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Why HME is a Front-End Profit Center/ How to Create a Successful Retail HME Showroom Handouts. by Jack Evans www.RetailHomecare.com www.HMEducation.com. Competitive Bidding: Another Reason for Retail?. The MMA creates a "second class" of Medicare beneficiaries:

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Why hme is a front end profit center how to create a successful retail hme showroom handouts l.jpg

Why HME is a Front-End Profit Center/How to Create a Successful Retail HME Showroom Handouts

by

Jack Evans

www.RetailHomecare.com

www.HMEducation.com


Competitive bidding another reason for retail l.jpg
Competitive Bidding: Another Reason for Retail?

  • The MMA creates a "second class" of Medicare beneficiaries:

    • Requires CMS to select a group of low-cost providers to serve beneficiaries in the competitive bidding areas.

  • Medicare beneficiaries in a bid area will not receive the same level of care or the same quality of products as someone in a non-bid area

  • Bottom Line

    • Medicare beneficiaries will be forced to accept a lesser standard of care

    • Medicare beneficiaries will be forced to accept a lesser quality product


Hme revenue sources diversify for survival l.jpg
HME Revenue Sources:Diversify for Survival


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Transitioning HME Customer Demographics


Baby boomers family caregivers as hhc customers l.jpg
Baby Boomers & Family Caregivers as HHC Customers

The Facts:

  • 44.5 Million First Wave Boomers

  • 15 Million are Active Caregivers

  • Represent 65% of current Rx and retail HME customers

    The Concept:

  • # Boomers = # Californians

  • California = 5th largest economy in the world

  • Imagine the potential HHC sales!

    (think Rock n Roll, SUV’s, Starbucks, Botox & Viagra!)


More baby boomer family caregiver stats l.jpg
More Baby Boomer & Family Caregiver Stats

  • Boomers began turning 60 this year

  • They are purchasing more HHC products for themselves

  • 75% make their purchasing decision in-store

  • Boomers represent loyal, repeat customers


Demographic merchandising l.jpg

Seniors

Front End:

Mobility

Bath Safety

Lift Chairs

Scooters

Back End (Demand):

Incontinence

Urology

Wound Care

Adult Children

Front End:

Orthopedic Supports

Compression Stockings

Hot/Cold

Back/Neck

Back End (Demand):

Diabetes Supplies

Home Diagnostics

Demographic Merchandising


Hme business components l.jpg
HME Business Components

  • Retail Location

  • Showroom Display

  • Product Mix

  • Dedicated Salesperson

  • Medicare Billing

  • Referral Marketing


Retail location l.jpg
Retail Location

  • Strip mall, medical center or adjacent to chain drug store.

  • $12 - $18/ft. rent for retail AAA space.

  • Minimum street traffic of 8,000 – 12,000 cars/day.

  • Minimum 800 – 1200 sq. ft. showroom for “hub & spoke” operation.

  • Exterior signs to announce HME.

  • Window displays that sell 24/7.


Hhc merchandising l.jpg
HHC Merchandising

Level 1

HHC products mixed with OTC’s

Level 2

HHC planogramed sections to sell most OTC-type retail products

Level 3

HHC department with trained person for specific customer needs plus rentals, insurance billing, delivery, fittings


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Level 1 HHC in Pharmacy

Home medical equipment (HME) or any other home health care products that are scattered throughout the store as part of other departments.

These products are shelved as OTC’s to sell themselves.


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Level 1 – Examples

  • Blood pressure monitors and diabetes products are shelved behind the counter.

  • Incontinence products are next to diapers.

  • Bathroom safety products are displayed with urinals, bedpans and sitz baths.

  • Wound care is part of first aid.

  • Canes are hanging from a floor stand wherever there is room for the display.

  • Orthopedic supports are next to foot care.


Level 2 hhc in pharmacy l.jpg
Level 2 HHC in Pharmacy

  • HME shelved as OTC to sell itself.

  • Displayed as one HME/HHC category.

  • Minimal selection of best sellers.

  • Retail, cash products only.

  • Displayed near pharmacy.


Level 2 examples l.jpg

4’ Bathroom Safety:

Grab Bar

Elevated Toilet Seat

Bath Bench

Hand-held Shower

Level 2 – Examples


Level 2 examples15 l.jpg
Level 2 – Examples

4’ Mobility:

  • Cane

  • Quad Cane

  • Folding & Rolling Walkers

  • Transport Chair

  • Standard Wheelchair


Level 2 examples16 l.jpg
Level 2 – Examples

2’ – 4’ Orthopedic Supports:

  • Carpal Tunnel Braces

  • Knee & Elbow Supports

    2’ – 4’ Compression Hosiery

  • Support Stockings

  • Graduated Compression




Successfully selling against the chains www l.jpg

Boutique Business Basics

HHC = Specialty/Niche Retailer

More knowledgeable salespeople

Deeper selection, higher margins

Experiential store environment

Sell the Package

Medical grade product = 20%-30% added value

Consumer education

Product demonstration

Delivery

Customer service follow-up

24/7 support

Successfully Selling Against the Chains & www


Merchandising 1 l.jpg
Merchandising #1

  • COG = $30,000 - $40,000 w/distribution,

    $80,000 - $100,000 w/o distribution

  • Cost showroom remodel = $30/ft.

  • Inventory turns = 8 – 9/year for HME,

    10-12/year for disposables

  • Front 1/3 showroom = 80% sales.

  • Good/Better/Best selection closes sales.

  • Display products on floor to touch/try/buy.


Merchandising 2 l.jpg
Merchandising #2

Core Profit Category

  • The more product displayed, the higher the sales and profits

    i.e. Scooters, Power Chairs, Lift Chairs, Wheelchairs, Oxygen Delivery Systems

  • Complete product selection of features, benefits and prices helps to close sales:

    • 2-3 Lift Chairs displayed = 1-2/mo. sold

    • 5-6 Lift Chairs displayed = 3-4/mo. sold

    • 10-12 Lift Chairs displayed = 2-3/wk sold = 8-12/mo

    • 15 Lift Chairs displayed = 4-5/wk sold! = 16-20/mo


Level 3 hhc in pharmacy l.jpg
Level 3 HHC in Pharmacy

1) Create an aisle or dedicated department.

2) Stock 20% of the products that generate 80% of the HME sales.

3) Sell selected categories that meet the needs of customer demographics.

4) Display basic and upgrade products within each category.

5) Train a salesperson in HME products.

6) Participate in Medicare, Medicaid and other third-party billing.


Staffing l.jpg
Staffing

  • Opening Staff:

    • Owner/Manager/Sales

    • Sales/Customer Service/Billing

    • Warehouse/Delivery

  • Basic Staff Positions:

    • Manager

    • Inside Salesperson

    • Outside Salesperson

    • Customer Service

    • Biller

    • Delivery/Warehouse

    • Reception/Office

  • Gross sales/employee/year:

    • Good HME = $150,000/employee

    • Great HME = $200,000/employee


  • Revenue 1 l.jpg
    Revenue #1

    • Revenue sources break down into thirds:

      • 1/3 Medi/Medi

      • 1/3 Private Insurance

      • 1/3 Retail (cash, credit card & check)

    • Top retail locations average 40% - 60% retail sales. (= 1000 transactions/mo.)

    • Average retail transaction = $180

    • Saturdays = highest sales of $5000 - $6000


    Revenue 2 l.jpg
    Revenue #2

    • Factors limiting HME gross sales to $400,000 - $600,000/year:

      • Less than 800 sq. ft. showroom

      • No outside salesperson

      • Less than 200 scripts/day (Rx-based HME)

  • How to double this annual sales revenue:

    • Increase showroom to 1,000 – 1,500 sq. ft.

    • Hire a dedicated outside salesperson

  • $1 Mil gross sales generates 8-12% net


  • Revenue 3 l.jpg
    Revenue #3

    • First year break-even month 10-12

      • Year 1: $60,000 - $80,000 average/mo.

    • Second year gross sales average $1 Mil to $1.5 Mil per location.

      • Year 2: $100,000 - $120,000 average/mo.

      • Year 3: $150,000 - $160,000 average/mo.

    • Average GPM = 45%

      • Scooters, Lift Chairs average 35%

      • Disposables average 50% – 60%

      • Wheelchair cushions, compression hosiery & orthopedic supports as high as 100%


    Hme advertising budget 5 of 1 mil gross sales 50 000 l.jpg
    HME Advertising Budget(5% of $1 Mil Gross Sales= $50,000)

    Event marketing = 25-35%


    Mobility category l.jpg

    Wheelchairs

    Manual

    Transport

    Power

    Lightweight

    Accessories

    Canes

    Aluminum

    Wood

    Folding

    Quad

    Handles

    Seats

    Crutches

    Underarm

    Forearm

    Accessories

    Walkers

    Folding

    Rollators

    Accessories

    Scooters

    Transport/Travel

    3/4 Wheel

    Mobility Category


    Cross selling mobility 1 l.jpg

    Requested Product

    Wheelchair

    Identified Need

    Mobility and comfort

    Add-on Products

    Seat Cushion

    Back Support

    Pouch/Backpack

    Tray/Cup Holder

    Ramp

    Lift

    Cross-Selling Mobility #1


    Cross selling up selling mobility 2 l.jpg

    Requested Product

    Folding Walker

    Identified Need

    Mobility

    Add-on Products

    Rollator

    Basket

    Seat

    Tray/Cup Holder

    Cross-Selling/Up-Selling Mobility #2


    Bathroom safety l.jpg

    Bath/Shower Chair

    Bath/Shower Bench

    Transfer Bench

    Elevated Toilet Seat

    Toilet Safety Frame

    Commode

    Bidet Inserts

    Wall Grab Bar

    Tub Grab Bar

    Bathtub Rail

    Hand-held Shower

    Diverter Valve

    Anti-scald Head

    Anti-slip Mat

    TP Holder

    Bathroom Safety


    Cross selling up selling bathroom safety l.jpg

    Requested Product

    Bath Bench

    Identified Need

    Stability in Bathroom

    Add-on Products

    Bath Chair

    Tub Rail

    Handheld Shower

    Grab Bars

    Cross-Selling/Up-Selling Bathroom Safety


    Patient bedroom l.jpg

    Homecare Bed

    Side Rails

    Support Surface

    Pad & Sheets

    Patient Lift & Sling

    Overbed Table

    Trapeze Bars

    IV Pole

    Lift Chair

    Foam Wedge

    Cervical Pillow

    Underpad

    Commode

    Bedpan

    Urinal

    Nutritionals

    ADL’s

    Patient Bedroom


    Solution selling for stroke patients l.jpg

    Related Products

    Lift Chair

    Mobility (Wheelchair, Walker, Cane and Scooter)

    Bathroom Safety

    ADL’s

    Nutritionals

    Core Products

    Bed

    Overbed Table

    Commode

    Patient Lift and Sling

    Solution Selling for Stroke Patients


    Incontinence products l.jpg

    Disposables

    Pads and Shields

    Guards

    Undergarments

    Briefs

    Reusable Systems

    Undergarments

    Briefs

    Liners and Pads

    Urologicals

    External Catheters

    Related Products

    Underpads

    Mattress protectors

    Urinals and Bedpans

    Sitz Baths

    Washcloths

    Powders and Ointments

    Gloves and Lubricants

    Bathroom Safety

    Skin Care

    Cleansers

    Barriers

    Moisturizers

    Antibacterial, Antifungal

    Incontinence Products


    Diabetes category l.jpg

    Core Products

    Control Supplies (Insulin, lancets, syringes, test strips and glucose)

    Blood Glucose Monitors

    Blood Pressure Monitors

    Related Products

    Foot, Eye, Mouth and Skin Care

    Sugar/Alcohol-Free Foods and Meds

    Shoes

    Vitamins and Minerals

    Erection Aids

    Compression Stockings

    Diabetes Category


    Home diagnostics l.jpg

    Core Products

    Blood Pressure Monitors

    Blood Glucose Monitors & Strips

    Thermometers

    Pregnancy Tests

    Ovulation Tests

    Cholesterol Tests

    UTI Tests

    Colon Cancer Tests

    Prostate Cancer Tests

    HIV Tests

    Osteoporosis Tests

    DNA Test Kit

    Thyroid Disease Tests

    Male Fertility Tests

    PMS Tests

    Home Diagnostics


    Asthma hhc products l.jpg

    Core Products

    Nebulizers

    Compressor/Home

    Handheld for School/Sports

    Peak Flow Meters

    MDI’s

    Related Products

    HEPA Air Cleaners

    Allergy Control Products

    Pillows

    Sheets

    Bed Covers

    Dust Mite Sprays

    Vaporizers

    Humidifiers

    Asthma HHC Products


    Compression l.jpg

    Core Products

    Fashion Support Hosiery (8-15 mmHg)

    Support Socks for men and women

    Knee-hi Hosiery for women

    Pantyhose for women

    Ready-to-Wear Graduated Compression Hosiery (15+ mmHg)

    Related Products

    Anti-embolism Stockings

    Maternity Pantyhose

    Custom Hosiery (need certified fitter)

    Pumps (both upper-extremity and lower-extremity models are available)

    Compression


    Orthopedic supports l.jpg

    Core Products

    Carpal Tunnel Braces

    Neoprene & Elastic Supports (ankle, knee, thigh, back, elbow and wrist)

    Hernia Belts

    Rib & Abdominal Belts

    Lumbar Sacral & Sacroiliac Supports

    Arm Slings & Straps

    Cervical Collars

    Cervical Traction Kits

    Related Products

    Elastic Bandages, Tapes and Wraps

    Athletic Splints, Insoles and Heel Cups

    Pain Creams, Rubs and Liniments

    Hot/cold gel packs & wraps, instant cold packs and Boo Boo Pacs

    Thermophore

    Moist/Dry Heating Pads

    Hyrocollator

    Paraffin Bath

    Exercise Balls

    Stationary Bikes

    Universal Bands

    Putty

    Orthopedic Supports


    Prime retail hhc markets l.jpg

    Bariatrics

    Display extra-large products on floor

    Plus Sizes or X-Sizes

    Home Accessibility

    Stairglides

    Walk-in showers/tubs

    Bath Lifts

    Ramps

    Bath Safety

    Women’s Health

    Near oncology centers

    Separate interior room

    Diabetes

    Complete leg health

    Home Blood pressure monitoring

    Prime Retail HHC Markets


    Obesity in hme l.jpg
    Obesity in HME

    • 300+ lb. capacity

    • Bariatric Products

    • Walkers & Rollators

    • Wheelchairs

    • Beds

    • Bath Benches/Chairs

    • Lift Chairs

    • XL Blood Pressure Cuffs


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