Page 34 - HME Business, April 2018

HME EXPERTS OFTEN POSITION retail sales as the ultimate panacea to whatever ails an HME business. It makes sense: retail sales are free from the hassles of Medicare and private payer; they aren’t subject to capricious price cuts; they can expand a provider’s reach into all new markets.
However, there are a number of real world business issues associated with retail sales, as well. One of the most important is purchasing.
Why is managing purchasing so impor- tant? Well, let’s start with the basics: HME providers, whether retail, funded or both can trade in a lot of inventory. In fact, the typical HME provider carries so much overhead in
their warehouses that their pro t margins can quickly disappear faster than the Ark of the Covenant in the Federal storage facility at the end of the “Raiders of the Lost Ark” — and even the accounting version of Indiana Jones won’t be able to nd it.
That problem is magni ed even in the retail environment where cash- ow is king. The wrong inventory strategy can upend the bottom line.
Inventory Turn Times
Providers do not want to collect dust on expensive inventory, and this is particularly true of retail providers. The reason for this is inven-
tory turn times. Inventory turn times are, in fact, a crucial retail metric, particularly for the HME industry.
The longer that expensive inventory sits
on the shelf, the longer the capital spent to acquire that inventory is tied up in a kind of cancerous limbo that literally works against the provider’s cash ow. It is critical that the inven- tory get sold in a cash ow-intensive business such as retail sales. The faster expensive items move, the more pro tability will almost expo- nentially increase.
And this is why monitoring inventory turn times is so important, particularly if the provider can drill down to turn times per inven-
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Management Solutions | Technology | Products
MAKING THE RIGHT MATCH
Smart inventory purchasing has always played a key role in HME, but in retail, it’s even more important. What should providers consider?
By David Kopf