Zen and the Art of Working with Distributors

HME-Drop-Shipping-medical-supplies

You work hard all day.

You have to stay on top of patient service, your staff, regulations, billing, inventory, delivery, quality control. It can all seem like a game of whack-a-mole just to stay in business. And then there’s competition from local and online retailers. If you can, you take an annual vacation to a Zen spa or retreat where gurus tell you to relax and give up control. You laugh, sip margaritas and go back to the same overload in two weeks’ time.

What the guru didn’t tell you is that working with a distributor is how you incorporate that Zen advice into your business: you have to give up control to get control.

It may be reflex to think of a distributor as just a supplier or drop-shipper, but distributors can do many things that you’ve been used to doing and managing yourself. So relax, breathe deeply and look at some of the ways distributors can bring order and prosperity to your business.

Much of what distributors do can save providers time and money. They offer the purchasing power of huge volume that brings prices down for their customers. Working with a distributor can also help stabilize costs and free up working capital and staff time. The provider doesn’t have to spend time negotiating pricing with the manufacturer, meet purchasing goals or buy in bulk quantities and still gets generally lower pricing than an individual account could provide. It might also extend the provider’s geographic reach and give access to manufacturers that might not work with small accounts.

“We take the burden off of them. We negotiate with vendors on their behalf. We also buy it as well as you can buy it,” says Colton Mason, senior vice president of Supreme Medical. “Our biggest DME line is Drive Medical, the top brand in that industry for bent metals. Supreme buys that by the tractor-trailer load several times a week. We negotiate our contract and extend costs out to DMEs based on our buying power.”

Supreme also handles returns and repair issues for its clients, Mason says. “All of your returns, warranty and repairs flows through your Supreme Medical rep. They take care of all that paperwork for you.”

LOSING CONTROL, OR LOSING MASSIVE OVERHEAD?

The easiest thing to let go of when you start working with a distributor is inventory. Distributors aren’t free — they typically have shipping
charges — but retailers can get huge savings from not having to pay for warehouse or storage space, stockpiled supplies, delivery vehicles and staff to manage and deliver a large inventory.

“We are a smaller company getting off the ground. It is very cost-effective because we don’t have to have a warehouse, a staff, or an inventory management program on the computer. There’s a lot of cost savings to it. It’s very easy to place an order and it drop-ships right to the patient,” says Trish Mattimoe, president of Innovative Wound Care. “It just really simplifies and allows you to focus. Especially in the DME world with accreditation and all the bureaucracy that comes along with it … It frees you up to make sure you are on top of everything you need to be.”

A distributor handles tens of thousands of SKUs, giving the provider Amazon-style selection without tying up space or capital. That frees up store floorspace for patient consultations, products that need a higher touch and non-insured accessories and conveniences that sell at retail. The provider can be more selective about which items to keep on hand and still be assured the patients are getting what they need via patient home direct (PHD) — yes, drop-shipping.

There’s no denying that drop-shipping still plays a major role for distributors, but many have gone well beyond simple shipping services to offer easy-touch ordering, tracking and private label paperwork that carries your logo and provider information. Distributors let providers centralize patient orders so that multiple products from different manufacturers can ship to the patient’s home in the same box. They offer discreet packaging for personal items and custom paperwork with your store’s logo and information, so the patient never even knows the distributor is involved.

GETTING YOUR FEET WET

If you don’t want to jump in all at once, start with disposables like incontinence and urology products or resupply items for oxygen patients. Once you and the health provider have helped the patient identify the right product, size and features, it’s just a matter of making sure the patient has a continuous supply that stays within insurance billing limits. Meanwhile, you can keep control of delivering large and high-touch items like oxygen tanks and hospital beds, and train your drivers to upsell retail accessories like sheets. Most retailers will probably find a balance of staff and drop-shipped deliveries.

“Some DMEs are not drop-shipping everything; they are having it delivered to the DME and would rather have their own delivery drivers,” Mason says. “That is their distinction in the market. A lot of DMEs feel like that. The owner of the DME or the pharmacy makes a big point that they are delivering everywhere; they want to do it because they want that patient contact; they want that extra touch.”

Sometimes patients do, too: DMEs may see a “Meals on Wheels” effect, where the delivery person is a familiar face and a link to the outside world, especially with elderly customers, says Richard Maluyo, vice president and general manager of Caremax. That contact also gives the driver an upselling opportunity: When a bed is sent out for delivery, the van has sheets to fit. When a commode goes out, the driver is ready with commode liners. “All of our drivers are capable of selling those things and have them to show the customer. To have the actual product there, instead of having it drop shipped, it makes their decision easier,” he said.

Distributors aren’t all about drop-shipping. Many offer consulting or advice on running your physical business and optimizing your retail floor space. They can help identify manufacturers that offer the most retail support like displays, plan-o-grams and national advertising for their products. They can advise on everything from product mix to retail lighting and product placement.

Finally, distributors offer DMEs access to their wide network of industry contacts. “We’re not talking just to the sales rep, we are talking to the VP of the company,” Mason says. “The distributor can help link you up with those people.” Sometimes they can even help a good idea grow into a thriving new business.

INNOVATIVE WOUND SOLUTIONS: BREAKING THE CODE

After working for HME providers for more than two decades, Trish Mattimoe, RN/CT, was ready to launch her own business specializing in wound care. It’s an area that requires a lot of custom patient care and interaction with medical providers, and a category with a lot of products.

She’d worked as a consultant for 10 years, then two years ago she struck out on her own and opened Innovative Wound Solutions. It was a big move, and her distributor, Supreme Medical, played a part in it.

“We had a product from a company called Dukal. It doesn’t have a billing code if you look on the Medicare fee schedule, but I remembered from years ago that it was reimbursed and I remember what it was reimbursed. Supreme Medical sold it to us at a discounted rate and we were able to trial-bill it,” Mattimoe explains. ”It paid exactly as it had in the past, and we were the exclusive provider on that product for quite some time. It was thanks to them allowing us not to have to take the risk and take the hit, but allowing us to crack the code on how to get it billed.”

The support didn’t stop there. “When we opened, in helping us learn how to bill that product … it opened up a whole new marketplace for that company. The manufacturer was so appreciative that they actually made our logo, made our website. There’s a lot of networking among all of us.

None of that would have happened without Supreme Medical going the extra mile and allowing us to learn how to crack the code to bill that product.”

Innovative Wound Solutions operates in seven states, has 10 employees and is getting ready to hire more reps to expand. The company can offer such good service, it just landed an important new client. “We have been trying to get the biggest insurer in Toledo,” Mattimoe says. “Just this week I got an email that we are getting the contract. That insurance owns this city. Before, we would have to pass-through bill with another provider.”

This article was featured in HME Business’ April 2019 issue.

Author: Holly Wagner

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