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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?. 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

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  1. 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

  2. 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

  3. HME Revenue Sources:Diversify for Survival

  4. Transitioning HME Customer Demographics

  5. 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!)

  6. 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

  7. 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

  8. HME Business Components • Retail Location • Showroom Display • Product Mix • Dedicated Salesperson • Medicare Billing • Referral Marketing

  9. 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.

  10. 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

  11. 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.

  12. 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.

  13. 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.

  14. 4’ Bathroom Safety: Grab Bar Elevated Toilet Seat Bath Bench Hand-held Shower Level 2 – Examples

  15. Level 2 – Examples 4’ Mobility: • Cane • Quad Cane • Folding & Rolling Walkers • Transport Chair • Standard Wheelchair

  16. Level 2 – Examples 2’ – 4’ Orthopedic Supports: • Carpal Tunnel Braces • Knee & Elbow Supports 2’ – 4’ Compression Hosiery • Support Stockings • Graduated Compression

  17. Senior HME Set

  18. Baby Boomer/Family Caregiver HME Set

  19. 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

  20. 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.

  21. 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

  22. 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.

  23. 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

  24. 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

  25. 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

  26. 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%

  27. HME Advertising Budget(5% of $1 Mil Gross Sales= $50,000) Event marketing = 25-35%

  28. 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

  29. 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

  30. Requested Product Folding Walker Identified Need Mobility Add-on Products Rollator Basket Seat Tray/Cup Holder Cross-Selling/Up-Selling Mobility #2

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. 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

  37. 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

  38. 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

  39. 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

  40. 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

  41. 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

  42. 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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