Becoming a Retail Hero
How HMEs can transform their mild-mannered retail operations into cash sales powerhouses.
- By David Kopf
- Apr 01, 2010
The funding issues currently plaguing the HME industry can seem so extreme that it’s as though the situation came straight out a comic book. The villain, CMS, is big, bad and seemingly unstoppable as it attempts to lay waste to the homecare landscape.
But as crushingly low profit margins and strangled cash flow threaten to snuff out hope for HMEs, something comes along to save the day: Retail sales. Cash sales can restore life to providers’ flagging bottom lines and invigorate their cash flow by bringing in new revenue that is not subject to approval or runaround from any government agency.
Moreover, the types of DME and related products that HMEs can sell to patients on a retail business not only brings in revenue, but it helps them strengthen their customer relationships by being seen as a resource for many different items. They go from being “the wheelchair store,” or “the oxygen place” to becoming a trusted solution provider. And that reputation doesn’t stop at their patients. Providers can make referral partners aware of their retail solutions as well, which can help bring in even more patients and retail revenues — not to mention claims.
However, retail requires some new knowledge and skill sets from providers. What are some tactics, tips and techniques that can help an everyday provider transform itself into a retail hero?
Marketing Is King
Like any retail sales, marketing is critical to success. Providers must get the word out to patients and referral partners about the products and services that they offer. There is a wide range of avenues through which providers can market their services, including advertising in print, online, on the radio and television; email and direct postal mail campaigns; follow-up mailings and newsletters; and hosting seminars and educational gatherings, as well as having a presence at local events.
However, the investment required with some of these marketing methods can seem a little steep at time. Fortunately, providers have help. Many manufacturers of DME offer marketing support to their providers. The basic equation is that if the provider succeeds, then it will buy more DME from the manufacturer, so it is in the vendor’s best interest to help the provider.
Such is the case for Elias Reyes, sales manager for Village Apothecary Inc. which is a pharmacy and general HME provider that offers sleep products, respiratory services, beds, mobility items and other DME to customers in the Napoleon, Ohio area. Reyes says a key retail-marketing tool for him are custom-made product cards that come from one of his vendors, Contour Products, which makes pillows and other retail items for CPAP users and other sleep patients.
“We have found that providers are much more successful with cash sales items when there is a marketing program to back those items,” Sue Sarko, who was the longtime marketing director of Contour Products and now continues to handle marketing for Contour as an independent consultant. “I would use our Comfort CPAP Pillow a prime example of that.
“We provide what we call the marketing kit, and within that marketing kit we have various materials,” she explains. “The cornerstone of that program would be our handout cards, which are 4 inch-by-9 inch cards, and we provide literature holders for those. We will give a provider, depending on how pillows they order, say they order a dozen, we will give them 150 cards to use.”
On the back of the card is a white space that is custom printed to bear the personalized contact information, address, web site and other information for the provider. The provider can also re-order the cards to replenish the stock, as well, according to Sarko.
Reyes says tools like those cards are a key element in his retail marketing strategy to both patients and providers.
“When a patient is due for a new mask or other refill I put these cards into the reminder envelopes and mail them out,” he says. “Also, when I do an initial set up, I put a card in the CPAP bag so the patient has it.”
Those cards are especially helpful in working with referral partners, Reyes says, explaining that he will drop off the cards so that the lab can pass them along to patients, along with sample DME.
“It’s sort of a gift from me to a sleep lab,” he explains. “I’ll take the cards and put them in a card rack holder, and have them at the sleep lab so that I have our information there. They’re a good sized card and on the back of them it has my name and where you can find the pillows. And I’ll usually give a lab a CPAP pillow, so when they do their sleep studies, they’ll use these pillows.”
Another key marketing avenue for Reyes is exhibiting at local events, and he says he brings sample DME and those cards with him when he goes.
“I do a lot of health fairs,” he says. “I’m always advertising at health shows and that really helps. It’s key for me. I actually had one about two weeks ago, and my table was nuts. Obviously, sleep apnea is being diagnosed a lot, and I was sort of surprised at how many people were stopping at my table. The next day we had people coming and taking product off my rack.”
Another part of Reyes’ marketing strategy is to specially price cash sales items to drive retail traffic to Village Apothecary.
“I’ll run a special sometimes, as 25 percent off,” he says. “The last time I did that, I ran out of CPAP pillows.”
Financing: The Secret Weapon
DME can get expensive, and often there are patients that need DME, but are not covered. These patients often are willing to purchase even costly DME on a retail basis, but simply might need a little help. This is where financing can become a big help, according Steve Bach, owner of general HME provider Bach Medical Supply, which offers a variety of DME and services to patients in Springfield, Mo.
Bach Medical Supply’s cash sales are concentrated on bath safety, stair glides and aids to daily living, as well as scooters and other mobility products for some customers. Needless to say, not all patients are covered and need help.
“For scooters and power chairs we’d like to get the people who don’t qualify, but still want to buy one,” Bach says, adding that there are some similarities for patients that want power mobility devices but cannot get funding for them. “Often they are in a younger age group. I’d say 55 to 65 years old. And we get a few over 65 as well, but the majority of them are under 65. We still have a lot of people where we and the doctor can’t qualify them for a power chair.”
For customers that are in that situation, Bach says that providing financing is a key advantage. Not only does financing ensure that a provider can help a patient get the DME he or she needs, but it allows the provider to differentiate its cash sales operation from competitors by demonstrating that it has solutions for patients that aren’t covered. Bach Medical offers its financing for its mobility products through Pride Mobility’s consumer financing program, which is handled on the back end by Pride’s financing partner, U.S. Credit.
The program’s terms include six months same as cash, with up to 24 months of financing available, according to Bach.
“For example, on a lift chair, they will only finance those for 12 months, on a scooter or power chair or Silver Star lift, they’ll do those at 12-, 18- or 24-months financing,” he says.
“It’s only for products where no third-party insurance is involved,” he adds. “[Patients] can only finance it through U.S. Credit.”
In terms of patient response to the program, Bach says most patients get pretty excited.
“They know they don’t qualify with Medicare or insurance coverage, and even with Medicare, they know they would have some kind of co-pay,” he says. “So these patients are happy if they can have a 24-month pay period on something.”
Another important component in ramping up retail sales is ensuring that staff members are properly trained. For many of even the most seasoned HME pros, handling retail sales marks a sudden shift in how they interface with patients. Now, HME staffers do not only have to determine the best solution for the patient, but they have to sell them on it, as well. That can represent a massive culture shift for some.
Bach says that training is key in ensuring that Bach Medical Supply’s team members stay at the top of their retail game.
“We have customer service staff that are trained and that receive in-services every two weeks,” he says. “Every other Friday morning from either myself or a representative from a company.”
Ensuring that staff members are knowledgeable about products and how they suit customer needs is central to sales success. In order to sell a patient on a piece of DME, staff must understand its features, specifications and capabilities backwards and forwards.
“If a person calls on the phone and my staff doesn’t know about the product, they can’t start the sales process,” he explains.
Besides instilling product knowledge in his team, Bach says recruiting the right people is also important. Bach says he seeks out potential recruits who have a knack for sales, because they will be his retail specialists.
“There are some people that are more sales oriented — that are natural sales people —and some people that aren’t,” he notes.
Being more sales oriented means not stopping at “no” — especially when that “no” is followed by the word “funding.” Besides handling any customer hemming and hawing, sales-oriented staff must be able to come up with ways to help providers get the DME they need. And this often comes back to financing.
“Don’t be of the mindset that if a patient comes in and his or her insurance is not going to cover it that he or she is not going to be interested in buying,” Bach says. “That’s what I see the most when a dealer assumes a third party is not going to pay for it that the patient is not going to buy it.”
And if the patient doesn’t qualify for financing there are often options such as trust departments within bank, which can help patients pay for DME.
Also, grants and private philanthropic trusts will sometimes pay for patients’ equipment, Bach says.
“We have two or three in this area that we work with quite a bit. I can’t speak for other areas of the country, but I’m pretty pleased with the relationship we have with ours,” he says, noting that providers should ensure that they only direct patients that are applicable and truly need such help to those types of resources. “Direct people that really need to be directed there; not just anybody and everybody.”
Making a good first impression is critical and in retail sales that means having a show room that welcomes clients and helps them find what they need. This is a consideration that providers must not ignore, Bach advises, adding that he speaks from experience. He grew up in a drug store and 34 years ago he started a DME for another company and five years later started his own.
At Village Apothecary, a key to showroom success is having good product shelving and keeping DME and related products organized and located together, so that patients can see the range of solutions available to them. Also, Reyes says he makes sure to display retail products along with other funded DME that is related. This will allow staff to “upsell” patients on products about which they might not have been aware, but that add an increased level of comfort or usability or functionality to the core DME than initially needed.
For instance, one of Village Apothecary’s specialties are sleep products, such as CPAPs and BiPAPs, so a key has been to offer related products, such a pillows, pads and other products from Contour Products that better accommodate CPAPs and help sleep patients sleep more comfortably, Reyes says.
“I’ve been here a year in a half in that short amount of time we have really just taken off on our CPAPs and BiPAPs,” he says. “With that pillow, it’s really convenient for people that are on those devices.”
So it’s critical to make products very visible to patients moving through the showroom. The key is to think strategically about where they’ll be.
“Right now I have a full rack of CPAP pillows, which holds twelve,” Reyes says. “The location that I have for that is perfect.
“We have our pharmacy, and where people come up to get their medicine, I have an end cap with all my CPAP demonstration heads with masks, and right next to them is my rack of pillows,” he explains. “So it’s eye-catching. People see it and say, ‘oh, there are pillows.”
And if a provider can’t stock what the patient needs, it should make patients know that it is it is ready, willing and able to serve a wide variety of patient needs. Providers should make patients and referral partners aware that they are there to help and willing to handle special orders if necessary.
“We do a lot of special orders,” Bach says. “We can’t carry everything. It’s just not physically possible. So we promote to physicians offices that if they have patients looking for something to send them to us and we will either find it for them or find a place where they can get it for some reason. Special orders have done very well.”
This article originally appeared in the April 2010 issue of HME Business.