Observation Deck

The Need for HME 'Caretailing'

Retail sales are critical to expanding HME provider revenues in the face of Medicare reimbursement cuts, and Caretailing makes a solid patient connection.

We talk a lot about retailing in this industry, but what about Caretailing? Let’s start by defining the term. Caretailing is the act of providing customer service and expertise to consumers willing to pay cash for health-related products that improve their lives, and are beyond the usual scope of Medicare and other third party payors.

Are you one the many HME providers who can’t get comfortable or really see any solid reason to invest in a Caretailing program? Maybe you think people will never buy enough product to make it viable or that we could never generate enough customer visits per day to keep a staff busy, or even the most robust retail operation will never bring in profits like your core business does.

Or maybe you feel that to be viable, it takes a different type of employee than you have in your current operation and it would take a huge investment to develop and grow a retail program. Or you feel that retail is a business model that your organization knows nothing about so you have no chance at being successful.

I want to give you three reasons why you need to have some kind of Caretailing program as part of your existing or future business offerings:

  • Is there a worse business partner than the federal government? If there is, it’s probably one of managed care contractors or national health insurance contractor. We absolutely need to find payors who will give us margin and let us keep our money.
  • I saw a report that states that 85 percent of the private insurance plans Americans own today are high-deductible plans, which means that they are spending more of their own money on health care than ever before. When the general public is paying, they shop around.
  • VGM’s Mark Higley predicts that by 2019, cash will be the No. 2 payor for health care services, very slightly below the No. 1 payor, which of course will still be Medicare.

Caretailing Is the Future

So no matter what your core business is today, a bigger percentage of it is going to be cash as we steam towards 2020.

The other key component of the future is who the predominant customer is going to be, and that is the baby boomers. Most of the boomers are still under the age of 65, and as they need and want services, they will want instant access and will expect to pay for some or all of it, and in many cases will be able to do so. Are we “boomerizing” our businesses to appeal to this group?

I am a younger boomer and I am really unsure of when I am going to grow up. I still like rock and roll, action movies and am very active with jogging, softball, walleyball and golf. I am completely undone that in the next five years I am likely to be a grandfather! I do find the current image of our industry to be more suited to someone far older than me, and feel many of the HME stores I visit make it feel like you need to be half dead to have any need to go in.

We must and can easily change that image, to capture the old in the body, but not in the mind boomers, who will buy our products if we can make them feel good about doing so.

Caretailing can take many forms. I’m seeing hundreds of providers from all over the country who are investing in a retail programs of all shapes and sizes. Let’s say CPAP is your bread and butter revenue source. We are seeing lots of CPAP shops opening up where the consumer comes in to get their replacement mask or initial fitting and the space is loaded with many tag-along products, as well as some selected great holistic and everyday active products to help this type of consumer live more comfortably and be more active.

Complex rehab providers are bringing more and more mobility-related cash items in and are upgrading their showrooms to appeal to their end users, and especially their caretakers.

We are seeing other suppliers, mostly in the bigger markets, foregoing taking any prescriptions and going with a full blown retail model, and many are beating their sales goals by the end of the third quarter. Safe at Home senior products are the many times the big focus, many stores are mixing in pain relief products, great-looking pain relieving shoes, and compression products for both everyday wear and athletic performance styles.

We are also seeing many providers who have had lackluster retail programs that they did not invest much in now realize that they need to upgrade to an “all-in” management, where they put as much energy into growing it as they did their other core business. Many of these retailers are having a huge uptick in their mom and baby goods with the Obamacare policy of enhanced breast pump coverage. There are many new tag-along before-and-after baby cash products that consumers love that many providers are starting to move.

Caretailing Emphasizes Care

When I owned a HME company, we hired a branding company and it was a great business experience that made us better, but I will never forget the one thing that our project manager was super impressed with. He could not believe how emotionally solid our relationship was with our consumer.

For the most part we have a bond with our customers (I refuse to call them patients) that creates a level of trust and goodwill that most companies can never expect to achieve. With this trust, we should be introducing them to products that we know are great, will work for them and enhance their life. With the relationship we have, as long as the price is reasonable we should be able to make our average ticket sale bigger and enhance our relationship more by being the resource our consumer can trust for more than just their wheelchair or CPAP machine.

The one part of our business that fits the Caretailing model is that we are already good at explaining what our products are, and how to use them for best health results. With a focus on staffing your showroom with people who are good at retail and not HME third party experts will make a big difference in your success. Staff who are tasked with the handling of prescriptions on the one hand and the detail that goes with that and then serving a retail customer, will struggle with completely different approaches that each transaction takes, and more times than not the retail customer is left wanting.

Setting a store up with management that is incentivized to make the retail successful and learning the best ways to market the general public is a much better recipe.

So, Caretailing sales has only one place to go and that is up. This is a true entrepreneurial opportunity that is waiting for us to grab. To be successful, we must realize that many of us have no real expertise in this arena and bring retail people with customer service skills and marketing experience.

Caretailing is not going away and we invite you to join us for the ride!

This article originally appeared in the November 2015 issue of HME Business.

About the Author

With 34 years in the industry, Jim Greatorex started Black Bear Medical in 1988, which grew to include three stores and 37 employees in Maine and New Hampshire. Today, he leverages his HME retail experience at VGM Retail Services, where he helps providers implement successful Caretailing programs.

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