Best Practices in HME Presented by Bruce Brothis, Jack Evans & Wes Hopper Sponsored by Jobst/BSN Medical www.RetailHomecare.com
Warehouse “Hub” Commercial or industrial location <$1/sq ft/mo Billing Rental equipment Delivery Warehouse Retail “Spokes” Visible & accessible location $3-$6/sq ft/mo 2,500 sq ft “box” 1,000-1,500 sq ft showroom 1-2 fitting rooms 200-400 sq ft storage/ break room Hub & Spoke Retailing
1 = 4 sq ft Cost = $79 Retail = $149 GP = $70 Rent = $24 Net = $46 Fully Loaded: GP = $150 Net = $126 Turns/mo = #/floor 1-2 Display = 1/mo 2-3 Display = 3/mo 5-6 Display = 6/mo 10-12 Display = 12/mo Rollator ROI
Traditional Intake “What insurance do you have? Show reimbursable product Process insurance Retail Sales “Who is the end-user? “What is their medical condition and need?” Display all available products that meet their needs Ask for insurance Use ABN or sell upgrade for cash Intake vs. Sales
Requested Product Folding Walker Identified Need Mobility Add-on Products Rollator Basket Seat Tray/Cup Holder Cross-Selling/Up-Selling Mobility #2 ABN + Upgrade = $50-$150 Cash Sale!
Requested Product Wheelchair Identified Need Mobility and comfort Add-on Products Seat Cushion Back Support Pouch/Backpack Tray/Cup Holder Ramp Lift Cross-Selling: Wheelchair Rental Rental + $150-$250 Cash Sale!
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 Average bundled sale = $150 - $200!
Related Products Bed Accessories Mobility (Wheelchair, Walker, Cane and Scooter) Bathroom Safety ADL’s Lift Chair Core Products Bed Overbed Table Bedside Commode Identified Need Mobility Independence Cross-Selling: Hospital Bed Rental Rental + $200-$400 Cash Sale!
Seniors Function Price Personal Benefit Basic Entitlement vs. Storeroom vs. Adult Children Lifestyle Benefit Bells & Whistles Convenience Best Available Showroom Sell Values
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 • Retail Location • Showroom Display • Product Mix • Dedicated Salesperson • Medicare Billing • Referral Marketing
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 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
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 = $140,000/employee • Great HME = $200,000/employee
Revenue #1 • Revenue source breakdown: • Medi/Medi 30-40% • Private Insurance 20-30% • Retail (cash, credit card & check) 40-60% • Top retail locations average 40% - 60% retail sales. (= 1000 transactions/mo.) • Average retail transaction = $160 • Saturdays = highest sales of $5000 - $6000
Revenue #2 • Factors limiting HME gross sales to $400,000 - $600,000/year: • Less than 800 sq. ft. showroom • No outside salesperson • How to double this annual sales revenue: • Increase showroom to 1,000 – 1,500 sq. ft. • Hire a dedicated outside salesperson • Retail showroom = $1,000/sq ft/annual gross sales • $1 Mil gross sales generates 8-12% net
Revenue #3 • First year break-even month 10-12 • Year 1: $40,000 - $60,000 average/mo. • Second year gross sales average $1 Mil to $1.5 Mil per location. • Year 2: $80,000 - $100,000 average/mo. • Year 3: $120,000 - $140,000 average/mo. • Average GPM = 45% • Scooters, Lift Chairs average 35% • Disposables average 50% – 60% • Wheelchair cushions, compression hosiery & orthopedic supports as high as 100%
Retail Pricing w/Medicare • Tag all products with prices • Tag all big-ticket items with both MSRP and “Our Price” or Sale Price • Take minimum of 20% off Medicare-allowable • Take 30% off Medicare allowable IF you have timed study to document additional billing costs • Use ABN to sell upgrades
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.
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 Shoes Home BP monitoring Prime Retail HHC Markets