CASE 5 - ISSN 1940-204X Dynamic Medical Solutions Expanding...

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COMPANY INTRODUCTION AND CASE BACKGROUND Dynamic Medical Solutions (DMS) is a small company that sells (as a retailer of products manufactured by others) durable and nondurable medical products to customers in seven states across the United States. Some of the popular durable products sold by the company are hospital beds, diabetic footwear, and mobility equipment (i.e., wheelchairs, scooters, etc.). A large portion of the company’s business involves the sale of durable and nondurable medical supplies including nutrition supplements, gloves, and personal care products used in patient care. All of the products carried by DMS are over-the-counter items and thus do not require a physician’s prescription. 1 Like most companies in the medical products supply industry, DMS serves a multitude of customers, including those with (1) no insurance (i.e., cash and carry), (2) Medicare and Medicaid benefits (i.e., government programs), 2 and (3) private insurance. Accordingly, DMS has a billing department internally for customers with such benefits and insurance. Many customers, including those enrolled in government programs and those who pay for products out of pocket (i.e., cash and carry) are elderly and/or reside in assisted-living facilities. The company employs sales representatives who visit these facilities and interact with the customers and their caregivers on a regular basis and establish the ordering process for the customers via phone or fax. Customers also are able to purchase goods at one of the company’s five retail stores via the company’s website or through the phone/fax process with a sales representative. In regard to cash and carry customers, DMS strives to offer competitive prices as the company is directly competing with large national retail stores that offer many types of medical products and operate on small profit margins. Serving cash and carry customers is fairly straightforward, involving no other considerations beyond the typical sales initiation (i.e., visits from a sales representative), point-of-sale sales, and warehouse shipping or customer pick-up processes. On the other hand, serving government programs customers is more restrictive and requires an extensive number of internal processes and procedures. The prices charged to these customers (i.e., the reimbursement amount) are set by the program entity (i.e., Medicaid or Medicare). Most importantly, the process of selling goods involves additional mandated (by law) considerations beyond the normal cash-and-carry process, including the written verification of medical necessity from the customer’s physician, the processing of insurance claims, and the substantiation of product delivery. For many of the nondurable medical supplies, such as nutrition supplements and gloves, the process is even more cumbersome as these products are supplied to customers on a monthly basis.
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