Skip to Content

Pediatrics: Smaller market, but decent revenue

Pediatrics: Smaller market, but decent revenue

Finding business channels that do not involve Medicare has become a primary mission for many HME providers looking to bolster revenues. The shakeup to the federal program has caused so much financial fallout that it has become nearly impossible for legions of companies to work within its confines any longer. Consequently, alternative categories such as pediatrics are getting a lot more interest, manufacturers say.

“No question pediatrics is and has always been a huge growth market for all DMEs,” declares Craig Bright, owner of Bluffton, S.C.-based Medquip. “Nebulizers, breast pumps, allergy and asthma all have retail potential, as do pillows and nutritional supplements.”

Mike Murphy, national account manager for Alex Orthopedic in Grand Prairie, Texas, agrees that “pediatrics represents a retail segment that has not been fully explored,” though he sees it as more an ancillary market for additional sales and not a business focus. “Specialization to such a degree is only sustainable in rare market environments.”

The pediatric healthcare market is small compared to adults, concedes Kirk MacKenzie, but the president of Stallings, N.C.-based Snug Seat asserts that it can also provide a decent revenue stream.

“The funding for pediatric products is typically pretty good, because there are no fee schedules for most of the products other than seating and mobility,” he said. “Dealers are most often paid on a cost-plus or retail-minus basis for most of our products, which provides a fair margin. There is also often funding for pediatric products through charities, grandparents and other sources.”

Providing pediatric clients with top-flight products and services pays off in the future, notes Jay Doherty, clinical education manager for Exeter, Pa.-based Quantum Rehab.

“If you can furnish products that children really like, they will continue coming back to you year after year,' he said. “You've got them for life.”

Pediatric focus

The pediatric market deserves to be its own category rather than being classified as a “kids' version” of adult products, manufacturers say. It is especially true in pediatric rehab, Doherty said.

“Children are different in many ways,” he said. “First of all, they are growing, so their seating needs are much more significant. Their equipment has to be modified constantly so that they always have a proper fit. What's more, they are in many different environments than adults, so the equipment has to be tailored for them.”

Though small, pediatrics is comprised of a multitude of sub-categories, which offers a wide range of product sales opportunities, vendors say. Snug Seat's biggest selling pediatric offerings are mobility, bath safety, gait training, standing and transportation products, with respiratory and sleep also represented, MacKenzie said.

The primary cost of entering the pediatric market, he says, is in hiring a specialist to actively promote the company's services.

“We find most providers do not carry a full inventory of pediatric products, rather relying on manufacturers to supply demonstration equipment,” MacKenzie said. “This allows a dealer to get involved without a significant investment if they already have someone on staff who is qualified to work with pediatric clients.”

For rehab, Doherty recommends having two pediatric specialists on staff—one who is an expert on wheelchairs and another focused on seating and positioning.

'Child friendly' designs

To ease the fear and perceived stigma that comes from having to use medical products, manufacturers pay special attention to cosmetic appearance.

“We are continuing to make traditional DME products 'child friendly' as we have done with nebulizers in the past,” Bright said.

Products that appeal to children feature bright colors and snappy graphics, Murphy said.

“Products that use this approach will provide a more rapid sales process and increased compliance by the user,” he said.

How a chair looks “will definitely catch a child's eye,” Doherty adds. “They want the chair to look cool. They want their favorite color. If the piece of equipment is suitable for that child's needs, the choice will come down to color.”

While aesthetics are important, the greatest market innovations have occurred with materials, MacKenzie said.

 “Lightweight metals and plastics have made products lighter, making life much easier for primary caregivers, who tend to be female,” he said. “It used to be much more difficult to lift wheelchairs and buggies into cars and over thresholds, but ultra-light carbon fiber frames make this much easier.”

The ACA factor

Pediatrics steers clear of nettlesome Medicare, for sure, but Medicaid and other commercial insurers are certainly in the picture, so getting paid is fraught with questions, concerns and speculation. Fold in the Affordable Care Act and there is another new payer variable added into the mix.

 Still, the ACA could end up creating a positive impact on provider business by delivering an even greater pool of potential pediatric clients, Bright said.

“I've been told it has the potential to bring in more people to a pool where services can be paid for if provided in lieu of them simply being uninsured,” he said. “It could have a positive effect, but it is just theory at the moment and we need to learn more.”

MacKenzie is also bullish on the potential posed by higher client volume due to the ACA.

“It is designed to provide better access to healthcare for the underserved population, so it should increase pediatric business,” he said. “However, this will vary by state, because it appears a number of states are opting out of matching funds for their Medicaid programs.”

Comments

To comment on this post, please log in to your account or set up an account now.