ll do it — but if they would widen it on the left side instead of the right side, it makes a whole lot of difference.”
Keiderling also points out that working with a qualified contractor reduces liability on the supplier: “Now you have a contractor who’s bonded and insured and has his own liability insurance, and it’s off of (the supplier’s).”
Fact 4: You’ll Get Out of It What You Put Into It
So should you expand into the home/environmental accessibility market? A few major factors would seem to be in your favor, including the cash-pay nature of the products and services you would offer, the impending impact of baby boomer customers, your current familiarity with future customers and your expertise as a professional who already works with people who will benefit from more accessible homes.
But ultimately, suppliers who are thinking of expanding into this market would be smart, industry experts say, to first examine the unique structure of their current business.
“A key factor for consideration when entering this market is the question, ‘Does this fit into my overall business model?’” says Dave Henderson. “Providers often stretch their boundaries to enter markets that they are not fully ready to service and find the new market to be a drain on resources rather than an additional source of income. The second question to consider is ‘Is this a level of service that I am able to provide?’”
Henderson suggests that in addition to the obvious investment in home medical equipment inventory, suppliers should also factor in marketing expenses. “The hidden financial equipment investment is in the area of marketing or advertising in this new market,” he points out. “Many providers that fail in this market do so because of failure to gain sufficient exposure.”
Dave Carambula points out that the ability to provide skilled service is crucial to the overall success or failure of this new venture. “An accessibility salesperson needs to know what equipment is available to serve the accessibility customer, what ADA (Americans with Disabilities Act) rules may apply, what potential challenges/problems may be relevant to the customers’ particular needs, architectural issues, installation methodologies, etc., so the salesperson can identify the real in addition to perceived needs, how to meet them with the appropriate technologies and be able to put together a proposal that will meet those needs effectively and at the price level he or she has qualified the customer to have. The technical/installation side of the business is just as important for obvious reasons.”
Carambula adds there is much to be gained — financially and otherwise — for suppliers willing to make the investment.
“Having been around the industry for more than a decade, I know that the retail side of this business can be rewarding both financially and personally, because it mostly serves a population whose quality of life can be greatly improved by these technologies,” he explains. “It takes some commitment both financially and personally to invest in people and equipment, but then there is a price to be paid for growth… No pain, no gain.”
This article originally appeared in the May 2007 issue of Mobility Management.