Respondents split on success of retail stores

Friday, September 27, 2013

YARMOUTH, Maine – Is retail the solution for HME providers feeling the squeeze from reduced Medicare reimbursement? It depends who you ask.

The vast majority (86%) of the 77 respondents to a recent HME NewsPoll say they have retail locations. But when asked how successful those operations are, respondents were split, with 57% saying retail is living up to their expectations and 43% saying it’s not.

Some respondents said retailing products from a storefront provides a new revenue stream, helping providers and their customers navigate a post-competitive bidding market.

Mark Ehlers of Ehlers Health Supply, said the extra income makes retail a “no brainer,” and Sam Clay of Clay Home Medical called retail a substantial part of his business’ “survival strategy in this DME market.”

Other respondents, however, reported lackluster sales and little walk-in traffic. One respondent said striking a balance between maintaining a retail location and providing for Medicare patients is tough.

“The primary reason our retail location has not been as profitable as we’d like is that the bulk of our time, energy and resources, especially human resources, have been focused on the 30% of our business that is Medicare,” the respondent said.

Succeeding at retail does take time, respondents said. Jim Greatorex of Black Bear Medical puts a great deal of work and energy into developing a store experience and marketing that experience to customers. The result: Retail is Black Bear’s fastest-growing segment, he said.

Retail can be as much of a source of relief for customers. New Medicare policies are frustrating to them, too, and they’re turning to retail stores to make out-of-pocket purchases, some respondents said.

Some respondents that did not receive or accept competitive bidding contracts put all their chips on retail and, so far, it’s paying off.

“We have grown retail from 5% of the business to 40% when we had an active Medicare DME business,” said Mark Nicotera, of AZ Mediquip. “We won no contracts, and retail is now 80% of our business and still growing. I hope my competitors don’t follow my lead.”