Most providers serve a large volume of senior patients. Now is the time to expand by helping them further.
- By David Kopf
- Aug 01, 2013
If there is one business segment that knows seniors, it is home medical equipment providers. The question is, how well have providers leveraged their understanding of such a critical patient group? There could be an opportunity to expand their revenues to a significant degree, provided HMEs do a little out-of-the-box thinking along the lines of senior care services.
Most providers are well aware of the market size senior patients represent. The population of seniors is massive and growing. According to the Census Bureau, there were 40.3 million people age 65 and older in the United States in 2010, which was up 5.3 percent from 35 million in 2000. Moreover, with the 77 million-person-strong Baby Boom well into retirement, it’s no wonder the AARP reports that by 2030 one in every five Americans will be age 65 or older.
But when it comes to the HME industry, it’s fair to say that while that market size might be recognized, its scope is underleveraged. Most providers offer DME to older patients without considering that they could leverage their customer and referral partner relationships to expand into the realm of senior care services.
Now is the time for providers to revise that way of thinking. Given the massive funding pressures they now face — especially with the near-national expansion by the Centers for Medicare and Medicaid Services of its competitive bidding program via the July 1 implementation of Round Two — expanding into revenue opportunities that are free from the funding frustrations of Medicare (and even private payor insurance, for that matter) is critical.
Senior care is an excellent opportunity in that regard. It serves a patient group providers know inside and out and offers more than one entry point into the marketplace. There are two main approaches providers can take toward diversifying their revenue in the senior care marketplace:
- Offer senior care services themselves, which makes good sense given the close alignment of seniors’ need for DME and senior care services.
- Work with senior care providers as a referral partner and a customer that would be purchasing DME from the HME provider.
Providing Senior Care
So what is senior care? For many seniors, they simply need help around the house. They might be living independently, or even with some assistance (such as in an assisted living facility), but they need help carrying out various duties, or simply need some companionship. This is where senior care services providers come into play. They provide the people that can help senior patients address these needs and wants.
The help that senior care services providers offer can range from having a team member stop by a senior’s home for two or three hours a day to help with a given set of tasks — doing the laundry, cooking some meals, running errands, or simply having a chat — to scheduling an around-the-clock team to provide 24/7 care and assistance to a client.
Offering those sorts of senior care services is a clear opportunity for providers, and some of them are already diving into that arena, according to Alan Morris, director of Alternate Care Programs for HME industry member service organization The VGM Group Inc. (Waterloo, Iowa; www.vgm.com).
“A number of DMEs have gone down that path,” he says. “… I think just from a logic standpoint, it makes perfect sense,” Morris says. “There is no segment of healthcare that has access to more home-bound, chronically ill individuals in their homes than the DME marketplace.
“Certainly you have access to a large, fragile population that has a strong desire to remain in their home, otherwise they wouldn’t be your customers in the first place,” he continues. “So to offer a service like this — while maybe not perfectly complementary to home medical equipment — the audience is the same, and it seems to make sense.”
Franchising Senior Care
In terms of how providers go about offering senior care services, there are two main approaches: develop their own senior care services, or work with a large regional, or national senior care services franchise.
“VGM has a partnership with Caring Senior Service [caringseniorservice.com; San Antonio, Texas] to bring that franchise opportunity to our members, but there are lots of other opportunities out there, as well, including in-house solutions,” Morris says. “And a number of DMEs have gone that route.
“There are lots of successful franchises out there; that seems to be a popular model,” he continues. “While I know a handful of DMEs that have started their own, and I’m sure there are lots of independent providers of senior services in the home.”
One key asset that comes with joining a franchise operation is that many offer software programs to help providers manage their senior care business. The software helps them manage their staffing, billing, scheduling and other key aspects of senior care operations.
Another benefit of joining a franchise operation is marketing. Franchise operations often offer a number of materials ranging from newsletters, email content, print ads and even radio and TV advertising creative that providers can use to help publicize their new senior care services businesses.
And many of these franchisers are looking to grow their networks. This means providers have a ready and willing provider eagerly on the hunt for viable franchisees to help expand their footprint. That’s certainly the case of VGM’s partner Caring Senior Service, according to Morris.
“They, like many others, are growing,” he says. “They have a good program, they have a good opportunity to partner with DMEs, and it’s a popular model.”
Who’s Right for Senior Care?
So what type of provider is well suited to senior care services? It comes down to a blend of capabilities, service and patient characteristics. The provider needs to look at what is offering and to which patients, to see if there might be a senior care crossover opportunity.
“I don’t think we could pin it down to the perfect candidate, but I do think there are several attributes that would make a company a good candidate,” Morris says. “If you’re looking at DMEs that have access to the perfect population, I would point toward respiratory providers, specifically home oxygen therapy, because they have individuals that are living in their homes; they’re generally elderly; and certainly have related needs.”
Whereas, a provider that focused on complex rehab or sleep and CPAP services might serve a much younger patient population, so senior care services might not work as well, he says.
Another provider group that might have a good line into the senior care market would be providers that are offering home access services. Because they’re going into various homes to do bath safety modifications and access upgrades, they might already be serving a large number of senior patients that could benefit from senior care services.
“If you have a person who wants to stay in their home and is will to invest money into modifying their home — if they’re willing to spend $5,000, $10,000 or $40,000 to make their home more appropriate for them so that they can stay there longer — then they might be a candidate for these types of [senior care] services,” he says. “They have a need, and they have the cash to spend on something like this.”
Morris also suggests providers that have a good retail/cash sales operation in place, and that have a breadth of products that include items such as aids to daily living and bath safety solutions that will help empower seniors looking to remain in their homes. Moreover, senior care services are not funded; they are retail services, so the ability to conduct sales of higher-priced services is a plus.
The HR of Senior Care
If providing senior care services means sending staff to seniors homes, it clearly requires manpower, and that means understanding the human resources elements of senior care services.
“There aren’t a tremendous amount of requirements as far as staffing goes, or qualifications, necessarily, but there is a relatively high turnover because of the nature of hours associated with this business,” Morris says. “So generally there is a staff placement program in conjunction with a temp agency or something like that, or a program that is managed by a franchise where it is placing staff on behalf of its franchise.”
And that is critical since senior care is a high turnover environment. The schedules often change and how much time and assistance a senior might require can shift. This means that providers employee base will expand and contract as the population of senior care clients grows and changes.
Serving Senior Care Providers
As mentioned, there is more than one way to approach senior care services, and serving existing providers of senior care services is another route providers can take into the senior care marketplace. In fact, it can offer a large number of potential customers and partners that providers might not necessarily realize — especially if they look beyond the classic definition of senior care services.
“If you went out and started building relationships with assisted living facilities, existing non-medical homecare facilities, senior centers, and other providers of senior services, as well as places where seniors congregate, you have the opportunity to expand your existing business,” says Louis Feuer, MA, MSW, president of Dynamic Seminars and Consulting Inc. (www.dynamicseminars.com), which offers the Med Comment Center (www.medcommentcenter.com), as well.
Moreover, while there is a temptation for a providers to initially start offering their own senior care services, looking to existing providers of their services as potential customers might help them find a niche in the senior care world that doesn’t entail launching a new division or business. Or, it could offer a way to ramp up toward that launch over time.
“People say, ‘Well, I’ll start a sleep lab, and I’ll start a this and a that,’ but I think sometimes before you start anything you might want to see if you can expand your reach a little bit,” Feuer explains.
No matter how you slice it, assisted living, residential and adult congregant facilities represent a growing marketplace, and the patients living in them, as well as the facilities themselves represent a key opportunity.
“These are people who can afford the products that we are trying to sell through our retail stores,” Feuer says. “They can afford the magnifying glasses and watches that talk and seat lift chairs. And the growth of assistant living at least from my research to be tremendous.”
The Hidden Market
And providers might not realize how many of these facilities are available to them. There is a large number of facilities serving patients that do not advertise or that are not initially apparent when providers conduct an initial sounding of their local marketplace, Feuer says. The Yellow Pages.
“I live in a community where if you looked for facilities with [senior care-type] names on them in South Florida, you’d probably find fairly few. But if you looked in the archives of licensed facilities in the state, there are hundreds.
“In Broward County, which is where I live in the Ft. Lauderdale area,” he explains, “when I looked there were close to 400 licensed facilities, because a lot of them are sitting in residential homes where a nurse will buy a three- or four-bedroom home; and then decided to add two, or three, or four bedrooms on; got a license; hired a part-time nurse, and generates about $2,500 or maybe more per-resident. If you drove by those facilities, you’d probably never even know they were there.”
If providers obtain such list by reaching out to their state agencies that license such facilities, the Catholic Services Bureau, Jewish Family Service, they will start to get an idea of the true market opportunity available to serve such firms, Feuer recommends.
And those smaller providers offer a ripe opportunity for providers by helping them differentiate their care, as well as to offer a way for their patients and their families to improve a patient’s stay at such a facility, Feuer says.
“We hear a lot about aging in place,” he notes. “People want to create a place where seniors can age in place. Well, if you’ve been to these facilities, I think people are aging there, but I’m not too sure they have the extras there that could make aging in place a bit more pleasant.
“For instance,” he continues. “I’m saying we could sell them an electric bed that was more high-end than they would have in most facilities. I’m thinking of that lady in an assisted living facility. Would she benefit from an electric bed that the family would buy her? Would she benefit from a lift chair?”
And the notion of what the provider offers to a senior care service provider and its patients and their families could even broaden in unexpected ways. Feuer goes back to his example of the patient in a small residential assisted living home.
“I kind of laugh for even suggesting this, but would she benefit from a large-screen TV in her room?” he says. “Are we in the television business? I don’t know. If that makes senior living easier, then why don’t we sell the $1,500 TV? You want to make that place not just someplace where patients can age, but improve the quality of life for the resident.”
Feuer’s point: Why be a DME-only provider? Why not be a senior living solutions provider? That’s the sort of creative thinking the provider needs to engage in.
And of course the traditional offerings such as bath safety solutions and aids to daily living still stand, as well, Feuer points out. The key is to meet with these providers and start finding out what opportunities exist.
“If you went to the facilities, if you made a sales call, and you did some evaluations, the owners of these facilities have everything to gain by having an HME dealer do an assessment of that room,” he explains. “If they lose a resident for whatever reason, they are probably wiping out $30- $40- $50,000 a year. They can’t afford to have a patient leave. And you might be able help the owner make the existing facility where patients can really age in place without any reason to have to leave.”
This article originally appeared in the August 2013 issue of HME Business.