Retail Sales Case Study
How do the concepts discussed in the feature article apply to an actual O&P company? This Case Study provides a practical example.
A couple of years ago, an O&P practice, Step Ahead O&P LLC, (fictional name) had many patients who needed foot orthotics and shoes or minor shoe modifications.
The practice had reached a point where it needed to make a decision to either focus more making this part of its business perform more efficiently and profitably or to aggressively minimize it by redirecting it to people who specialize in it.
The practice realized that there were good business reasons to pursue either strategy. Thus the owners agreed that they simply needed to make a decision and be committed to the outcome. They also considered what would be best for the patients in their community.
This practice believed that there was more to gain by developing a care pathway within their business for patients needing these services rather than redirecting the business. So, the clinical director went about putting the plan together.
The clinical director realized that the care pathway had to be structured to be more cash-based than the normal insurance-based custom O&P care. The clinical director also realized that since the margins on this type of work are very slim, expenses had to be kept to a minimum. Specifically, no additional overhead expenses could be incurred and labor expenses had to be minimized. All of these business goals had to be achieved while maintaining a high level of clinical care and meeting all necessary legal requirements.
To work within these parameters and achieve the desired results, the clinical director created a separate company called Footsteps LLC. This was a separate legal company, which had a very defined scope of service and had a common owner with Step Ahead O&P.
Even though the companies have a common owner, the clinical director also saw that creating a separate company allowed for different ownership structures for Step Ahead O&P and Footsteps. Footsteps was not going to hold any contracts with insurance companies, nor was it going to be a participating provider with Medicare. All of its business was going to be cash-based. Footsteps would offer to provide patients with any information they needed to bill their insurance, but would require payment at the time of service. Clearly, this approach would eliminate the administrative challenges associated with collecting for services rendered, reduce the expenses per patient encounter, and increase cash flow.
The next step was for the clinical director to clearly define both companies' role in patient care to incoming patients, to the community, and to referral sources. To accomplish this, the clinical director redecorated a "corner" of the practice's patient waiting room to identify Footsteps and the services that were associated with this name. Shoe displays and photos were used to create this environment. The Footsteps name and logo was also prominently displayed in the room that would be primarily used for patient care under this umbrella. Simple marketing brochures and handouts were created to define the services and how to use them. A news release was sent to all local papers and healthcare journals for broader communication of the change. Further, meetings were set up with the primary local referral sources to introduce the new company and to explain how these changes would better meet the needs of the referral sources' patients.
The clinical director also addressed staffing issues. Due to the anticipated volume of business, a full-time certified pedorthist was hired. The pedorthist would be supervised by the clinical director. The front office staff would handle patient scheduling and cash collection. It was decided to use central fabrication for most technical services, with the CPed doing minor modifications and the current technical staff helping out in emergencies.
A separate company was created in the billing system to handle patient scheduling and accounting separately from Step Ahead O&P. A cash register was inconspicuously placed in the front office to handle the exchange of monies. Finally, receipts and other financially related paperwork was created with the Footsteps name and logo. The process of handling patients was carefully explained to both clinical and administrative staffs in order to make the process flow efficiently.
The most costly investment was the purchase of an inventory of shoes for fitting sizes. The clinical director and the pedorthist decided to minimize the choice of shoes readily available, although they did establish accounts with a few companies. Effort was made to partner with shoe companies to establish consigned inventory and the best possible payment terms.
Finally, processes were established to define how a patient would be cared for who needed a more complex orthotic or prosthetic device and services than those provided by Footsteps, along with procedures for reimbursing Step Ahead O&P for expenses it pays for that are the burden of FOOTSTEPS. For example, benefits for Footsteps employees are provided through Step Ahead O&P-this was possible because of the common owner-but need to be paid for by Footsteps.
Author's note: The Case Study is intended to place conceptual information into practice. However, it was not possible to address all business or clinical issues in a brief case study, and therefore, the reader should recognize the Case Study's limitations.