The HME180 Podcast – Episode 5 – Jay Broadbent from Caddis Capital Management & Alpine Home Medical

Jay Broadbent from Caddis Capital Management & Alpine Home Medical
In this episode of The HME 180 Podcast, Sue Chen interviews Jay Broadbent, Founder of Caddis Capital Management and Alpine Home Medical. Jay shares his journey in the HME industry, starting in 1997, and discusses the challenges and strategies involved in balancing retail and reimbursement models. He highlights the importance of providing excellent customer service and while constantly adapting to the roller coaster of reimbursement cuts and changes. He also shares the necessity to prioritize profitability in tandem with improving the customer experience. Jay emphasizes the value of detailed measurement and monitoring in business operations, particularly in managing customer reviews and ensuring quality service. He talks about the establishment of Caddis Capital Management to offer centralized services like HR and marketing to their stores, enhancing efficiency and growth. The conversation also touches on leadership development within the company, underscoring the significance of nurturing young talent through initiatives like their Leadership University.

Listen to our Episode

Photos

Click to enlarge photos and learn more about Jay Broadbent, Caddis Capital Management, and Alpine Home Medical!

Transcript

Introduction: Welcome, you’re listening to The HME180 Podcast. Every month, your host Sue Chen, will interview the best of the best HME retailers who are fearless, innovative, and committed to their work. On this month’s episode, our special guest is Jay Broadbent, Founder of Caddis Capital Management and Alpine Home Medical.

Sue Chen: Hi, and welcome to The HME 180 Podcast. I’m your host, Sue Chen and this is going to be a unique and very compelling episode, we’re going to add a little chaos, the good kind. All of our episodes so far have featured HME retailers and pharmacies that are 100% HME retail, so doing no HME insurance, Medicare or reimbursement. And many of you have heard me say, “Let’s kick Medicare to the curb.” But in reality that may not be feasible, and also not serving all customers. And a large part of our industry is a hybrid of HME, retail, and reimbursement. Caddis Capital Management commands both sides of our industry: reimbursement and retail. There are 20 locations and growing: Alpine Home Medical, 10 locations in Utah and Idaho. Copper Star home medical supplies, with five locations in Arizona, and You Can Home Medical with five locations in Colorado. Founder Jay Broadbent is with us today. Jay, I’m so excited to have you as our guest.

Jay Broadbent: Yeah, I’m excited to be with you, Sue.

SC: So you’ve been in the industry for 27 years. Okay. And so for context, that’s 1997. And did you know that that year Jay, IBM released the first laptop to feature a built in webcam and the price was $12,000. And today, we can all like FaceTime, and Google Meets and Zoom on our devices. And we’re doing this today on Zoom. Isn’t that crazy?

JB: It is crazy. Yeah, that was, it’s crazy to think of the technology that we didn’t have back in ‘97.

SC: Right. And so speaking of, we’ve known each other for a long time, but I don’t know your origin stories. So how did you get started in our industry back in ’97. By the way, the Spice Girls were a rage back then.

JB: Good old Spice Girls. Yeah, so I, I had moved to Utah, and I needed a job. And so I, my brother in law worked for a company that had a DME company, and so I went, I went to work for them. And I really, really fell in love with the industry. I loved that you could help take care of people and help meet their needs, especially for mobility and going into people’s homes and seeing how their whole world would just open up with being able to provide a piece of equipment that would completely change their life. And I just really dug. that I thought that was I thought that was really cool. And it was something that I could do that I could provide for my family and make a decent living. But there was there was that non tangible that I could really benefit just from seeing people’s lives change. And so that’s where I really got my start. And then that company was going to sell their, their DME company to someone else. And I really didn’t want to go work for this new company. And so I had an opportunity to start my own. And so I had a couple of partners that we started and I needed some financial backing. And so we got that, and we opened Alpine Home Medical in Salt Lake City in  April 1997.

SC: Wow, my goodness. And you’re so your first memory, your foundational memory was of the impact that you made to that customer’s life?

JB: Yeah, very much so.

SC: So growing a business is hard. And it’s expensive. And it’s risky. And obviously, you had to get financing for your very first location. And today, Caddis has 20 locations. However, back in 2010, Alpine Home Medical had nine locations, and you guys are one of the few independents with multiple locations. So share with us your growth strategy and how you define growth.

JB: So we measure year over year growth, and how are we doing this year compared to the year before and whatever percentage of growth or not growth that we’re having at that, at that time is how we measure it. Our strategy was to grow as we could afford to grow. And so if we could afford it, we would make a move. You know, in Utah we have some locations in Salt Lake and then there’s Provo, which is just to the south and Ogden to the north. And then just as opportunities became available, and we could afford it, we would we would open another store in a city where we thought that we could go in  and make a difference.

SC: And that’s what you have to do as an entrepreneur because you know cash flow is always a challenge. And growing sometimes is not defined by your ambition but is defined by what you can do.

JB: That’s very true.

SC: So Alpine Home Medical, which was, you know, we’ve been–we’ve known each other for a long time, and you guys are a staple in the industry. But I introduced you as Caddis Capital Management umbrella where you have 20 locations. Share with us how Caddis Capital Management came about.

JB: Sure, yeah. So in 2017/2016, I really had to step away from, from our business. We–I had some personal things that were going on. And so I had to step away from Alpine for a few years. And then when I was able to come back, Alpine was really running really well. And I was really struggling to find where did I fit into my own company. And, and I didn’t, I didn’t really kind of have a place at my own company. And so looking at other markets–and then also I was really fascinated with the cash only retail model. Medicare’s really difficult to do business with. It’s, it’s a roller coaster, at best.

SC: Truly.

JB: The other insurances follow. And so I had an opportunity—I went down and looked at a company in in Arizona, and we were trying to make an acquisition there, and that didn’t work out. And so we decided to open our own store in in Mesa, Arizona. And so we went ahead and did that. But Dan Cloward, our CFO made the recommendation that we should start a management company that would allow us to provide things like accounting, marketing, purchasing, IT, you know, things like that without having to put those things into another company that really couldn’t afford all of those functions. And so that’s Caddis was born, was it allowed us to provide services to these DME companies that we were starting without them having to have their own HR department or their own marketing department. And so, so now Caddis  services, all of these, all three of the companies that we that we own with these services.

SC: That makes so much sense. Because I find that some of the challenges of our independent HME providers and retailers is the IT, the HR, the cashflow, all the things that, you know, not hinder, but you know, make it very challenging to run business day to day and take care of your customers. So that’s great that you put it under an umbrella for them to take care of it.

JB: Yeah, it’s worked. It’s worked really well for us. And we’re really pleased with how it how it functions and its Caddis isn’t above any of the companies. They’re just it’s all linear. We just, we just provide services to these to these DME companies. And, and we feel like we found a model that works for us.

SC: I know it certainly sounds like it. So you talked about how you’re very intrigued by the cash model, and you always have been Jay, you know, and you’ve always loved that side of it, but yet the foundation of your business and your customers needs were reimbursement. So I’ve often expressed and you’ve heard me say that retail and reimbursement are like yin and yang, you know, they may not work well together, they have two different mindsets growth versus fixed. But when I think about Alpine Home Medical, even back when I started working with you, you remember I used to come in and do retail classes. But that was not the case. You guys were unique in that you did both retail and reimbursement well, and in harmony. How do you do that? How do you create harmony and a strategy with reimbursement in retail?

JB: That’s a good question. You know, when we first opened our first location in Salt Lake City, I wanted to have a retail store. I had been in other DME companies and there was there was sort of a “frump factor” to it, you know, you’d go in and, and there wasn’t a lot of effort or energy put into displaying products or kind of retailing them and I wanted to have a nice retail location, and so we tried to do the best job that we could back in 1997, and you know, display products and give people an opportunity to come in and see touch and feel. But also my background was in rehab and mobility and so we did have reimbursement and depend on insurance payers for reimbursing us for products that we did outside of our showrooms and what we found is that the two marry up pretty well. There’s a fair amount of customers that can come in and use their insurance to purchase items right off of our showroom, there’s not a lot, but there are some items that people can come in and in shop. And so for us, it’s just, you know, maybe that’s just because that’s how we started. And so for us, it’s always, it’s always been that way: to do both reimbursement and retail. And we, I liked the model, I liked the way we do it.

SC: You said the “frump factor.” And boy, I don’t know if that’s in the Webster’s Dictionary, but it’s a great term that defines the look of some of our providers back in the day where you didn’t feel good about where you walked in. And I love that that resonated with you, because that seems to tie in with your passion for that customer experience. So maybe it wasn’t necessarily about creating this beautiful retail shopping experience, but you wanted to give your customer a good experience and not have to have frump factor.

JB: Yeah, yeah, I remember the first DME company I ran into, they had old, these old grocery store shelves, you know, and they just kind of ran up and down their showroom, and everything was on a on these old dingy gray shelves, and nothing was really display, they were just sort of set there. And, and it just it wasn’t–it didn’t really make you want to shop there, you know, you just, it looked like a place where you’d go in and just grab your stuff and get out. And for me, I wanted to do it a little bit different, I wanted to make sure that that people could, you know, if we were displaying the a lift chair, or a four wheeled walker or bath safety that, you know that it was all kind of grouped together, and you could kind of make choices and selections of different brands and, and quality levels. And, and so that’s really kind of where that came from.

SC: Oh, and I know that well, because I personally set many of your stores. Planograms.

JB: Yeah.

SC: And so you with that, with that intention of–I think about the intersection of your origin story of knowing the impact that products can make in people’s lives, but then also the experience of walking in your store and having a good experience and marrying that together. And so how do you “Wow” your customers–sounds like you are–exceed their expectations, because I know that that is a pillar goal for Caddis, keep them for life when you have to merge. And here’s my question, because you have to merge two concepts, the limitations of reimbursement with the freedom of retail, That’s a complicated conversation with a customer.

JB: Yeah, you know, it really is. I think when you’re talking to a customer, if you can educate them on what the reimbursement rules are, and you can explain that to them, as you’re showing them products that they get it. They understand that that insurance doesn’t pay for, you know, every single item. Take bath safety, for example. You know that insurance doesn’t cover any of that bath safety product.

SC: Right.

JB: Then so, for the customer, if they understand that, you know, okay, here’s five different Shower chairs, or, you know, whatever. And they know that they can really pick any one of them because the insurance isn’t going to pay for any of it. That’s, that’s great. I’m trying to think of another product that that is covered by insurance that well–

SC: Just like a basic walker.

JB: Yeah, a basic walker. And those, you know, the reimbursement on those is pretty terrible. And so it’s really those have become a cash pay item at this point, because of the insurances is pretty—the reimbursement is not great.

SC: And so how do you train your staff to have that information with empathy, where you say to your customer, you know, “Mrs. Jones, you know, this is all your insurance is going to pay for this, this gray folding walker. and if you can’t get it to move, you know, I know people put tennis balls, but we’re not gonna do that here.” And then she says, “But I see my friends have those red fancy walkers with brakes and seats. That’s what I want. How come I can’t have that?”

JB: Yeah. You know, it’s just having that conversation about what insurance will pay for and what they won’t and it’s pretty easy to stand there and point to a little two wheeled walker that drags behind the backside of the walker, or you put them in front of a nice colored four wheeled walker with a seat and a little basket or duffel bag. And they you know, they’re looking at their choices. And it’s a pretty easy choice for them to make the decision. You know, the even just the big wheels for example, on a four wheeled walker that are that are going to roll up over doorway thresholds or pebbles or little cracks in the sidewalk, compared to a little walker that you’re gonna get reimbursed by insurances. It’s kind of a no-brainer. People, they have the means to be able to purchase what they want to purchase. Now, very few people can’t purchase DME that they want versus just what their insurance will pay for.

SC: So it sounds like in the decades, you know, that the industry—that consumer expectation is shifting, whereas maybe, you know, 25 years ago, if you were having the conversation that, you know, this is all the Medicare pays for, they’re a little bit more defiant and confused. And now that I think they have a better understanding so it’s easier for them to understand where your staff is explaining.

JB: Yeah. Yeah, very much so.

SC: That’s great. All right. So I’ve got a good, juicy question for you here, Jay. This podcast is focused on retail. But we’ve got to talk about reimbursement. [laughs] Okay. So with reimbursement, especially if you look back over the last 27 years, you have limited control of your margins. And like you said earlier, the limited control is like a roller coaster, so very hard to control a roller coaster. So over your offerings and services, I imagine you’ve experienced hundreds of cuts and changes over the years yet you say in mandate, “We’ve got to stay profitable.” How do you do that with the roller coaster?

JB: Yeah, that’s a that is a juicy question. It’s becoming harder and harder to do that. Our margins continue to narrow. You know, you’ve got to be able to, you have to watch your numbers, you have to know what your business is doing. You need to know what your product categories and what your profit margin is on a product category. You can’t just run it kind of like the old days where, you know, if there’s, if there’s money in the checking account, that your money, you got some money, and if there’s not, then you don’t. You have to really, really watch your numbers, and monitor your business and know where, where you’re profitable, and where you can be more profitable than maybe other product categories.  And so we find that we’re having to do more with less, which I think every DME company across the country, especially if you accept reimbursement, you just can’t do everything that we used to do, as a company. And so there’s–let’s take deliveries, for example, you, you can still offer a really great service, and not run everything to the customers home.

SC: Mmhmm.

JB: You know, we look at, you look at your pharmacy, and if you need a prescription at your pharmacy, you go to the pharmacy, they don’t come to you. And so people are willing to get in their car and come see you, which is where you know, for us, we’re really glad that we have a really nice showroom, because when they come to see us to pick something up, whether it’s an oxygen tank, or maybe it’s a concentrator, you know, they can they can experience our showroom while we’re gathering up equipment and, and doing the paperwork for them. But that’s a good example of where you just can’t run everything to a customer’s home the way that we used to back in back in the late ‘90s and early 2000s. You know, we used to roll a truck for everything. And now we hardly roll a truck, unless it’s just an absolute essential that we go to their home.

SC: Right. Yes. And, you know, you’ve said something that really resonated. And I think it’s so important. You know it, regardless of the type of business that you have, and it’s, “If you can’t measure it, you can’t manage it.”

JB: Yeah, that’s a very true statement. If you can’t manage–measure it, you cannot manage it. Things can get away from you very quickly if you’re not looking at your numbers.

SC: And so do you build into your team and your culture, especially with the constant changes and reimbursement of the constant measuring to make sure that you are profitable that each transaction can generate income for Caddis?

JB: Absolutely, yeah, you have to and then making those tough decisions on the impact of the customer.

SC: And if you have to take away services, like you say delivery, and in other things, you know, where do you kind of start looking at, “My goodness, we may have may or may not be able to provide these services?”

JB: Yeah, yeah. I mean, that’s very true. You take the just the standard Medicare, little front wheeled walker, the reimbursement on that is so lousy. I’ve heard the joke that, “It’s cheaper to take the box of walkers and put it out on your front lawn at your store and write the word free.” Let customers just come and take it because it’s cheaper to do it that way than it is to try to do all the paperwork and chase down the documentation and try to–because you can’t make anything on a little front wheeled walker billing Medicare. I think it’s important to try to be that asset in the community. You can’t be there just to make a buck. You need to be profitable that that is important, it’s extremely—at any company, you need to be able to make a profit, because that that’s what helps you give pay raises, it’s what helps you grow it’s where a company that succeeds. That’s where they get their successes from that that profitability, but you, you can’t just be in it for the for the dollar. You have to be, I think in this industry, you have to be willing to be an asset to the community and be willing to, to help the community and to try to—because not every not everybody has the ability to pay for things that they need to have improvement in life. And so it’s been fun to be in it for more than just the dollar, I guess, is what I’m saying.

SC: And it sounds like you actually can do both. Because you are–since you love to measure things, and measure your marketing. And sometimes people don’t do it. So you don’t know the results of it. But an understanding that it’s more than just making a dollar, but then also obsessing on measuring things, share with me what you did with one of your concepts, as far as the gestures of kindness to your customers and measuring that when it comes to actual, like, results in sales and revenue.

JB: So we measure our Google reviews is a really good way to measure how you’re doing from a marketing standpoint, and then also what the customer experiences when they’re there in your store. And, and so we try to drive our Google reviews and you know, “Hey, would you be willing to give us a review?” And, and, you know, we get plenty of one-star reviews where somebody was not happy with the experience that they have. But I really look at that as–that’s an opportunity for, “okay, how are we going to go in and correct the mistake and turn that customer into a customer for life and really give them a ‘wow’ experience and see that? Whatever their first experience was, isn’t the norm. And so we had a lot of customers that struck, you know, they were they were grumpy with us at first and we were able to change their perception of us. From a marketing standpoint, gosh, you have to market everything. Because if you’re not measuring it, if you don’t you don’t you just be throwing dollars into the wind, and you don’t know whether those dollars are landing on the right customers?.

SC: Yes. Back to what you were just saying, on that customer experience, on that one star… do you go after your one-star customers?

JB: We answer every single Google review that we get. So regardless of whether you’re a five star or a one star, we respond to it, and we thank them for giving us a review. If it was a one star, we’re saying, “Gosh, what happened? What that’s we’re sorry that you had a negative experience with us. What can we do to make it right? What can we do to make it better?” And I think that is unusual in probably a lot of industries. Where people want to vent and be heard, and if they give you a one star, obviously they’re not happy. And so, I think you just take it that step further. “Okay, well, what happened? And what would it take for you to feel like you got a five-star experience from us,” and then and then go in and figure that out. And boy, a lot of those, we really are able to turn them back into a five-star customer because we’ve been able to correct whatever the situation was and just give the customer a better experience than what they initially got from us.

SC: Wow. Jay, I love that. I talked about little chaos this morning. That’s chaos where you kind of, you know, reach into the fire. Most people are so afraid of reaching out to that one-star angry customer who wrote a nasty review and you get upset and it’s better just to ignore them. But you kind of like jump–you grab that customer, you bring on the chaos. And you ask them like, “What can we do?” I imagine that customer, when that happens, one they’re shocked, two they feel heard, three, they’re empowered and four, they’re a customer for life and then five, they tell everybody!

JB: Yeah, yeah. Yeah, we kind of see it as a challenge. You know, it’s, we’ve got I, you know, and I’m making it sound like this is this is me, it’s, you’ve got so many good store managers that they just stay on top of these Google reviews. And I mean, they are on it, if we get a one-star review, they are on it within… I think our average is like five minutes.

SC: What?!

JB: Yeah, they monitor these. And so if we get a negative review, they’re on the phone. And hey, “Mrs. Brown, what tell us what happened? Where did we go wrong?” And, and, and it’s pretty cool to see these get resolution to then.

SC: Oh, my gosh, that is unheard of! Because time is of the essence. So you’re able to come in, in the moment, the heat of the moment, and completely change the emotion that customer had. Alright, that’s amazing. Well, I’m glad that we got to talk about that. All right. So in the last few years, you guys have acquired locations that are 100% retail, and I know that that is always been really appealing to you. And they also have some of them have existing brands. How did you bring them into your family? But specifically, how did you introduce reimbursement to their retail landscape?

JB: Yeah, yeah, that’s a that’s a bit of a tough pill for some of those folks that came over with us to swallow because it is more involved. It’s very detail oriented, you have to you have to get it right. You have to get your documentation, you get all those ducks in a row before you can vend the product. And it’s a learning curve for sure. I would say it’s very much like bringing on a new employee that’s never done DME or seen DME. It’s very similar to that except for they do know all the retail product. It’s just a learning curve. Some, some people are up for the challenge, and other people have chosen to go pursue other industries, because it’s, it’s not easy. It’s a process for sure. And it’s a process that you have to learn and know and take some time.

SC: Yes. And I think I shared with you that last night, I did a little bit of stalking on your website and digging in, and I found the hedgehog area, the hedgehog concept. And it really made me think about your journey over the last 27 years. And even when you stepped away and came back, and you were like, “Wow, my leadership team, my team is so good, they actually don’t need me anymore.” And then bringing on new companies, starting new companies bringing them on to this umbrella, an umbrella that really serves as an umbrella is to protect and to serve your stores. And then to then merge them as a family and then really create this team effort. I got to watch some Ted Lasso on one of your huddles last night. And it really makes me think about how you think about leadership and how you drive leadership and also alignment in your team. Can you can you speak about that?

JB: Yeah, we, first of all, we’d love to be able to hire from within and create opportunity. I think if people feel like there’s room to grow within an organization and that they can be part of the vision, part of what a company is trying to accomplish that I think there’s a lot of satisfaction for them there. We’ve created a few years ago, this Leadership University and we’d really try to target some of our younger employees that–they’re young, they’re bright, they’re hardworking, and they want to have an opportunity for future leadership. And so we do these two day courses where we bring everybody in, whether you’re from Colorado or Arizona, or anywhere in Utah, and you can you can come and participate. And this year, we’re doing the Speed of Trust with the Franklin Covey Group and, and it’s been it’s been fantastic. Our young people are super excited about learning and growing and they can see that there’s an opportunity. And really almost everybody in that leadership view has over the last few years has moved up in different positions within our organizations. Some of them will become store managers, some of them will become department leaders, you know, or they might be a team captain over a team in a department that they’re at. And so I think leadership and trying to develop leadership and help people feel there’s an opportunity with an organization, I think that’s I think it’s really important, especially for young people to feel like they have a place that they can go.

SC: That’s just tremendous. And I actually did kind of poke around in your leadership university and I think you’re underplaying the amount of resources and time you and Trudy are putting into and investing into your people. You’re being very humble about it. When I look at it, I really was so inspired. It’s just amazing, and I can understand why Caddis is where they are today and tomorrow. So I’m gonna—we’re kind of coming to the end of our podcast here, Jay, and I wanna end our conversation with where I start, and I didn’t start there, which is, you know, how are you? And how is life?

JB: You know, life is good, Sue, I appreciate you asking. I feel like I’m kind of at the sunset of my career. I’m excited to see our company go on. We got some sons that are working in the business, and they have an interest in taking that over. And so it’s been a lot of fun to get the company in a position to be run under a different leadership and to get our company as healthy as we possibly can before I get ready to step away. Trudy and I, we love to travel, we love to go places. We’ve got hobbies here at the house that we enjoy. She loves to garden and I love to wood work and fly fish. And so, life is good. It’s really hard to complain.

SC: Oh, I’m so glad, Jay, and I have to say you define leadership. You’re not an outspoken person; you’re very humble, but I feel you define leadership in our industry, and especially really finding that balance and that power with reimbursement and retail. And more importantly, you’ve empowered great leadership in your organization and in our industry so I commend you for that.

JB: Thank you, Sue, I appreciate that.

SC: Alright, well I hope you enjoyed this episode number five. We brought in some chaos with Jay Broadbent, and I look forward to future episodes. Thank you for being on the show today. Thank you Jay, and thank you to our listeners. Take care!

JB: Thank you, Sue.

 

Outro: A transcript and a copy of the visual companion guide is available on our website at HME180.com. Your host was Sue Chen, Chief Educational Officer of NOVA Medical Products. And our special guest today was Jay Broadbent, Founder of Caddis Capital Management and Alpine Home Medical. This podcast was produced and edited by Melissa Grace Klose. Our theme music was created by Rebecca Klose. Thank you for listening to The HME180 Podcast and we will see you all again next month.

Ready to Join the NOVA Network? Connect with Us.

What is your name?

How can we get in touch with you?

Are you interested in joining the NOVA Network?

Let us know what questions you have and we'll get back to you.