Why HME is a Front-End Profit Center/ How to Create a Successful Retail HME Showroom Handouts

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Why HME is a Front-End Profit Center/How to
Create a Successful Retail HME Showroom Handouts

• by
• Jack Evans
• www.RetailHomecare.com
• www.HMEducation.com

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Competitive Bidding Another Reason for Retail?

• The MMA creates a "second class" of Medicare
  beneficiaries
• Requires CMS to select a group of low-cost
  providers to serve beneficiaries in the
  competitive bidding areas.
• Medicare beneficiaries in a bid area will not
  receive the same level of care or the same
  quality of products as someone in a non-bid area
• Bottom Line
• Medicare beneficiaries will be forced to accept a
  lesser standard of care
• Medicare beneficiaries will be forced to accept a
  lesser quality product

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HME Revenue SourcesDiversify for Survival
Traditional DME Retail HME
Payor Medi/Medi Medi/Medi and/or cash
Revenue Mix 90-95 Medi/Medi, 5 cash 30-50 Medi/Medi, 25-50 cash
Medicare Cuts 35 x 90 31 35 x 35 12
Av. Products/ Transaction 1 (Medical Necessity) 2-3 (Medical Need)
Av. Cash Sale 30 160
Cash Cycle 90 69 days 30-50 1 day
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Transitioning HME Customer Demographics
Issue Seniors Boomers/ Caregivers
Goal Physical Independence Financial Independence
Attitude Conservative Youthful
Purchasing Influences Testimonials Entitlement Industry Ratings Brand
Sales Approach Hard Sell Price Informational Personal Benefit
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Baby Boomers Family Caregivers as HHC Customers

• The Facts
• 44.5 Million First Wave Boomers
• 15 Million are Active Caregivers
• Represent 65 of current Rx and retail HME
  customers
• The Concept
• Boomers Californians
• California 5th largest economy in the world
• Imagine the potential HHC sales!
• (think Rock n Roll, SUVs, Starbucks, Botox
  Viagra!)

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More Baby Boomer Family Caregiver Stats

• Boomers began turning 60 this year
• They are purchasing more HHC products for
  themselves
• 75 make their purchasing decision in-store
• Boomers represent loyal, repeat customers

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Demographic Merchandising

• Seniors
• Front End
• Mobility
• Bath Safety
• Lift Chairs
• Scooters
• Back End (Demand)
• Incontinence
• Urology
• Wound Care

• Adult Children
• Front End
• Orthopedic Supports
• Compression Stockings
• Hot/Cold
• Back/Neck
• Back End (Demand)
• Diabetes Supplies
• Home Diagnostics

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HME Business Components

1. Retail Location
2. Showroom Display
3. Product Mix
4. Dedicated Salesperson
5. Medicare Billing
6. Referral Marketing

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Retail Location

• Strip mall, medical center or adjacent to chain
  drug store.
• 12 - 18/ft. rent for retail AAA space.
• Minimum street traffic of 8,000 12,000
  cars/day.
• Minimum 800 1200 sq. ft. showroom for hub
  spoke operation.
• Exterior signs to announce HME.
• Window displays that sell 24/7.

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HHC Merchandising

• Level 1
• HHC products mixed with OTCs
• Level 2
• HHC planogramed sections to sell most OTC-type
  retail products
• Level 3
• HHC department with trained person for specific
  customer needs plus rentals, insurance billing,
  delivery, fittings

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Level 1 HHC in Pharmacy

• Home medical equipment (HME) or any other
  home health care products that are scattered
  throughout the store as part of other
  departments.
• These products are shelved as OTCs to sell
  themselves.

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Level 1 Examples

• Blood pressure monitors and diabetes products are
  shelved behind the counter.
• Incontinence products are next to diapers.
• Bathroom safety products are displayed with
  urinals, bedpans and sitz baths.
• Wound care is part of first aid.
• Canes are hanging from a floor stand wherever
  there is room for the display.
• Orthopedic supports are next to foot care.

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Level 2 HHC in Pharmacy

• HME shelved as OTC to sell itself.
• Displayed as one HME/HHC category.
• Minimal selection of best sellers.
• Retail, cash products only.
• Displayed near pharmacy.

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Level 2 Examples

• 4 Bathroom Safety
• Grab Bar
• Elevated Toilet Seat
• Bath Bench
• Hand-held Shower

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Level 2 Examples

• 4 Mobility
• Cane
• Quad Cane
• Folding Rolling Walkers
• Transport Chair
• Standard Wheelchair

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Level 2 Examples

• 2 4 Orthopedic Supports
• Carpal Tunnel Braces
• Knee Elbow Supports
• 2 4 Compression Hosiery
• Support Stockings
• Graduated Compression

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Senior HME Set
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Baby Boomer/Family Caregiver HME Set
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Successfully Selling Against the Chains www

• Boutique Business Basics
• HHC Specialty/Niche Retailer
• More knowledgeable salespeople
• Deeper selection, higher margins
• Experiential store environment

• Sell the Package
• Medical grade product 20-30 added value
• Consumer education
• Product demonstration
• Delivery
• Customer service follow-up
• 24/7 support

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Merchandising 1

• COG 30,000 - 40,000 w/distribution,
• 80,000 - 100,000 w/o
  distribution
• Cost showroom remodel 30/ft.
• Inventory turns 8 9/year for HME,
• 10-12/year for disposables
• Front 1/3 showroom 80 sales.
• Good/Better/Best selection closes sales.
• Display products on floor to touch/try/buy.

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Merchandising 2

• Core Profit Category
• The more product displayed, the higher the sales
  and profits
• i.e. Scooters, Power Chairs, Lift Chairs,
  Wheelchairs, Oxygen Delivery Systems
• Complete product selection of features, benefits
  and prices helps to close sales
• 2-3 Lift Chairs displayed 1-2/mo. sold
• 5-6 Lift Chairs displayed 3-4/mo. sold
• 10-12 Lift Chairs displayed 2-3/wk sold
  8-12/mo
• 15 Lift Chairs displayed 4-5/wk sold! 16-20/mo

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Level 3 HHC in Pharmacy

• 1) Create an aisle or dedicated department.
• 2) Stock 20 of the products that generate 80 of
  the HME sales.
• 3) Sell selected categories that meet the needs
  of customer demographics.
• 4) Display basic and upgrade products within each
  category.
• 5) Train a salesperson in HME products.
• 6) Participate in Medicare, Medicaid and other
  third-party billing.

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Staffing

• Opening Staff
• Owner/Manager/Sales
• Sales/Customer Service/Billing
• Warehouse/Delivery
• Basic Staff Positions
• Manager
• Inside Salesperson
• Outside Salesperson
• Customer Service
• Biller
• Delivery/Warehouse
• Reception/Office
• Gross sales/employee/year
• Good HME 150,000/employee
• Great HME 200,000/employee

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Revenue 1

• Revenue sources break down into thirds
• 1/3 Medi/Medi
• 1/3 Private Insurance
• 1/3 Retail (cash, credit card check)
• Top retail locations average 40 - 60 retail
  sales. ( 1000 transactions/mo.)
• Average retail transaction 180
• Saturdays highest sales of 5000 - 6000

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Revenue 2

• Factors limiting HME gross sales to 400,000 -
  600,000/year
• Less than 800 sq. ft. showroom
• No outside salesperson
• Less than 200 scripts/day (Rx-based HME)
• How to double this annual sales revenue
• Increase showroom to 1,000 1,500 sq. ft.
• Hire a dedicated outside salesperson
• 1 Mil gross sales generates 8-12 net

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Revenue 3

• First year break-even month 10-12
• Year 1 60,000 - 80,000 average/mo.
• Second year gross sales average 1 Mil to 1.5
  Mil per location.
• Year 2 100,000 - 120,000 average/mo.
• Year 3 150,000 - 160,000 average/mo.
• Average GPM 45
• Scooters, Lift Chairs average 35
• Disposables average 50 60
• Wheelchair cushions, compression hosiery
  orthopedic supports as high as 100

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HME Advertising Budget (5 of 1 Mil Gross
Sales 50,000)
Media
Yellow Pages 5 2,500
Newspaper 20 10,000
Radio/TV 35 17,500
Web 10 5,000
Direct Mail 10 5,000
Health Fairs/Shows 10 5,000
Open Houses 5 2,500
Misc. 5 2,500
Event marketing 25-35
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Mobility Category

• Crutches
• Underarm
• Forearm
• Accessories
• Walkers
• Folding
• Rollators
• Accessories
• Scooters
• Transport/Travel
• 3/4 Wheel

• Wheelchairs
• Manual
• Transport
• Power
• Lightweight
• Accessories
• Canes
• Aluminum
• Wood
• Folding
• Quad
• Handles
• Seats

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Cross-Selling Mobility 1

• Requested Product
• Wheelchair
• Identified Need
• Mobility and comfort

• Add-on Products
• Seat Cushion
• Back Support
• Pouch/Backpack
• Tray/Cup Holder
• Ramp
• Lift

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Cross-Selling/Up-Selling Mobility 2

• Requested Product
• Folding Walker
• Identified Need
• Mobility

• Add-on Products
• Rollator
• Basket
• Seat
• Tray/Cup Holder

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Bathroom Safety

• Bath/Shower Chair
• Bath/Shower Bench
• Transfer Bench
• Elevated Toilet Seat
• Toilet Safety Frame
• Commode
• Bidet Inserts

• Wall Grab Bar
• Tub Grab Bar
• Bathtub Rail
• Hand-held Shower
• Diverter Valve
• Anti-scald Head
• Anti-slip Mat
• TP Holder

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Cross-Selling/Up-Selling Bathroom Safety

• Requested Product
• Bath Bench
• Identified Need
• Stability in Bathroom

• Add-on Products
• Bath Chair
• Tub Rail
• Handheld Shower
• Grab Bars

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Patient Bedroom

• Homecare Bed
• Side Rails
• Support Surface
• Pad Sheets
• Patient Lift Sling
• Overbed Table
• Trapeze Bars
• IV Pole
• Lift Chair

• Foam Wedge
• Cervical Pillow
• Underpad
• Commode
• Bedpan
• Urinal
• Nutritionals
• ADLs

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Solution Selling for Stroke Patients

• Related Products
• Lift Chair
• Mobility (Wheelchair, Walker, Cane and Scooter)
• Bathroom Safety
• ADLs
• Nutritionals

• Core Products
• Bed
• Overbed Table
• Commode
• Patient Lift and Sling

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Incontinence Products

• Related Products
• Underpads
• Mattress protectors
• Urinals and Bedpans
• Sitz Baths
• Washcloths
• Powders and Ointments
• Gloves and Lubricants
• Bathroom Safety
• Skin Care
• Cleansers
• Barriers
• Moisturizers
• Antibacterial, Antifungal

• Disposables
• Pads and Shields
• Guards
• Undergarments
• Briefs
• Reusable Systems
• Undergarments
• Briefs
• Liners and Pads
• Urologicals
• External Catheters

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Diabetes Category

• Related Products
• Foot, Eye, Mouth and Skin Care
• Sugar/Alcohol-Free Foods and Meds
• Shoes
• Vitamins and Minerals
• Erection Aids
• Compression Stockings

• Core Products
• Control Supplies (Insulin, lancets, syringes,
  test strips and glucose)
• Blood Glucose Monitors
• Blood Pressure Monitors

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Home Diagnostics

• Core Products
• Blood Pressure Monitors
• Blood Glucose Monitors Strips
• Thermometers
• Pregnancy Tests
• Ovulation Tests
• Cholesterol Tests
• UTI Tests

• Colon Cancer Tests
• Prostate Cancer Tests
• HIV Tests
• Osteoporosis Tests
• DNA Test Kit
• Thyroid Disease Tests
• Male Fertility Tests
• PMS Tests

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Asthma HHC Products

• Core Products
• Nebulizers
• Compressor/Home
• Handheld for School/Sports
• Peak Flow Meters
• MDIs

• Related Products
• HEPA Air Cleaners
• Allergy Control Products
• Pillows
• Sheets
• Bed Covers
• Dust Mite Sprays
• Vaporizers
• Humidifiers

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Compression

• Core Products
• Fashion Support Hosiery (8-15 mmHg)
• Support Socks for men and women
• Knee-hi Hosiery for women
• Pantyhose for women
• Ready-to-Wear Graduated Compression Hosiery (15
  mmHg)

• Related Products
• Anti-embolism Stockings
• Maternity Pantyhose
• Custom Hosiery (need certified fitter)
• Pumps (both upper-extremity and lower-extremity
  models are available)

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Orthopedic Supports

• Core Products
• Carpal Tunnel Braces
• Neoprene Elastic Supports (ankle, knee, thigh,
  back, elbow and wrist)
• Hernia Belts
• Rib Abdominal Belts
• Lumbar Sacral Sacroiliac Supports
• Arm Slings Straps
• Cervical Collars
• Cervical Traction Kits

• Related Products
• Elastic Bandages, Tapes and Wraps
• Athletic Splints, Insoles and Heel Cups
• Pain Creams, Rubs and Liniments
• Hot/cold gel packs wraps, instant cold packs
  and Boo Boo Pacs
• Thermophore
• Moist/Dry Heating Pads
• Hyrocollator
• Paraffin Bath
• Exercise Balls
• Stationary Bikes
• Universal Bands
• Putty

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Prime Retail HHC Markets

• Womens Health
• Near oncology centers
• Separate interior room
• Diabetes
• Complete leg health
• Home Blood pressure monitoring

• Bariatrics
• Display extra-large products on floor
• Plus Sizes or X-Sizes
• Home Accessibility
• Stairglides
• Walk-in showers/tubs
• Bath Lifts
• Ramps
• Bath Safety

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Obesity in HME

• 300 lb. capacity
• Bariatric Products
• Walkers Rollators
• Wheelchairs
• Beds
• Bath Benches/Chairs
• Lift Chairs
• XL Blood Pressure Cuffs