Download BUSINESS PLAN SUMMARY April 2002

BUSINESS PLAN SUMMARY
April 2002
Mr. Sean Williams, President
Mr. Robert Maas, Vice President
2554 Tarpley, Suite 104
Carrollton, TX 75006
(972) 478-2882
[email protected]
[email protected]
Confidential Business Plan
This Confidential Business Plan, (the “Business Plan”) has been prepared solely for information purposes
and is being provided to prospective investors in connection with a possible private investment in Select
Homecare Services, Inc. and Pharmacy 7, Inc., (the “Companies”). This Business Plan has been
prepared by the Company. The information contained herein has been obtained from sources both within
and outside of the Company and while believed to be reliable, does not purport to contain all of the
information a prospective investor may desire, consequently, prospective investors are urged to conduct
their own investigation and analysis of the Company. The Company makes no representations or
warranties as to the accuracy or completeness of this Business Plan and shall have no liability for any
representations, expressed or implied, or any statement made herein, or for any omission from the
Business Plan, or any written or oral communication transmitted to you in the course of your
investigation. In addition, no liability will attach except as provided in a definitive stock purchase
agreement, when and if this is executed and subject to such limitations as may be provided in such an
agreement. You should read any discussion of our prospective financial condition and results of
operations in conjunction with the prospective financial statements and related notes included elsewhere
in this business plan. This business plan contains a number of forward-looking statements that reflect our
current views with respect to future events and financial performance. We use words such as
"anticipate," "believe," "expect," "future," "intend" and similar expressions to identify forward-looking
statements. You should not unduly rely on these forward-looking statements, which apply only as of the
date of this business plan, April 3, 2002. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from anticipated results. By accepting
this Business Plan, you acknowledge and agree that:
1)
You will keep the information herein and all information provided by the Company strictly
confidential;
2)
You will not reproduce the Business Plan in whole or in part and will not distribute all or any
portion of the Business Plan to any person other than a limited number of your employees or
representatives who have a need to know such information for the purpose of evaluation only and who
are informed by you of the confidential nature of such information and agree to be bound by this
Agreement;
3)
You understand that the Company will conduct its process of exploring possible investments in
the Company as they, in their sole discretion, may determine (including, without limitation, negotiating
the terms with any prospective investor and/or entering into definitive agreements without notice to you
or any other person), that any procedures relating to any possible investment may be changed at any
time, and that any discussions regarding any possible involvement may be terminated by the Company at
any time;
4)
The financial information set forth in this Business Plan has been prepared by the management
of the Company for inclusion in the Business Plan. Projected financial information set forth in this
Business Plan is based upon the Company’s current estimates of the future financial condition and results
of the operation of the Company, and the actual financial condition and the results of operations may
vary and such variance may be material;
5)
If requested by the Company, you will return to the Company any copies of the Business Plan or
other material relating to the Company that you may have received, in accordance with this agreement;
6)
You agree to maintain confidentiality with the Company with respect to each and every
discussion concerning a possible investment in the Company, all terms thereof and any subsequent action
appurtenant thereto for a period of three (3) years from your receipt of this Business Plan;
Any prospective evaluation and investment is based upon representations made by each investor as to
their qualification as an accredited investor, that each warrants it is investing for its own account, that it
shall not syndicate nor resell any investment in any manner, and that funds invested in the Company are
specifically designated for that purpose.
2
Table of Contents
Executive Summary
Concept ...................................................................................................... 4
Operating & Expansion Strategy ........................................................................ 5
Product & Services......................................................................................... 6
Industry ...................................................................................................... 7
Competition ................................................................................................. 8
Sales & Marketing.......................................................................................... 8
Consolidator Strategy ....................................................................................10
Reimbursement for Services............................................................................10
Management...............................................................................................12
Financial
Financial Summary........................................................................................13
Investment Requirements & Use of Proceeds.......................................................13
Return on Investment Analysis .........................................................................15
Exit Strategy ...............................................................................................15
Exhibits
A - Targeted Sales Strategy ............................................................................16
3
Executive Summary
Our aggressive consolidation strategy is to acquire smaller local
home medical equipment companies and (post-acquisition) utilize
our proven marketing strategies to grow organically and further
develop our integrated healthcare delivery model…
-- Mr. Sean Williams, President & CEO
Concept—durable medical equipment (DME) sales to the home
healthcare market segment
Select Homecare Services, Inc. ("Select" or the "Company") provides comprehensive
home medical equipment sales and services, also known as durable medical equipment
(DME) sales to the home healthcare market segment. The Company's home healthcare
business provides a diversified range of products and services with emphasis on
respiratory therapies and home medical equipment. Select has pursued an aggressive
regional sales strategy since 1988 resulting in a 35% increase in sales from
approximately $3.7 million in 2000 to $5.0 million in 2001.
Current industry estimates indicate that approximately half of the nation's home
healthcare industry remains fragmented and is run by either single operators or small,
local chains. These smaller providers are Select’s main competition and main acquisition
opportunities. The Company plans to enter new home healthcare markets through
acquisition or start-up as competitive and pricing pressures encourage consolidation
and economies of scale.
Recent data suggests that there is a shortage of healthcare services in non-urban
markets. According to the United States Census Bureau, in 2000 non-urban areas of the
United States accounted for roughly 25% of the national population, or approximately
62 million people. However, according to the American Medical Association, just 11% of
physicians, or approximately 75,000 physicians practice in non-metropolitan markets.
4
This data indicates that rural markets are underserved, and suggests that there may be
opportunities for improvement in access to primary care physicians, as well as specialty
services. The Company believes that these needs result in significant opportunities for
companies such as Select.
Operating and Expansion Strategy—develop integrated healthcare
delivery systems through the acquisition of smaller local home
healthcare companies
Select was founded in 1995 to provide home respiratory and home medical equipment
products and services to patients in Texas. With its founders' roots in home healthcare
services, the Company's marketing directive has always been to consult with physicians
in utilizing home healthcare techniques, products and services for their patient base.
Counseling these physicians as to disease management leads to earlier identification
and treatment of patients, enhancing the patient's quality of life and longevity.
The Company's strategy is to utilize existing proven marketing strategies to grow
organically and further develop integrated healthcare delivery systems through the
acquisition of smaller local home healthcare companies. The Company will target nonurban markets of smaller cities and rural areas, due to the dominance of primary care
physicians in these markets, reduced competition and a tendency to care for patients in
the home setting.
The Company believes that acquisitions of home healthcare companies will continue to
expand the base of relationships with primary care physicians in these markets. Primary
care physicians in these markets typically have long-standing relationships with loyal
patient bases. These physicians are usually solo practitioners and are the key decision
makers in the treatment of their patients. The Company believes that making home
healthcare products and services available to these physicians will result in better, less
expensive healthcare that provides an improved quality of life for the patients and their
caregivers in these communities.
5
Products & Services
Home Respiratory Therapy and Equipment
Select provides a variety of home respiratory therapy products and
services on a
monthly rental or sale basis. Home respiratory therapy and equipment represented 80%
of the Company's revenues for fiscal 2001. Select focuses on serving patients of primary
care physicians with chronic pulmonary diseases in their pre-acute stages. Early
identification and retention of these patients at the primary care level reduces the cost
of healthcare and should improve the quality of life of the patients and their families.
Select also enjoys patient retention post-hospitalization at the patient's or physician's
request and referrals of patients by hospital discharge planners or case managers.
Overall home respiratory market revenues were approximately $4 billion in the year
2000.
The Company's home respiratory care product line includes oxygen concentrators,
portable and home liquid oxygen systems, nebulizers, and aerosol nebulizer
medications. Oxygen concentrators extract oxygen from room air and generally provide
the least expensive supply of oxygen for patients who require a continuous supply of
oxygen, are not ambulatory and who do not require excessive flow rates. Liquid oxygen
systems store oxygen under pressure in a liquid form. The liquid oxygen is stored in a
stationary unit that can be easily refilled at the patient's home and can be used to fill a
portable device that permits greatly enhanced patient mobility. Nebulizers are devices
which aerosolize medications, allowing them to be inhaled directly into the patient's
lungs. The Company provides technicians who deliver and/or install the respiratory care
equipment, instruct the patient and caregivers in its use, refill the high pressure and
liquid oxygen systems as necessary and provide continuing maintenance of the
equipment.
Home Medical Equipment and Supplies
Select provides a full line of equipment and supplies of home medical equipment and
supplies for convalescents, including custom pieces required for rehabilitation patients.
Home medical equipment and supplies represented 20% of the Company's revenues for
6
fiscal 2001. Provision of home medical equipment enables the Company to provide a
''one-stop shopping'' presence in its markets, which is required for full patient service
satisfaction. These products are provided on a monthly rental or sale basis and include
wheelchairs, hospital beds, walkers, and bathroom aids.
Pharmacy Related Products & Services
Aerosol Medication therapy involves the administration of Asthma medications through
a nebulizer. The Company focuses on providing aerosol medication therapy to patients
prior to or in lieu of
metered dose inhalers, which generally offers significant cost
savings for patients and their families. Select believes that its marketing methods of
consulting with primary care physicians on aerosol medication therapies enable further
growth of this portion of the business. Focus on the referring primary care physician
facilitates the identification of patients requiring asthma treatments.
Part of Select’s consolidator strategy (refer to page 10) is to add pharmacy products
and services to companies (and their patients) acquired by Select that do not presently
offer these services. These patients are essentially a captive market since they are
existing respiratory therapy patients. This is an immediate area of profit enhancement
as operating margins in the RX business exceed 40%.
Industry—$4.0 billion in annual sales with growth estimated at
approximately 7% per year over the last five years
The Company estimates that the home respiratory therapy market (including home
oxygen equipment and respiratory therapy services) represents approximately $4.0
billion in annual sales, with growth in services estimated at approximately 7% per year
over the last five years. This growth reflects the significant increase in the number of
persons afflicted with chronic obstructive pulmonary disease (COPD)1, which is largely
attributable to the increasing proportion of the population over the age of 65 years.
1. An estimated 16 million Americans are diagnosed with COPD; an additional 16 million may be
undiagnosed (Petty TL, A new national strategy for COPD. Journal of Respiratory Diseases,
1997;18[4]:365-369).
7
Growth in the home respiratory market is further driven by the continued trend towards
treatment of patients in the home as a lower cost alternative to the acute care setting.
Competition—over 2,000 regional and local providers, many are
seeking to be acquired
The home respiratory care market is a fragmented and highly competitive industry that
is served by the Company, other national providers and, by Company estimates, over
2,000 regional and local providers. Lincare, Apria, American Home Patient, and other
national providers represent approximately 40% of the $4 billion annual market.
Quality of service is the single most important competitive factor within the home
respiratory care market. The relationships between a home respiratory care company
and its customers and referral sources are highly personal. There is no incentive for
either the physician or the patient to alter this relationship so long as the home
respiratory care company is providing responsive, professional and high-quality service.
Other key competitive factors are strength of local ties to the referral community and
efficiency of reimbursement and accounts receivable management systems.
Home respiratory care companies compete primarily on the basis of service since
reimbursement levels are established by the fee schedules promulgated by Medicare,
Medicaid or by the individual determinations of private insurance companies.
Furthermore, marketing efforts by home respiratory care companies are directed
toward referral sources which generally do not share financial responsibility for the
payment of services provided to customers.
Sales
&
Marketing—building
strategic
relationships
with
physicians and their patients
Select’s primary marketing and sales tactic is the building of relationships and educating
primary care physicians about patient retention through the early diagnosis and
treatment of COPD. Select's philosophy and practice is to assist primary care physicians
8
to identify patients prior to hospitalization and prior to an acuity level that would require
utilizing a specialist2.
Once the physician identifies the patient, Select places the patient in a database for the
purpose of contact management and COPD counseling, with the end goal of Select
becoming the equipment and medication provider when the disease reaches a specific
acuity level 3.
Select believes that the sales and marketing skills of its employees have been
instrumental in its growth to date and are critical to its future success. Select
emphasizes to its employees the importance of patient base growth and retention by
providing quality service to physicians and their patients. Approximately 28% of Select’s
employees are actively involved in sales and marketing. The sales representatives
employed by the Company include registered or certified respiratory therapists,
experienced medical sales professionals and social workers who market all of the
Company's services and products and are responsible for maintaining and expanding
the Company's relationships with physicians.
Select provides formal marketing, training, product and service information to all of its
technical and sales personnel so they can communicate effectively with physicians
about the Company's services and products. These personnel are instructed on methods
of serving the physicians by counseling them on new procedures and medical
technologies. Each technical and sales person must attend periodic seminars conducted
on a Company-wide basis. The Company emphasizes the cross-marketing of all its
products to physicians with which its salespeople have already developed professional
relationships. The Company believes its marketing approach allows the primary care
physician to identify acute and chronic patients earlier in the disease process.
Treatment is done at the primary care level and accordingly at less cost than the
advanced treatment of the disease by specialists or in a hospital setting.
2
3
Select’s Physician COPD Management Program.
Select’s COPD Patient Counseling Program.
9
Consolidator Strategy—Growth and Increased Profits through
Strategic Acquisitions
Select believes that acquisitions of smaller local home healthcare companies present
substantial opportunities. The Company believes that it will be able to increase a target
acquisition’s local market share through the implementation of Select’s COPD
management, patient counseling and pharmacy programs. Furthermore, Select believes
it can increase profitability of the individual companies through economies of scale and
greater efficiencies, and that its centralized billing and reimbursement functions will
typically result in lower costs per claim and quicker reimbursement.
Select believes that the additional training and responsibility of certain key personnel in
a company will result in more efficiency. Not only does this increased efficiency boost
profitability, it also usually results in greater employee satisfaction. Select has the
opportunity to instill the philosophy of patient retention whereby primary care
physicians can help patients maintain control over their healthcare expenditures.
The Company believes and has shown that the addition of pharmacy services to the
smaller company will increase the profitability of the company by approximately 20%.
Select currently provides home healthcare products and services to the patients of more
than 500 specialists and primary care physicians. Pharmacy revenue currently
represents 20% of the Company's total revenues and 50% of its profits.
Reimbursement For Services
A substantial percentage of Select’s revenue is attributable to third-party payors,
including private insurers, Medicare and, to a lesser extent, Medicaid. The Company has
substantial expertise at processing claims and continues to create and improve systems
to manage third-party reimbursements, to produce fully and properly documented
claims, and to obtain timely reimbursements by third-party payors. The Company has
developed distinct billing and collection departments for Medicare and Medicaid
reimbursements and for private insurance company claims which are supported by
10
customized computer systems. These departments work closely with reimbursement
officers at branch locations and third-party payors and are responsible for the review of
patient coverage, the adequacy and timeliness of documentation and the follow-up with
third-party payors to expedite reimbursement payments. Reimbursement from the
Medicare program as a percentage of Select’s total operating revenue approximated
78% for fiscal 2001.
Select has achieved increased operating revenue in home respiratory and other medical
equipment operations despite increased regulation and corresponding reimbursement
reductions. While increased regulation tends to reduce the amount of reimbursement
from government sources for individual cases, the Company believes the continued
increased regulation also benefits the Company by reducing the competition from joint
ventures and fee revenue sharing arrangements, which the Company has historically
avoided.
The Company's levels of operating revenue and profitability of the Company, like those
of other healthcare companies, are affected by the continuing efforts of third-party
payors to contain or reduce the costs of healthcare by lowering reimbursement rates,
increasing case management review of services and negotiating reduced contract
pricing.
Home healthcare, which is generally less costly to third-party payors than hospitalbased care, has benefited from those cost containment objectives.
However, as
expenditures in the home healthcare market continue to grow, initiatives aimed at
reducing the costs of healthcare delivery at non-hospital sites are increasing.
Changes in reimbursement policies by third-party payors, or the reduction in or
elimination of such reimbursement programs, could have a material adverse impact on
the Company's revenues. Various state and federal health reform initiatives may lead to
additional changes in reimbursement programs.
11
Management
Sean Williams, President & Chief Executive Officer
Mr. Williams has ten years of experience in the home care industry. He started into the
business as a billing specialist and soon became a sales representative for a medical
supply and equipment company. In 1995 he started Select Homecare targeting the
home health business which specialized in providing all types of services to home bound
patients. In early 1997 Sean recognized that there were all types of legislative issues
that were going to affect the home health business. With this in mind, he saw a
tremendous opportunity in the home medical equipment business. Since that strategic
move, Select Homecare has seen its revenues grow from $800K in 1997 to over $3.7
million in 2001.
Bob Maas, Vice-President & Chief Operating Officer
Mr. Maas joined Select Homecare in June of 1999. He has vast experience in the home
medical equipment business. He spent seven years as a Senior Account Executive for
Sunrise Medical where he was the top salesman for six of his seven years. His territory
comprised Texas, Oklahoma, Louisiana, and Arkansas. Mr. Maas’ knowledge of these
geographical markets and his experience in the industry were instrumental in the
Company’s decision to open up its first expansion city in Longview, Texas. This facility
was opened in October of 1999 and in its first year exceeded $X million in sales.
Michael A. Ross, PC, CPA , Financial and Tax Advisor
Mr. Ross has over 20 years of progressive experience in public accounting and private
industry. He is currently President of a full-service CPA firm specializing in strategic
business planning and business plan documentation for merger, acquisition, and capital
formation. He possesses a great deal of experience in the corporate finance function
including: debt/equity financing, prospective financial statements (financial forecasts and
projections), troubled debt restructuring and debtor/creditor relations. Clients companies
range in size from small to mid-size enterprises to multinational organizations.
12
Financial
Financial Summary—$16.3 million in revenues and $5.5 million
EBITDA by year 5.
Company management has developed a detailed five-year financial plan of income,
cash flow and financial position. Summary prospective financial data is presented below.
Income (millions)
Year 1
Year 2
Year 3
Year 4
Year 5
Revenues
$5.5
$8.5
$11.3
$13.9
$16.3
EBITDA
1.2
2.7
3.8
4.7
5.5
Gain on Debt Cancellation
1.54
-
-
-
-
Net Income
2.4
2.0
2.9
3.7
4.3
Operating Activities
1.5
2.3
3.2
4.2
5.1
Issuance Preferred Series B
5.0
-
-
-
-
Reduction of Long-term Debt
(1.5)
-
-
-
-
Preferred Dividends
(0.3)
(0.3)
(0.3)
(0.3)
(0.3)
Investing Activities
(1.9)
(2.0)
(2.2)
(2.3)
(2.8)
Net Cash Flow
3.0
-
0.7
1.6
2.1
Ending Cash
3.1
3.1
3.8
5.4
7.5
Total Assets
7.8
9.5
12.3
15.8
20.0
Total Equity
$7.0
$8.7
$11.2
$14.6
$18.5
Cash Flow (in millions)
Balance Sheet (in millions)
rd
Draft for discussion and internal use only. Not to be relied upon by 3 parties for any purpose.
Investment Requirements and Use of Proceeds
To further execute its business concepts and take advantage of the numerous
opportunities in DME and RX, Select is seeking an equity investment of $5 million to
restructure/cancel long-term indebtedness and, combined with anticipated profits,
acquire a total of 2,400 O 2 patients.
4
The Company anticipates that it can retire approximately $3.0 million in debt for $1.5 million resulting in
a $1.5 extraordinary gain.
13
In exchange, the Company will issue 2 million shares of $2.50 par value series B
convertible redeemable preferred stock. The preferred stock will pay an annual rate 5%
of par cumulative dividend payable monthly.
Sales and Profits
(in millions)
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
Year 1
Year 2
Year 3
Revenues
Year 4
Year 5
EBITDA
Cash Flows
(in millions)
$6
$5
$4
$3
$2
$1
$0
Year 1
Year 2
Year 3
Operating Cash Flows
14
Year 4
Year 5
Net Cash Flows
In summary, proceeds will be utilized as follows:
Use Of Proceeds
Amount
Retire $3.0 million of obligations under capital leases
$1,500,000
30%
Acquire 1,000 Oxygen Patients @ $3,500 per patient
3,500,000
70%
Total
$5,000,000
Percent
100%
Return on Investment Analysis
The Company anticipates the following rates of return on invested capital:
Use Of Proceeds
Cost
Gain
ROI
Retire $3.0 million of obligations under capital
leases
$1,500,000
$1,500,000
100%
Capital Appreciation of 1,000 Oxygen Patients
with RX layer
$3,500,000
$1,500,000
43%
Exit Strategy5
One way for investors to exit or realize the greatest return on their investment is via a
strategic acquisition by an entity that employs a business model that strategically and
synergistically aligns with the Company’s core business concepts. Management is
considering an Initial Public Offering within 3 to 5 years to aggressively acquire other
DME providers and roll-out the Company on a national basis.
5
Lincare Holdings, Inc. (Nasdaq: LNCR) is a prime example of a very successful public company that
Select Medical can emulate and possibly be acquired by. Lincare’s P/E multiple (April 3, 2002) is 22.32
with a Market Cap is $2.972 billion.
15
Exhibit A – Targeted Sales Strategy
Targeted Sales Strategy
Tracking the source of equipment referrals is an important tool to assist the sales
representative in identifying and developing marketing targets. Consequently, staff
receiving the order should always make note of the person calling in the referral. The
sales representative then should review the new order forms on a weekly basis to
develop a plan for sales calls based on the results of this review.
Referral sources that frequently order equipment for patients can be followed up on less
often than those that are infrequent referrers. Because frequent referral sources are
aware of and presumably somewhat loyal to our company already, they may be treated
as maintenance accounts. Referral sources that make infrequent referrals should be
followed up more frequently, for instance every two to three weeks, until they become
frequent referral sources. The goal here is to build a relationship with the referral
source and increase their loyalty to our company.
The focus of follow-up with these referral sources should be to show appreciation for
the business they have sent to our company, to assess their satisfaction with services
previously provided, and to assess for additional unmet needs that our company can
fulfill.
The sales representative also should make note of potential referral sources that do not
refer to our company at all. You can accomplish this by doing some old fashioned
detective work. Talk to local equipment vendor sales representatives and colleagues
working in healthcare facilities, and search the yellow pages to create a list of potential
sources of referrals. Prime targets might include sleep disorder labs, physical and
occupational therapy facilities, pulmonary, family, general and internal medicine
practice physicians as well as home health nursing agency staff.
16
Whether the referral source is deemed a maintenance account, an infrequent referral
source account or simply a potential referral source account, the sales representative
should take the time to develop an account profile for each. The account profile should
include, at a minimum, information such as key contacts for referrals within the
organization, the best times to contact the referral source, the type of products the
client might typically order, any special instructions or notes about the referral source
contact, and the frequency with which you plan to follow up with the referral source.
Once you have begun to develop an account profile and categorize our potential and
current referral source targets, mark your calendar to follow up accordingly.
Building and Maintaining Referral Relationships
Taking the time to build good working relationships with referral sources results in
loyalties to the sale representative and in turn, to the HME provider. Loyalty translates
into greater market share and greater market share results in increased profits.
Therefore, building and maintaining referral source relationships should be a primary
goal of any HME provider sales representative.
There are many ways to build referral source relationships, but most hinge on
understanding and meeting the needs of the referral source. When it comes to HME
sales, you can forget what you have heard about "treating others the way you want to
be treated;" it doesn't apply here. It's the platinum rule that you must remember-"treat
others the way they want to be treated." Naturally, you will want to encourage referral
sources to give you feedback concerning their specific needs, but before you make a
sales call on a referral source, ask yourself what the client's specific needs and concerns
are likely to be. One size doesn't fit all here, so you will need to tailor your approach
based on the type of referral source. For instance:
Sleep Labs
Do they need help with patient outcomes tracking in order to gain accreditation? Are
there specific brands of sleep therapy equipment they prefer to have provided to their
patients?
17
Discharge Planners
Is our company's intake process efficient and easy? Do you have a fast response time
that will help get patients discharged in a timely fashion?
Physician Offices
Again, is our company's intake process efficient and easy? Does our organization
provide accurate information when requesting certificates of medical necessity and
other documentation? Does our company's patient education process ensure that
patients can use the equipment competently?
Therapists and Therapy Departments
Does our company carry the products referral sources prefer to order for their patients?
Are there knowledgeable people on staff at the HME store to help with the referral
process for specialized equipment?
The bottom line here is that you want to leave the referral source with the impression
that you are aware of and understand the issues that are important to them when they
seek to assist a patient in arranging for medical equipment products and services. The
HME provider's patient care staff assumes the responsibility for providing service to the
patient, but the sales representative's job is to provide service to the referral source.
Service to a referral source takes the form of the sales representative acting as a liaison
between the referral source and the HME company, as an information source and as a
troubleshooter when the need arises.
Acting as a personal liaison between the HME provider and the referral source means
truly understanding the referral source's needs, providing feedback from the referral
source to the company's patient care and operations managers, and making sure that
any concerns or requests from the referral source are addressed and resolved in a
timely manner.
The sales representative also should function as the primary conduit of information to
the referral source. This, of course, includes providing referral sources with information
18
about products and services offered by the company, but it also can entail providing
reimbursement criteria information, or even help tracking down a hard to find medical
equipment product. Remember, as a sales representative, every opportunity you have
to help a referral source solve a problem is an opportunity you have to build loyalty to
you and our company.
Keep in mind that referral source relationships don't happen overnight. They take effort,
persistence and consistent follow-up. In the course of forging referral source
relationships, sales representatives may sometimes experience what feels like rejection.
The key to persisting through rejection is realizing that it is not personal. Sometimes a
referral source is busy, sometimes they are just having a bad day-rejection is rarely
about the sales representative, personally, and the sales representative must work to
maintain this point of view.
Suggested Talking Points
When approaching new referral sources, follow your opening greeting and introduction
with an assurance of respect for the time of the referral source. Know what you want to
say before you approach the referral source and keep your delivery succinct. The time
afforded you to make your pitch may be limited, so you will want to make the most of
it.
Emphasize service and verbalize an awareness of issues that are typically a concern to
the referral source you are targeting. Examples include our company's response time
for deliveries, ease of placing an order, and the patient education our company
provides.
Make an attempt to elicit a response regarding the referral source's needs. Everyone
appreciates it when a personal concern is shown for the obstacles he or she faces and
your referral sources are no different. Make it clear to the referral source that you are
available to act as a face-to-face liaison and to help make the home medical equipment
ordering process as easy as possible.
19
Assess satisfaction by requesting feedback regarding services provided and respond
positively to the feedback you receive. Keep in mind that referral sources often dislike
the information gathering process for referring a patient for medical equipment,
however, the sales representative needs to be able to explain that HME providers must
follow insurance payer guidelines in order to receive reimbursement on behalf of the
patient. When explaining this, make sure to show empathy to the referral source for the
hassle of providing so much information. Let the referral source know that our company
understands the cumbersome nature of paperwork but constantly strives to streamline
and improve the intake process.
Ask for the business if you're not already getting it. This sounds simple, but often sales
representatives leave it as only an implied request. You're likely to get better results
with a more direct approach. This can be as subtle as saying, "I hope you'll give our
company a try when arranging for home medical equipment for your patients," or as
overt as "Do you have any referrals you can give to me today?" Whatever your
approach, don't leave without making it clear that you are asking for the business.
Finally, always remember to follow up with a "thank you" for previous orders. Let your
referral sources know that you appreciate the trust they have placed in our company to
provide for the medical equipment needs of their patients.
20