Limited by Medicare Laws, AOS Finds Alternative Means for Prospecting

The AOS home products catalog is in a tough position when it comes to prospecting for new customers. Why? Half of its business comes from Medicare recipients, and the federal government has strict parameters on how and when it can procure lists.

“It makes it difficult to drum up new business,” explains Lisa Juenger, former operations manager for AOS catalog. “Medicare has very stringent guidelines, and we have to follow them to the nth degree.”

The Earth City, Mo.-based AOS is a direct-to-patient catalog for ordering home care medical products including ostomy, nutritional supplements, incontinence and diabetic supplies. The current catalog runs 120 pages and will cover the 2007-2008 ordering period, although a bold notice points out that prices are subject to change due to the lengthy cycle of the book.

Tight Restrictions
The cataloger only is allowed to send mailings to customers who have been “actively ordering within a 15-month period” from AOS, Juenger says. Medicare restrictions prevent marketers from doing outbound telemarketing to prospects who don’t fall within that ordering cycle.

With its direct marketing abilities limited, AOS has relied on third-party referrals — primarily nurses — to spread the word. Nurses “have been our frontline sales force for many years,” Juenger says. Many of them work in discharge units at hospitals and other medical facilities.

Judi Boc, director of marketing for AOS’ parent company, MMS, A Medical Supply Co., says Medicare guidelines restrict AOS from paying nurses for referrals. So, the cataloger relies on the nurses’ goodwill.

AOS makes most of its contacts with nurses at conferences, such as the national conference for the Wound, Ostomy and Continence Nurses Society, the United Ostomy Associations of America conference and the American Association of Diabetes Educators.

At these conferences, Boc says, “We explain, ‘Here we are; this is what we do. We have a great catalog and great pricing, even for those not on Medicare. Please pass this on to your patients.’”

After meeting nurses at conferences, AOS follows up with direct mailings. The mailings contain product samples, flyers on monthly specials and extra catalogs. The company also has a Web site and advertises in ostomy magazines.
Educate Everyone
To further build up their lists, AOS staff has been training the sales representatives of its parent firm, MMS, to mention the catalog when they call on hospitals, assisted living facilities, nursing homes and doctors.

Because AOS was a fairly recent acquisition for MMS, many members of the MMS sales force weren’t familiar with the catalog and retail division. “We educated the whole company and the reps about who AOS is and what it does,” Boc says. “We put information in the company newsletter. We sent out announcements.”

AOS ships products in discreet packaging within one to four days, depending on whether it’s in stock and where the client lives. Whether the patients are living in their own homes or in assisted living facilities, adult children can arrange to have AOS ship the products directly to them.

While there occasionally are some processing fees, AOS ships most orders free because of Medicare regulations. Juenger says the free shipping even applies to non-Medicare clients because the federal guidelines mandate that companies can’t have two different pricing levels. The processing fees help make up for some of the lost shipping fees, but in general, “We just have to assume a lot of these costs,” she says.

Juenger notes that dealing with Medicare involves a lot of paperwork. “It’s tough, but it’s what we choose to do,” she says. But that’s not the catalog unit’s problem. Boc notes that an MMS sister company, DSI Process Systems, handles the Medicare billing for AOS.

Gail Kalinoski is a freelance writer based in Wappingers Falls, N.Y. You can reach her at gkalinoski@aol.com.