LAS VEGAS – Can a complex rehab technology (CRT) repair business actually be profitable? According to Matthew Macpherson, owner and co-CEO of Las Vegas-based ATLAS-Fios, the answer is yes—but it’s tricky. The National Coalition For Assistive & Rehab Technology (NCART) defines CRT as “medically necessary, individually configured devices that require evaluation, configuration, fitting, adjustment, or programming.” CRT also requires repair, and DME providers often get asked to do the work.
Medtrade Monday sat down with Macpherson (a speaker at Medtrade 2024 in Dallas) to learn more about the nuts and bolts of a successful repair business.
Medtrade Monday: What are the biggest misconceptions about starting up a section of the business for CRT repairs?
Macpherson: One misconception is that it’s similar to DME and you’re just adding on more expensive products. It’s a very different animal than DME. It’s not like you’re just adding on a higher ticketed item if you’re hiring ATPs [assistive technology professionals] to do the evaluations, plus additional staff to do the service calls. Patients have more complex needs, so the individuals require more equipment that you may not have contracts with, and that means more manufacturers.
A lot of times, DME owners think that it’s an easy transition if you have the budget. Some think the majority of the burden is that it costs more, but acquiring the repair skills is challenging in our industry. The other misconception is that some people think that it’s harder than it is, as far as making that transition. You can do it. You just need to have the right understanding of how to roll out CRT. Don’t fall into the mistake of thinking that it is DME, but just more expensive.
Medtrade Monday: How would you characterize the reimbursement climate for CRT repairs?
Macpherson: CRT is holding a good umbrella over itself and not falling under competitive bidding. The reimbursements are still fairly appropriate for companies to run a CRT business. Where you lose money is in the repairs of CRT. So the repairs of all equipment, whether it’s DME or CRT, are all falling under the same categories.
As much as the CRT equipment is being protected on the purchase side, it’s not protected on the repair side. So you might make enough on the purchasing side to make it worthwhile to sell the equipment, but if you don’t have efficiencies in your service department to service it, that’s when you’re going to start to lose the extra revenue you built from the sale. If you want to keep the money from the sale, you have to have really good efficient service.
Medtrade Monday: What’s the latest on getting better coverage for repairs?
Macpherson: NCART has been lobbying to try to get separate buckets of money for DME and CRT so that CRT was its own evaluation process. They’ve been looking at trying to do a separate benefits type of pooling of money, but handling CRT differently than DME—where the ATP would be reimbursed for evaluations, fittings, and deliveries—not just a purchase.
Under that concept, CRT would be more like orthotics and prosthetics. It would lead to more appropriate reimbursement on repairs for CRT because it’s a separate category, but currently that doesn’t exist. It’s been on the horizon for the last few years, and NCART has been trying to push that through.
Medtrade Monday: Is it possible to be profitable with a repair business?
Macpherson: It is possible, but there are always barriers to profitability. A lot of those barriers come from reimbursement rates. We can’t just go and ask for more money when it comes to reimbursement, so it is what it is—at least for now.
Medtrade Monday: Where is the money typically lost in a service department?
Macpherson: If you break down the service department, a lot of the money is lost in how the department is handled. Training is one example. You may send a guy out who doesn’t know what he’s doing, and he goes and picks up the wrong chair or does the wrong repair—it costs you money. Experience is crucial.
Medtrade Monday: How do repairs at clients’ homes cut into the bottom line?
Macpherson: If you are routinely going out and doing mobile calls at somebody’s home, do you know the radius of your repair business? If you look at the sale of new complex rehab equipment, it’s appealing because they are expensive. If you drive 45 to 50 minutes away to repair a new power chair, the sale covers the cost of going up there.
However, in a year or two when you have to do a service call, the service call isn’t going to cover that hour of travel time. The sales department is going to dictate how your service department is operating, and the connection between those two is very important. With repairs, we’re working with pennies on the dollar, instead of the extra money like we would on a sale.
Medtrade Monday: What were the most common concerns you heard at Medtrade?
Macpherson: We’re finding that there is a lack of experience and understanding when it comes to running repair shops. As a result, ATLAS-Fios has grown to include consulting with providers on how to run repair shops as a business. Training is part of it. The efficiency of running a repair shop is the other part.
Profitability and repairs are really difficult in this current stage of our medical industry. More providers are trying to find ways to make money, and repair has historically been a money-losing part of the business. Sales tend to be the money-earning part of the business.
A lot of the focus is to put money where you’re making money and try to decrease where you’re losing money. A lot of companies have tried to avoid doing general repairs, choosing to only repair things that they sold. They are trying to mitigate how much they’re having to service, and focusing on the sales side. I communicate to employers how important it is to support the service department with more efficiency to make it more profitable. Do not try to avoid it, because it is unavoidable.
