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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

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
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
baby boomers family caregivers as hhc customers
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
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
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
HME Business Components
  • Retail Location
  • Showroom Display
  • Product Mix
  • Dedicated Salesperson
  • Medicare Billing
  • Referral Marketing
retail location
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
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

level 1 hhc in pharmacy
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.

level 1 examples
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
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
4’ Bathroom Safety:

Grab Bar

Elevated Toilet Seat

Bath Bench

Hand-held Shower

Level 2 – Examples
level 2 examples15
Level 2 – Examples

4’ Mobility:

  • Cane
  • Quad Cane
  • Folding & Rolling Walkers
  • Transport Chair
  • Standard Wheelchair
level 2 examples16
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
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
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
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
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
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
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
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
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%
mobility category
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
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
Requested Product

Folding Walker

Identified Need

Mobility

Add-on Products

Rollator

Basket

Seat

Tray/Cup Holder

Cross-Selling/Up-Selling Mobility #2
bathroom safety
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
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
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
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
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
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
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
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
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
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
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
Obesity in HME
  • 300+ lb. capacity
  • Bariatric Products
  • Walkers & Rollators
  • Wheelchairs
  • Beds
  • Bath Benches/Chairs
  • Lift Chairs
  • XL Blood Pressure Cuffs