Buying Groups 1-2-3 for the HME

Wandering through the self-help section of any Barnes & Noble bookstore is an interesting experience. Do-It-Yourself books range from automotive repair to woodworking. Titles such as The Complete Idiots Guide to Bartending and Texas Hold'Em Poker for Dummies occupy a vast amount of shelf space. Pretty much every conceivable book is available for those people willing to spend money and time to improve their understanding of a favorite activity. Yet you will never find an instruction book on how to be a HME/DME provider.

Working as a provider in this day and age is an interesting proposition. Rules and regulations are changing daily. The technical side of reimbursement can be confusing for the uninitiated. Managed Care contracts can be a legal nightmare that could put you and your company at risk. The provider tends to be a therapist, salesperson, attorney, technician and manager all rolled into one. Where does the provider turn to get help? None of the books at Amazon.com can help a provider fill in the gaps when it comes to service, support and education. The best place to turn is one of the Group Purchasing Organizations (GPO) available in this industry.

Anymore, the GPOs in this industry are more than vendor contracts and the ability to consolidate purchasing to get better pricing. With falling reimbursements, competitive bidding and the Medicare Modernization Act of 2003 looming closer on our calendars, the margins will be razor thin. Aligning yourself with a strong and committed GPO is imperative, but the winners and losers in the industry will be differentiated by who is running their business in the most efficient manner.

The provider tends to be a therapist, salesperson, attorney, technician and manager all rolled into one.

The ability to increase your margins is a skill set necessary to survive in the DME/HME industry today. One of the ways to increase those margins, beyond the pricing component, is to increase your operating efficiencies. How can you find ways to become more efficient? Like the industry itself has changed, so has the GPO model. Group purchasing is now a component within the entire business services spectrum the modern Business Services Organization (BSO) provides. You need the networking ability, as well as products and services that only an industry-specific business services organization can provide. As Michael Gerber says in his best seller The E-Myth, you tend to be too busy working in your business and not on your business. A major BSO can work in your business for you if you choose the right one for your company.

Employees

Starting with your employees, how do you select and evaluate them? Unless you are a large provider, chances are you do not have a Human Resources Department to handle that task. Does your Business Services Organization help you with products or services that can aid you with your human resources initiative? Risk reduction through proper hiring techniques goes directly to your bottom line, and an inappropriate hire can cost a provider time, money and credibility. Proper evaluation of your current employees during the year is also imperative in maintaining an appropriate business plan. Just like a pilot making course corrections during a flight, an ongoing evaluation program lets your employees know your business plan destination. If you utilize what your BSO has to offer in an industry-specific human resources program, you will be able to cut your operating costs and increase your employees' operating efficiency.

Continuing with your employees, does your prospective Business Services Organization have educational initiatives? By the time when you could have your best employee train, your newest one has passed. Regulatory and reimbursement issues in the future will be more complex with specialization in your ranks the norm. A full array of courses can allow an entry-level employee an opportunity to grow in your business resulting in a loyal and knowledgeable employee. The BSO's educational initiative should be able to offer your staff certified credits, a tracking mechanism for regulatory purposes and also demonstrate a career path with your employees' future in mind.

Regulations and Reimbursement

Speaking of regulatory and reimbursement issues, how do you stay abreast with the changes made within that area? Does the BSO you are looking at have a program that weeds out all of the extraneous information giving you only what you need? A properly set up program can save a provider? and their staff? an abundance of time in getting critical information to the right person in a timely and efficient manner. Also, having a best practices model available to work from will get you farther in a shorter time. Use the wealth of information your BSO has accumulated as a resource to develop your company in the future. You should also be able to contact a professional within the BSO's staff should you have a question about a difficult issue.

BSO Presence

Does your prospective BSO have a presence within the industry? Do they encourage their members to be active in industry objectives? There are many organizations and associations serving the DME/HME industry and the work they do behind the scenes goes on nonstop. One of the benefits of belonging to a BSO is the ability to share and distribute information quickly to members. This brings us to the networking aspect. Does your BSO support the interaction of their members? This communication takes on many different forms. From small "ad-hoc" groups to larger gatherings, does the BSO facilitate the "give and take" that can make your business better? There is a great deal of knowledge from the member base at your disposal. By networking with your peers, you may not have to reinvent a solution, but borrow a plan of action from someone that has already faced that issue. The trouble you may be encountering may have already been identified and resolved by a fellow member.

Other Services

There are other services your Business Services Organization should be ready and able to provide to you. On the management side, a wide range of consultants to enhance your business should be available. Measurement tools to benchmark your business should be available for your ongoing business plan. Marketing tools also should be available allowing your business to grow. These tools can vary from private labeled products, to advertising and print material design. Does the BSO have business-to-business contracts? Technological advancements have made this area ripe for increasing your efficiencies. Your BSO should be informed of and have the latest of technologies under B-2-B contracts. Again, if you can increase your operating efficiencies, you will decrease your costs.

Aligning yourself with a strong and committed GPO is imperative, but the winners and losers in the industry will be differentiated by who is running their business in the most efficient manner.

Tools

Finally, how does your BSO candidate make their tools accessible for you? One way is to have the tools on the Web, available for you and your staff 24/7. Is the pricing information easily downloaded into your billing system? Do they have a varied array of e-conferences available for your employees? Your staff's time is your money, and both can be saved by having processes in place for an efficient transfer of information and data. Are there any analytical tools available for you to use? These tools can help you arrive at an informed decision on what product is best suited for a specific situation, with regard to what profit you need to stay in business. Current and timely information is a provider's best friend; use it to the fullest extent.

You won't find any answers in your local library or bookstore. If a more knowledgeable and efficient way of doing business is a priority with your company, get information from a BSO, with a GPO component, unique to the HME/DME industry. Find out who their members are and how they have enhanced their success through their participation. Compare the features and benefits concerning the various programs they have to offer, and last, put those programs to work in your company. If you do these things, you'll have time to read up on Texas Hold' Em poker!

This article originally appeared in the January 2005 issue of HME Business.

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