Allow me to take you back to your first flip phone. Remember how awesome it was, sexy, cool and high tech. You were stylin’ and current, and you probably had a skip in your step. Times change. Seventeen years later, there are very few flip phones still in the USA. Thanks, Apple.
Another hot item in Y2K was the oxygen concentrator accompanied with portable tanks. OK, it wasn’t really a hot item, but it was dominant in the market. In 2017, Inogen is going to sell about 45,000 portable oxygen concentrators (POCs) for cash through its direct-to-consumer channel. POCs, theirs and many others like it, are dramatically superior for the user versus the alternatives. Most people on oxygen are not offered a POC and don’t know the existence of the technology. Despite that, POCs are approaching 10 percent market share and are the fastest-growing segment of oxygen therapy. There are several lessons therein that should not be lost as you move into 2018.
- Be exceptionally good at your core. You don’t sell 45,000 POCs for cash in 2017 without being exceptionally good at it. At its core, being “exceptional” is about disciplined and proven processes, methods and execution. Whatever your core may be, that is where you must be exceptionally good. The rest can be outsourced.
- Compelling products that solve problems move the needle. There have been many innovative new products launched and new technologies unveiled in recent years that impact your market and your customer base. But, usually it is easier and safer (short term) to hang onto the base and cling to what you know. Compelling products that are better for the customer have great power to drive your business. A little scouting and you’ll be able to find several that fit your business.
- Patient-centricity matters. Health care has traditionally been physician-centric, not patient-centric. Patient-centricity is a mindset and one that health care providers would be wise to adopt. Offering POCs direct to the consumer was abnormal when it began in 2009. But, thinking about the patient and how to meet their desires in the best way possible, patient-centricity, led to a successful direct-to-consumer model for POCs. There are many similar opportunities in our market yet untapped. To find them we must think beyond just want the doctor ordered to thinking about what can give the user a higher quality of life.
- Patient-pay is an exciting market. It’s good to be on the right side of mega-trends. Patient pay in health care is a huge growth area over the next decade. Those with the means will reach into their own pocket for a superior solution. The POC, the stand-up wheelchair, the tool that eases pain are a few of many possible examples. To capitalize you must offer the solution to your customer, and you must be adept in articulating the benefits and have the courage to ask for the sale. And, please avoid the “they don’t have the money” mindset, after all they aren’t carrying a flip phone, are they?
- “New” should be part of your plan. A minimum of 5% of your annual revenues should come from “new.” “New” can be new products or categories or referral sources or channels or payers. You must regularly introduce new revenues into the business or it is likely to atrophy.
The HME space will grow significantly over the next five years. Unit volumes vary among categories, but 7-10 percent growth in unit volume is a fair expectation. Those rates of unit growth represent an extremely attractive market. Serious problems will remain, notably continued compression of reimbursement, particularly for commodity items; narrowing participation panels brought on by payer consolidation; and non-traditional competition. Every market has its challenges. Selling flip phones in the U.S., as an example, certainly has its limitations. On the whole, HME remains a very compelling place to be.