2011 Big Ten
If 2010 was HMEs’ education in ‘retail 101,’ then 2011 is their graduation to cash sales graduate school.
- By David Kopf
- Jan 01, 2011
With CMS working overtime to drive down Medicare funding for home medical equipment, providers are working doubly hard to increase their cash flow anyway they can. One of the key ways to accomplish that is through increasing retail sales revenue. While patients come to providers for core DME, there is still a multiplicity of high-and low-price products, such bath safety items, auto access gear, compression garments, or aids to daily living, for which they are willing to pay cash. Moreover, there are many patients of means who are willing to pay cash for traditionally funded items, such as portable oxygen concentrators, because they want them right away and can afford them.
Recent years saw increasing retail interest from providers; last year saw providers prioritizing their retail efforts; and 2011 will see HMEs evolve into cash sales pros. That said, for businesses that have traditionally relied on Medicare funding, and private payor and Medicaid funding to a lesser degree, learning retail has been a journey for some providers. However, the lessons they’ve learned along the way have been instrumental in their prolonged livelihood.
For starters, simply learning that selling isn’t necessarily a bad thing can be a major step for providers. Much of sales is actually consultation; working with a client to better understand his or her needs. Consulting with a patient and then crafting the ideal solution, which might include some retail solutions, is hardly unethical. Rather it is providing the best possible care. Taking that to heart is perhaps the first step in the retail revolution for many providers.
Once that happens the provider can work with staff to shape a top-tier retail sales and service team. That means 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 completely understand its features, specifications, capabilities and limitations. It also means instilling the drive and entrepreneurial spirit to want to increase.
Another essential lesson is that marketing matters — in a big way. Providers are becoming increasingly savvy about getting the message 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.
That said, marketing isn’t free, which is why many providers are taking advantage of the marketing tools provided by many manufacturers of DME offer marketing support to their providers. These vendors realize that if their providers succeed, then they will buy more DME from the manufacturer, so it is in the vendor’s best interest to help its providers.
Consumer financing could become another key tool for HMEs’ retail operations, particularly for those selling higher ticket items. For patients that are willing to purchase even costly DME on a retail basis, but might need some help, financing can ensure the patient gets needed DME and the provider makes a sale.
Savvy providers are seeking to work with DME manufacturers that can offer turnkey financing services, or other third-party financing companies to ensure they can offer better terms than forcing patients to use a credit a card. Besides, providing financing also helps the provider differentiate its business from competitors by demonstrating that it has solutions for patients that aren’t funded.
And let’s not forget the floor. A retail operation is nothing without a well-designed, welcoming showroom that helps patients find what they need. DME should be organized and arranged so that patients can fully investigate the product. Signage and displays are critical in helping the patients help themselves. And once patients are at the register, the provider should point of sales systems so that they can ensure a smooth and speedy retail transaction.
In fact, point of sale systems are critical because when tied to a provider’s software system they can begin take advantage of back office efficiencies to help improve their retail operations. For instance, the provider can implement special promotional pricing for certain items, automatically update the inventory system when an item is purchased, and track which patients are buying which products. (This, of course, means the provider can generate even sharper marketing campaigns.) The key for providers is to outline how their back office systems will integrate with their point of sales systems and business processes before they start implementing the technology.
Suffice it to say that providers will need to take the lessons of 2010 to heart and apply them to their businesses if they want to secure retail success in 2011. Moreover, given the continual pressure to increase revenues they are sure to feel this year, providers will learn many more crucial lessons throughout 2011’s continuing cash sales education.
Points to Remember
- Cash sales a business imperative for HMEs in 2011.
- The lessons providers learned in 2010 will be instrumental in their retail success.
- A key element is training up staff and getting them used to sales.
- Marketing and smartly designed retail spaces are other top priorities.
- A company-wide commitment to retail will be key to driving retail revenue.
This article originally appeared in the January 2011 issue of HME Business.
David Kopf is the Editor of HME Business.