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Thread: The Dark Side of Mobility Business

  1. #1

    The Dark Side of Mobility Business

    Good morning everyone,

    This post is not so much about a device but instead about how to get it to the community in an ethical way.

    The way I see it there are two options:
    1. Going through DME's to distribute
    This is the traditional rout. It is relatively easy (since they already have the hospital networks). HOWEVER they take a massive amount of money (40-50%). That's why all the mobility devices that currently exist are priced insanely high for anyone trying to buy privately.

    2. Becoming a DME
    This pretty much just means building our own hospital/distribution network. It is much more difficult, but we can control our price and make it as low as possible.

    Is there a 3rd option I am missing? Maybe a more creative way to get to the wheelchair community? I want to avoid option 1 at all costs. It's not fair to the community that the prices have to be artificially high in order to to satisfy the pockets of "the system".

    Yes, I understand only a small percentage of users will buy a device without insurance but I don't want to leave anyone behind.

    Any and all advice/thoughts are extremely appreciated!

    Thank you for the help!

  2. #2
    Senior Member Oddity's Avatar
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    Most people go to DME for equipment, because they're also managing all the paperwork for us, between doctor and insurance company and suppliers/manufacturers. Their margins/markups aren't just "greed", they help cover the very high costs of keeping billing and certified rehab equipment specialists on staff, and all the work they do. There is also liability insurance which is very costly. It will be for you, too, as a manufacturer.

    If you try "being your own DME", then you'll need those same costly staff members and insurance, on top of start-up costs and staff to build, curate, and maintain your own networks.

    There is the option of "all of the above". If your device sells, DMEs will want it. Their "retail insurance price" doesn't have to be the same as your "direct from our website" price. Most of us don't really care what the DME charges the payer, only what our out of pocket cost is.

    There are also popular "online discount" DME shops who are cutting prices by ~30% right off the top, but they don't do any paperwork or other support actions.

    If your product is good enough, then a simple online shop presence might suffice for the occasional self-payer. Otherwise, I really can't imagine much success without being a part of "the system". Sure, you'll sell some units, and they might be awesome, but if avoiding the system is the only way you can keep a lid on pricing, well, frankly you'll be avoiding the vast majority of your potential business opportunity, as well.

    (Always keep in mind: less than 20% (~16%) of folks with SCI work, with private insurance, and/or disposable income to pay out of pocket. The vast majority of us are on Medicare. So, ~80% of your business potential is locked behind your Medicare coding assignments/registration and DME dealers right from the start.)

    There is very little potential for a business model depending on disabled folks having a few thousand dollars lying around to sink into a piece of occasionally useful equipment, IMO, no matter how great it is.

    Consider this: If we can go to a DME and get a Smartdrive for $400-$800 (which we can today), the fact it costs them $3,000 to source the unit, and they get paid $4,800 from Medicare, is irrelevant to us. Can you compete with a $800 Smartdrive by operating "outside the system"? No. You can't.

    I think you'll come to find the "traditional" model is less about greed and price gouging as it is about the realities of what it costs to run these types of businesses successfully.

    Sorry. Not trying to be a downer, just frank and candid with my opinions.
    "I have great faith in fools; self-confidence my friends call it." - Edgar Allen Poe

    "If you only know your side of an issue, you know nothing." -John Stuart Mill, On Liberty

    "Even what those with the greatest reputation for knowing it all claim to understand and defend are but opinions..." -Heraclitus, Fragments

  3. #3
    Senior Member Oddity's Avatar
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    So, here is my more positive take:

    I just got a Smartdrive, using a Medicare Advantage Plan by Humana, for $480. If I could have gotten another unit that did the same thing, or better, from your company, for less than that, I would have.

    Smartdrives are in a coding limbo right now, IIRC, of being "carrier priced", in my region. That essentially means there isn't a set assignment dollar value and what it ultimately costs people in my area has ranged (based on my direct knowledge of a few others who've gotten them) between $400-$800 co-pay.

    If you can get into "the system" with an as good (or better) option, for less Co-pay, then it doesn't matter (to us, the end user) what the behind the scenes costs are. It WILL matter to the DME, though.

    So, here's what I'd try to do if it were mine:

    I'd continue to strive to manufacture this thing as cheaply as possible. I'd then try and get it coded and priced via Medicare for as much as possible, commensurate to a Smartdrive's pricing. If your manufacturing costs (and dealer pricing) are still super low, but retail commensurate, DMEs will flock to the product for the margin, while we will still be able to get one for $400-$800.

    Even better: if you can get it coded and priced via Medicare LOWER than a Smartdrive but STILL allow for better margins at the DME end because your manufacturing costs are (hopefully) lower, then everyone in the chain wins.

    You can always sell it at cost, direct from a website, to fulfill your dream of making these affordable for the (very few) people who have cash and just don't want to go through the DME process.
    "I have great faith in fools; self-confidence my friends call it." - Edgar Allen Poe

    "If you only know your side of an issue, you know nothing." -John Stuart Mill, On Liberty

    "Even what those with the greatest reputation for knowing it all claim to understand and defend are but opinions..." -Heraclitus, Fragments

  4. #4
    Another option might be to involve one of the "big guys" in the DME manufacturing market and license your product to them. They would not own your company or product, but would take care of the distribution under their label and vendors. It would still need to get approved as an FDA-approved medical device for most insurances to cover it, which is a costly process, but they may help with this if they really like your product.

    (KLD)
    The SCI-Nurses are advanced practice nurses specializing in SCI/D care. They are available to answer questions, provide education, and make suggestions which you should always discuss with your physician/primary health care provider before implementing. Medical diagnosis is not provided, nor do the SCI-Nurses provide nursing or medical care through their responses on the CareCure forums.

  5. #5
    Senior Member Tim C.'s Avatar
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    Quote Originally Posted by ProPulse View Post
    Good morning everyone,

    This post is not so much about a device but instead about how to get it to the community in an ethical way.

    The way I see it there are two options:
    1. Going through DME's to distribute
    This is the traditional rout. It is relatively easy (since they already have the hospital networks). HOWEVER they take a massive amount of money (40-50%). That's why all the mobility devices that currently exist are priced insanely high for anyone trying to buy privately.

    2. Becoming a DME
    This pretty much just means building our own hospital/distribution network. It is much more difficult, but we can control our price and make it as low as possible.

    Is there a 3rd option I am missing? Maybe a more creative way to get to the wheelchair community? I want to avoid option 1 at all costs. It's not fair to the community that the prices have to be artificially high in order to to satisfy the pockets of "the system".

    Yes, I understand only a small percentage of users will buy a device without insurance but I don't want to leave anyone behind.

    Any and all advice/thoughts are extremely appreciated!

    Thank you for the help!
    so what's the device anyway

  6. #6
    Quote Originally Posted by Tim C. View Post
    so what's the device anyway

    http://sci.rutgers.edu/forum/showthr...al-Wheelchairs

    (KLD)
    The SCI-Nurses are advanced practice nurses specializing in SCI/D care. They are available to answer questions, provide education, and make suggestions which you should always discuss with your physician/primary health care provider before implementing. Medical diagnosis is not provided, nor do the SCI-Nurses provide nursing or medical care through their responses on the CareCure forums.

  7. #7
    Senior Member pfcs49's Avatar
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    Get it manufactured in China before they steal your property and do it themselves!
    69yo male T12 complete since 1995
    NW NJ

  8. #8
    @Oddity That was some of the best advice we have ever been given. So much so, that our entire team met yesterday for almost 2 hours discussing our thoughts.

    You are 100% right and I knew you were after I read your comments the first time. But I couldn't wrap my head around why I still felt like something was off.

    After a lot of thinking I finally realized my disconnect. I have been too focused on the price per device, as opposed to the true cost per user out of pocket. It's actually really silly but in my efforts to try and "protect the user" I let my guard down and became blind to the numbers.

    You are right, what is the point of having a device that costs $1800 when we could only help less than 20% of the population? Better yet, it may FEEL better for us but in reality, the users have to pay more than if we went through insurance (the user copay of $400-$800).

    Your advice under "So, here's what I'd try to do if it were mine:" was icing on the cake. Puts everything into perspective. Thank you for taking the time to be so specific and put it in honest, simple terms. You are awesome.

  9. #9
    @sci-nurse Agreed! I think that's a really wise path especially for our young start up.

  10. #10
    @Tim C. Wheelchair power add on the is as light as a smart drive but has 360 turning like a Zx1

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