Question: Starting a New NEMT Business vs. Franchising

I am wanting to startup a new transportation business with one vehicle but recently saw a franchise opportunity and an existing transportation business with 5 vehicles and was wondering which plan would give me the quickest ROI. I am new to the transportation business but am eager to start helping people regardless of the route I need to take. Thank you for your time.

Answer

Thank you for the great questions.  Without knowing more about the businesses or franchise you are interested in acquiring it is difficult for me to offer targeted insight with regard to which will give you the quickest and most robust ROI.


However, I am 100% against the franchise business model for NEMT for several reasons as follows:


1. They cannot guarantee you trip volume – REGARDLESS of what they promise you!


2. NEMT franchises will work to sign you up with Medicaid Brokers who are the lowest form of reimbursement.  Brokers should NOT be the foundational source of your revenue nor should they be a main attraction or source of enticement to invest.  Medicaid broker work is what I call the "low hanging fruit" - anyone can get it as it is readily available


3. Like any franchise, the franchise will require regular franchise fees for which I am 100% against being pick pocketed for the life of your business.  Needless to say, when it comes to NEMT and home care franchises, you will eventually outgrow the need for the franchise and, thus, should no longer need to pay such laughable fees


4. Over the years I have had about a dozen or so franchise business owners in various states contact me for advice on either selling their business and/or finding a legal solution to opt out of the franchise

So, buying an existing business being sold independently is an option, but that requires much more research and lengthy discussions for which I am happy to assist, but you will need to contact me directly so I can itemize the resources and materials you will need to provide.


Obviously, you can start your business from scratch as my material is designed to assist.  But regardless of circumstances or which direction you are currently leaning, I most certainly can tell you that I would NEVER advise you or anyone to invest in an NEMT or home care franchise.  They are foolish business model with a limited shelf life.  That last thing you want to do is no longer need them, yet, be stuck paying them fees and royalties or the life of your business.

Question: Worker's Comp Issue

I am working with three different worker com brokers but we don't get too many calls from them, maybe 2-3 calls per day even though we offer them as low as $1.65 pr mile for ambulatory and $2.20 for wheelchair.   I know that other providers are getting many more calls.  How can we build a good connection and relationships with them?  Do we have to pay some kind of commission?

Answer

Thank you for your great question!  Some random thoughts, ideas and feedback as follows:


1. I obviously don’t know what your competitors are charging, but you need to be VERY cautious about continuing to reduce your rates in an effort to try and make yourself appear more appealing to customers and potential comp brokers in general.  Reducing your rates is definitely a slippery slope that can put you in a very bad situation.  


First, you tighten your profit earning potential.  If anything happens during a trip in terms of duration or demand you can find yourself losing money - quickly!  Even more, you legitimately don't have the resources to grow and scale your business!


Second, you can look cheap – no one likes cheap or wants to use a provider who looks like they might be out of business soon.  


Third, when your rates are low it can be VERY difficult to raise your rates in the future, especially when you have created a solid clientele and they have grown accustomed to your low rates!


2.  Just as I don’t know anything about your competitors, I similarly, don’t know much about your business and what you've been doing to gain new clients.  But a few things I will tell for sure as follows:


a. You need to network YOU and your business.  This includes doing active searches for comp brokers and insurance companies and contacting them outright to introduce you and your business.  Please see below, at the bottom of this message, for some companies you might want to contact for possibilities.  


For my own transportation business, I literally started by contacting all insurance underwriters in New York who wrote policies for workers comp.  Sometimes I got the “run-around” when I called because the person who answered the phone was an entry level operator.  But after being persistent, I typically found my way onto the lap of someone who could provide me with more information.  And like anything, it was important to talk to many insurance companies.  A few will use you, but one or two will use you a lot!  


With some underwriters, they told me they would keep us on their list of providers to call when the need arose, but more times than not you rarely, if ever, hear back from them.  But ironically enough, there are a few that began contacting us a few times a month and one, the New York State Insurance Fund, began using us all the time.  So my point is, you need to be persistent and work to turn over every possible stone.  Network yourself and your business.  


b. I’m not sure where you’re located and although there exists the need for worker’s comp transportation across the country, wherever people work, workers comp is especially big in the Southeast.  Why it is so big down there, I honestly have no idea!  But workers comp transportation can be so big that different insurance underwriters will host broker conferences.  My advice is to work to find such conferences in your region and visit as a simple attendee so you can learn more about the workers comp industry and market.  I guarantee you will walk away from such conferences with a ton of leads and names of comp companies.


c.  Whatever you do, ABSOLUTELY AVOID a company called “Black Diamond.”  Black Diamond has stiffed many Transportation Providers to the point where they filed for bankruptcy and Providers who were owed thousands of dollars received a few hundred dollars if anything at all.  Do not go near anything regarding “Black Diamond” or anything company that could be an division or reformation of their company after they filed for bankruptcy.  


3.  I think it’s great that you’re working to try and build your workers comp business, but I strongly encourage you NOT to be one dimensional and relying exclusively one workers comp.  Doing so can leave you very vulnerable.  I definitely encourage you to work to diversify your sources of clientele and streams of income.  


In regards to the companies I mentioned previously, please see the following:

http://globaltransservices.com/ 

https://www.corvel.com 

https://interpretersunlimited.com 

https://transcom-solutions.com 

https://www.vgmhomelink.com 


Question: Market Analysis & One-on-One Training

I'm interested in a market analysis for the middle (Nashville) to eastern (Johnson City) Tennessee region. We are relocating to the area and would like to have the market analysis done quickly but would like to delay my one on one training until after we move so I can remain totally focused. Is this approach possible ? Thanks for your time and I am eager to get started.

Answer

Thank you very much for your great question and interest in enlisting our help.  We can definitely start work on your Market Analysis as soon as possible, but honestly, we are currently running at approximately 10 weeks for development due to the volume of ongoing projects in our queue and, simply, the time it takes once we reach the call phase - when we start calling each facility to determine points of contact, level of transportation need, etc.


In regards to delaying the start of One-on-One training, that is not a problem.  Just make sure you remain in contact so we can scheduled you when ready.  Also, just prior to starting your One-on-One training, we will need you to complete a questionnaire of about 25 questions . This will help us learn more about you and your start point.