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/ Archived News / Low-cost Ostomy
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Company
makes move to low-cost ostomy
by
Jim Sullivan, HME News (Oct. 2000)
ST.
PETERSBURG, FL - They could have picked an
easier way into home health care. With Convatec
claiming about 65% of the ostomy market and
Hollister 30%, Genairex,
a new medical supply company is going after
the Goliaths with a low-priced, two piece
ostomy product, the Securi
-T.
The two-piece system consists of an adhesive
wafer and a pouch that attaches to the wafer
- with "only a touch of a finger"
- by way of a flexible flange. But the company
isn't banking on these features to drive share
in the market; it's slashing prices.
"Our base dealer price for a box of ten
is $6.20 below reimbursement, which when compared
to Convatec is a 30% margin versus an 18%
margin," said Karen McKenzie,
the new company's marketing manager.
At these price points, the company is hoping
to lure back HME providers who've stopped
accepting assignment on ostomy products. "This
is a way to get back in," said McKenzie.
"A way to start bidding on managed care
contracts and other things they couldn't do
because the reimbursement was too low."
"People want specific products,"
said Bob Lichtenstein, the
president of Hollywood Medical Supply, who
recently stopped accepting assignment on ostomy
products, though he does still retail them.
"People get trained on a specific product,
and that's what they want."
This reality is not lost on Genairex.
"We have very modest projections,"
said McKenzie. "But people have told
me that the ability to take assignment again
is a huge incentive." McKenzie believes
dealer margins can increase up to 20% - the
same threshold that Lichtenstein says he would
have to reach before he starts accepting assignment
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