Thriving without managed care: Can it be done?
Bridge gap between MCO and good ol’ days’
Success nowadays is all about getting a piece of that managed care pie. At least that’s what many would have you believe. But Jeff Reagan, the president and owner of Reagan Home Care Pharmacy in Conyers, GA, says you can survive and thrive without managed care.
It wasn’t long ago that Reagan tried marketing to managed care organizations (MCOs) but ran up against one brick wall after another. Because Reagan Home Care Pharmacy is a one-stop shop for everything from skilled nursing to infusion, durable medical equipment, and respiratory therapy, it wasn’t a lack of services that stopped MCOs from sending business his way.
"We weren’t successful because we were not able to provide one very key element that they needed, which was an extremely large coverage area," says Reagan. "We could cover basically a 40 to 50 mile radius, but that was not large enough."
As a result, referrals directly from managed care account for less than 20% of Reagan Home Care Pharmacy’s home infusion business, and much of that comes through its being a Vitalink home infusion franchise. Now in the process of putting together a statewide network of independent pharmacies and home care providers, Reagan isn’t sitting back waiting for the network to expand his business, although he realizes his future depends on it.
"We’re OK today, but for the future we will have to get into the managed care game," he says.
While his network slowly forms, Reagan is relying on time-tested marketing methods that have yet to wear out their welcome, even in the high-tech age of home care.
Evolve for success
When Reagan and his brother Mike bought the business from their father in 1984, it would have been easy to live off the referrals from the agency’s solid reputation. Instead, the two looked to enhance their chances for continued profitability.
"There are two ways people can go," says Reagan. "You can become highly specialized in a niche, or you can diversify."
Reagan says he and Mike, who last year sold the remaining interest in the business to Jeff, chose diversification for one simple reason: stability.
"The benefit of diversification and being a one-stop shop is that you are more resistant to the significant changes in the marketplace," he says.
As an example, he refers to the recent federal budget which mandated a 25% reduction in the Medicare allowable for home oxygen therapy beginning Jan. 1. Any agency that relies heavily on this niche could be in trouble. But by offering numerous services, you spread out your risk rather than keeping all your eggs in one basket.
Recapturing lost business
Like many other independent home infusion providers, the introduction of managed care hurt Reagan pharmacy. But with personal, highly selective marketing, Reagan Home Care Pharmacy has bounced back.
"We’ve been able to recapture some infusion business through marketing more directly toward the nursing agencies, and we have been doing very well there," says Reagan. The success has come despite not only a lack of managed care contracts but the tremendous amount of competition from other Atlanta-area agencies.
"We do several things because my approach to marketing is that you have to hit several avenues," he says.
First and foremost for Reagan is to maintain its name recognition among the public. Rather than taking out ads in newspapers or similar marketing vehicles, Reagan goes to where the potential clients and referrals are. Here are some of his more unique approaches to marketing:
1. Get in the public eye.
Each year Reagan sets up a booth at the annual Cherry Blossom Festival, which upwards of 30,000 people attend. Most agencies wouldn’t consider setting up a booth at an arts and craft fair such as the festival, but it’s worked wonders for Reagan.
"We’ve had a booth there for the past few years where we’ll do blood pressure checks and also loan out wheelchairs free of charge for the day," says Reagan.
In general terms, the booth puts the Reagan name before thousands of potential clients. Second, by collecting names of individuals the agency loans wheelchairs to, Reagan is able to capture data for its mailing list, typically for use for retail sales.
"A lot of our marketing is not in sales calls," adds Harriet Howard, RN, BSN, CRNI. "We have a lot of community involvement. We do different types of screenings, such as blood pressure, blood sugar, and we work with other agencies doing inservices."
While it’s difficult to quantify the benefits of such marketing, Reagan feels such efforts help keep his name before potential clients.
In addition to working with clients, the agency also provides "joint visits," where if Reagan is supplying only the product for care, a nurse may do a home visit regardless to provide teaching regarding the equipment.
Another way the company keeps its name before the public is through two of its staff who are CPR instructors. These individuals work with various groups, such as physicians’ offices, staff of personal care homes, and children’s nurseries to provide CPR training.
"While they’re doing this, it allows us to market our other services such as infusion," notes Reagan.
And this, says Howard, is critical in gaining new business.
"It is a challenge to continue to stay afloat in the environment of larger companies and managed care contracts," she says. "I think an independent can still be successful by having the diversification of services, to align themselves with other agencies, and to form alliances so they can provide goods and services to a wider service area."
Howard adds that such alliances also allow the agency to get its foot in the door with managed care.
"By working in conjunction with agencies who have managed care contracts, they can subcontract out with us," she says.
2. Provide extra services for clients.
Name recognition is important, but Reagan says it’s equally important to go the extra mile for patients. That’s why Reagan Home Care Pharmacy provides patients and their families with a free monthly respiratory support group which meets at the agency’s 8,000-square-foot office.
"We have speakers that come in, or our staff act as the speakers on a variety of topics ranging from pharmacology, to disease states, to traveling with respiratory conditions," notes Reagan.
This is an area he would like to expand in the future.
3. Give yourself an "in."
Reagan is well aware that name recognition alone does not attract new business. Getting a chance to prove your worth through that first referral can be difficult.
"If you haven’t built any type of rapport, you can get a no very quickly when you start talking about IV therapy," he says. So Reagan uses any way he can to get his foot in the door.
One method that has proven successful has been by marketing non-medical services. In particular, Reagan Home Care Pharmacy offers retail sales of medical scrubs and nurse uniforms. This often serves as the first contact with a potential referral source.
"If we have had difficulty marketing to a certain office for infusion services, the door may be open for a non-clinician to do a uniform show for that office and build rapport that way," says Reagan. "And while they’re marketing the scrubs and uniforms, they can get a dialogue going regarding our other services and maybe even make an appointment to get a clinician out there for a sales call for IV therapy."
4. Establish trust.
When it comes to home infusion, there aren’t many ways providers can differentiate themselves.
"The only thing I can sell is our clinical expertise because vancomycin is vancomycin, and an IV pump is an IV pump," notes Reagan. "Everyone should be able to provide the same aspects in terms of medication and technology."
He also says that he doesn’t spend a great deal of time on the various types of therapies his agency provides or the fact that staff is available 24 hours.
"Those should be a given," he says. "We have to establish trust and establish ourselves clinically, so I market my staff. I walk in there with their résumés."
Reagan uses the extremely high level of experience in his medical staff as the main selling point. For example, his director of nursing has numerous years of experience and was a department head at a hospital, and teaches PICC line insertion classes and pediatric advance life support classes to other nurses.
Through the above methods of marketing, Reagan has built a bridge between yesterday and the future.
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