9 Tips on How Profitable is Medical Supply Business?

Filed in Business Idea by on July 29, 2022 0 Comments

How Profitable is Medical Supply Business? Medicare/Medicaid, 25 to 50 percent cash and 20 to 35 percent private pay/third-party insurance.

A profitable retail HME business that is also a Part B provider remains under 40 percent Medi/Medi.

How Profitable is Medical Supply Business?

1. Reduce or eliminate Medicare.

These traditional HME providers have had enough aggravation from Medicare.

Whether the issue is competitive bidding, the PECOS, ZPIC audits or denied claims.

They have diversified their revenue stream and either completely eliminated or reduced Medicare to less than 30 percent of their total revenue.

The end result is that the ongoing reimbursement cuts.

And added regulations may affect their bottom line — but they won’t be out of business.

How Profitable is Medical Supply Business?: BusinessaHAB.com

How Profitable is Medical Supply Business?

2. Stretch your comfort zone.

By trying a completely different business model.

These HME companies are becoming boutique retailers that happen to sell home medical equipment.

HMEs that attempt retailing usually do not have the appropriate location, staffing, product mix or advertising program to be successful.

3. Delegate.

Successful veteran HME owners and managers are very knowledgeable and capable business leaders.

However, when they shift to retail.

They delegate the daily operations to retail veterans who are equally competent in their own respective business model.

4. Think big.

As in multiple locations. Hub-and-spoke business models are the most efficient and profitable in retail.

Using their traditional HME as the hub, many retailers open multiple retail locations around the hub to control an entire sales or geographic territory.

How Profitable is Medical Supply Business?

5. Location, Location, Location.

Traditional HME businesses may be hidden in commercial areas or industrial parks where they pay warehouse rental rates.

Retail businesses strive for high visibility and easy accessibility.

Retail locations for HMEs vary, but usually center around strip malls.

Shopping centers, medical office buildings and hospital lobbies.

6. Capturing 80% of Sales.

There is no “one-size-fits-all” for home health care product selection.

And this is why most retail HME chains have failed.

In retail, the front third of the store generates 80 percent of sales.

An HME retailer must match demographics and local HME needs with product selection.

For example, a senior community would buy patient room, bath safety, incontinence and wound care products.

People in a baby boomer community and family caregivers would buy diagnostic and diabetes products, foot care products, orthopedic supports and compression hosiery.

How Profitable is Medical Supply Business?

7. No Chrome!

Chrome canes, crutches, walkers, transport chairs and wheelchairs are Medicare-reimbursable items.

In retail HME, these products do not belong on the showroom floor.

HME retailers display colored aluminum as upgraded — and more expensive — products that sell for cash.

Why take up valuable showroom display space on reimbursable products that net minimal profit?

8. Qualify First.

When a salesperson immediately asks a new customer what insurance they carry.

He is limiting the sale to the least expensive and least profitable reimbursable product.

Qualify customers first by determining who the end-user is.

And find out about their medical issue or condition.

Then the salesperson can demonstrate all of the core and related home health care products that meet this health care need.

9. Sell High.

Start showing customers the most expensive, fully loaded product.

And then work your way down to the basic reimbursable product.

Car salespeople are notorious for pushing top-of-the-line, fully loaded vehicles on customers.

But even with cars, consumers usually don’t buy the most or least expensive models but purchase somewhere in the middle. The same holds true for home health care products.

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