Coloring Outside the HME Provider Lines
HME Home Medical’s Eric Hagen explains the origin of the GO HME distributor model.
- By David Kopf
- Apr 01, 2014
Exploring new businesses models has been a top priority for many providers trying to expand beyond Medicare reimbursement. To that end, many HME businesses have tapped into retail sales, home access and orthotics & prosthetics, just to name a few. But one Northeastern Wisconsin provider has hit on yet another option: business-to-business supply.
On March 1, Green Bay-based HME Home Medical launched GO HME (www.gohme.com), a new business-to-business outfit that delivers incontinence products to various businesses in the healthcare supply chain, including other DME providers. The company aims to bridge the gap in the continuum of care that exists between product and users by working as a strategic partner for businesses, facilities, managed-care organizations and caregivers alike.
“I started a patient supply program for incontinence supplies when I first started here a little over two years ago,” said Eric Hagen, director of business development for HME Home Medical.
That effort was targeted mainly toward assisted living facilities where residents were responsible for pay for their incontinence supplies. So Hagen set up a program of supplying those items on the first and 15th of each month to take the burden off the patient or the family.
“That quickly grew over the last two years by 300 percent in sales from 2011 to the end of last year,” he says. “Just by offering that incontinence resupply program.”
After that, various care operations, such as skilled nursing facilities, which have to supply those items to their residents and patients, began approaching HME Home Medical for incontinence products.
“But what I had found was that, too often, as we would sit down and start talking about it, many of the companies that we’re buying product from were also selling to those facilities,” he explains. “Naturally, they sell them their products cheaper than was I can buy them for. So even though these companies wanted to give me their business, I couldn’t do it, because I couldn’t come close on price.”
That got Hagen thinking like a distributor, and looking at other product options that would let get to the right price point. That led him to Eau Claire, Wis.-based Presto Absorbent Products Inc.
“They are a large manufacturer of adult incontinence products, and have private labeled for many major manufacturers,” Hagen says. “Because they have been private labeling, they’ve been on the forefront of automation.”
This meant the right prices, but Hagen had to affirm the product was rock-solid. After various factory tours and tests, and overall due diligence, Hagen and HME Home Medical decided the product was good. With that core supply relationship, Hagen says he was able to pursue other manufacturers to ensure that GO HME’s line was broad enough to offer a full line of incontinence products that includes briefs, pull-ups, underpads, gloves, wipes and skin-care products.
From there a distribution center was established for GO HME and now it is working on attracting a client base. The orders are already going out, Hagen says. The goal isn’t market domination, but simply carving out a niche in a realm dominated by some well-known big players.
“We want to compete with some of these major companies,” he says. “We don’t pretend we’re going to be David vs. Goliath and win here. But what we are trying to do is keep some business local. There are a lot of managed care contracts won by out-of-state companies, and we’d like to try and help the companies in our state win those.
“We might be able to win a few price battles, but we’ll never a win price war with those major companies,” Hagen continues. “But we also provide a much wider range of service.”
And there’s a longer play at work, as well. If a patient at a skilled nursing facility gets better and goes home, know HME Home Medical can step in and help, because of the relationship that was established by GO HME.
“When they discharge from that facility, they might need a hospital bed and a wheelchair,” Hagen says. “We’re able to do that, too. So being a DME company, as well as a distributor, we’re able to help patients 360 degrees.”
That kind of creative thinking will keep HME businesses such as HME Home Medical and GO HME providing product and value throughout the healthcare continuum.
This article originally appeared in the April 2014 issue of HME Business.
David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.