Page 24 - HME Business, September 2017

The Distributed Provider
“The process is invisible to the customer. The packing slip, and all other collateral packed with the item has only the provider’s information. As far as the customer is concerned, they are receiving the product form their local DME.”
—Tom Stinson, McKesson Medical-Surgical
Mayo Clinic Stores does not have a website, but its mail order business, when in-house, was the largest sector of its business. According to Owen, outsourcing this function has resulted in the following advantages:
• Patients get their product quicker.
• Mayo Clinic Stores does not have to carry a wide array of products in-store, and can easily drop ship from a warehouse that inventories many more products.
• The company’s costs have been greatly reduced.
• The pick, pack and ship strategy is more accurate with the automated systems these vendors use to manage orders.
• Mayo Clinic Stores gets excellent customer service from the vendors.
• As the company is on a hiring pause, it has been able to reassign its mail order staff to taking more orders, rather than picking, packing and shipping.
When considering using a turnkey service, Owen says the first question to ask yourself is: Does your system have an easy way to get drop ship orders to the vendor, and receive tracking numbers back into their system when shipped?
“If an HME provider is looking to grow their mail order business and improve accuracy, they should analyze the cost benefit of going with an outside vendor,” she says. “For us, the deci- sion was easy. We could not improve customer service by having a full range of products in-house, offer the pick, pack and ship efficiency and FTE and minimize our costs without these vendors. We are very pleased with how it has grown our business.”
McKesson (mms.mckesson.com)
Tom Stinson is a Business Process Consultant, Lean Six Sigma-Black Belt, with McKesson Medical-Surgical. He consults with McKesson customers to help them improve their business. One of the McKesson programs he champions to help customers be more cost effective is called Patient Home Delivery.
McKesson’s PHD model helps decrease
an HME provider’s need to manage its own inventory and shipping. Providers gain access to McKesson’s 40,000-plus SKUs in a network of 35 distribution centers. So instead of owning
this inventory — and paying for staff and warehouses to manage merchandise, freight and repair costs, and capital expenses — the provider simply takes orders from customers as usual. Those orders are then sent electronically to a McKesson distribution center, where the item is picked, packed and delivered to the end customer’s doorstep.
“The process is invisible to the HME’s customer,” says Stinson. “The shipping label and packing slip include only the provider’s informa- tion. As far as customers are concerned, they are receiving the product from their local HME.”
The McKesson PHD catalog, which contains the majority of McKesson product inventory, can be managed either through McKesson’s ordering portal or via a provider’s software system, such as Brightree or Universal Software Solutions. The provider can view critical infor- mation, including what is in stock and shipping and delivery confirmations.
“Many DMEs we work with will deliver their initial order to the discharged patient’s home on their first visit,” says Stinson. “After that, all recurring orders will go through McKesson’s PHD program. This reduces the amount of inventory the DME needs to keep on hand to serve their customers.”
Provider costs for using the service, which are incorporated into the total cost of delivering the product, depend on sales volume, and size and frequency of orders. But Stinson pointed out that providers can end up saving exponen- tially by avoiding delivery, fulfillment and other related costs.
In summary, Stinson says the PHD program offers providers the following benefits:
• Helps bring down the provider’s cost to serve customers
• Helps reduce working capital expenses, which can be used elsewhere in the business • Helps save freight and delivery expenses
• Allows for less inventory needed on-hand
• DME/HME can have a smaller physical loca- tion but a larger distribution footprint
• Don’t have to worry about expired stock
“Our national sales team will consult with DMEs/HMEs to assist them in coming up with the solution that works best for them,” he says. “This consultative sales approach is focused on improving the bottom line of our customers.”
Jeff Bowman, vice president of homecare for McKesson, has been in the HME business over 25 years, either running his own business or working for McKesson.
“Never have I seen a higher sense of urgency and need for HMEs to take a hard look at how they are doing business and work with compa- nies like McKesson, which are bringing much more value than just a widget or price to the market,” he says. “That only sustains you so long. Providers have to make hard decisions now to offset the challenges in the market, and given the chance, McKesson has the scale and resources focused on this market to help.”
Skip Matthews, president of Louis & Clark Medical Supply, uses McKesson’s PHD. He says the service lets his company deliver products to a customer’s home through a package delivery service, such as Fed Ex or a local courier service. There is no additional cost to the customer and typical product categories include incontinence, urological, nutritional, and wound supply. Matthews says that about
a third of his company’s revenue comes from using this turnkey service.
Matthews says the benefits of using the service include lower delivery costs, a consistent process and system, and a reduction in inventory. On
the other hand, challenges can include failed deliveries and customers with extreme product, communication or complex needs.
“Quick, good internal and external communi- cation is key,” he says. “Having quality partner- ships helps very much.”
If HME providers want successful outcomes using turnkey services, Matthews suggested that they have a key manager or key contact own the program.
“Computer integration and training helped,” he says. “The fulfillment company helped quite a bit with training and providing interfaces and tools. It was fairly easy to install once we were committed and communicated how and why we were changing our processes.”
Establishing trust and a process with a partner vendor is also important, he says, suggesting that HME providers spend some time vetting the potential fulfillment company and ask for references.
“Handle issues quickly and openly, and commit to a better way of improving efficiencies and consistency for your company, your customers, and your vendor partner,” he says. “Once you commit, commit fully and with your end in mind, work through the difficulties caused by any change in business processes.” n
Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business. He can be reached via e-mail at joe@ prooferati.com.
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