HME News

DEC 2017

HME News is the monthly business newspaper for home medical equipment providers. This controlled circulation publication reaches 17,100 home medical equipment services providers, including traditional HME dealers & suppliers, hospital- and pharmacy-o

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Providers h ME NE ws / DE c EM b E r 2017 / www.h MENE ws.co M 13 By Tracy Orzel, c ontributing Writer BOISE, Idaho – Norco filled a major gap in its footprint recently when it acquired Free- dom Medical Supply in Yakima, Wash. "We had patients being discharged into Yakima but we weren't able to service them because we didn't have a store there," said Ned p ontious, president of Norco. Norco offers respirator y, sleep therapy and mobility products, and produces welding and industrial gases. The company has 1,200 employees and more than 80 branch locations in Washington, Idaho, Oregon, Montana, Nevada, Utah and Wyoming, amounting to $290 million in annual sales. The acquisition of Freedom Medical, which now operates under the Norco name, isn't the company's first foray into Yakima. Fifteen years ago, Norco was in the welding business there, but left due to competition. Since then, the community has seen quite a bit of activity, with some providers closing doors and others making buys, including Howard's Medical Supply, which recently acquired the inventory of Keeler's Medical Supply. "There's been a market shake-up in Yakima," said p ontious. "We've seen 'Shake-up' in Yakima gives Norco opportunity what's been going on in Yakima and we felt the community was underserved in the home care space, so that's why we decided to go after an acquisition in that market." While it's not uncommon for Norco to make several buys a year, changes in reimbursement meant the company pulled in its horns the last few years to get its house in order and develop a well-defined billing process. As for future acquisitions, p ontious says it's something Norco is always open to. In the meantime, the company just signed leases for two new locations in the Seattle and p ortland, Ore., areas. "Our primary strategy is to strengthen our current footprint," he said. "It's a seven-state area, so we have a very wide geography and lots of opportunity within that footprint." The key to Norco's growth is its employees, says p ontious. "We're asking our people to do more work with fewer people," he said. "And while we're not as profitable, unit per unit, as we were two years ago, we still feel we've got good profits and a strong cash flow to continue to allow us to reinvest in the business." HME Barbara Smith: It used to be, you'd walk into a room and there were only a few women. It wasn't necessarily the most comfortable place to be, but you needed to be there. The education I've gotten through Medtrade and VGM has been invaluable. A big part of that has been meeting and learning from my peers, and over the years, a lot of those peers have become women. There are a lot of women I admire in this industry; a lot of them could have won this award. HME: A big reason you won this award is your ability to grow an HME business, despite industry difficulties . Healthline has grown from three to 12 locations under your leadership . Smith: We won contracts for oxygen and beds in the most recent r ound 1 and we can't wait for those contracts to end. We've decided to pull back on those, and focus on what we're really good at and that is the more clinical aspects of the business. We have an awesome team of r Ts and AT p s to focus on sleep therapy and home ventila- tion, and complex rehab. We will do other things, but we've steered away from trying to be a jack-of-all-trades. HME: What has been your leadership style in making Healthline's growth possible? Smith: I've always thought, if you take care of people, including your employees, busi- ness will come. We've invested a lot in our employees; we look at them as family. That's probably been the hardest part of now hav- ing 200 employees—we can't know them as personally as we used to. But we encourage our managers to adopt that approach. We have so many employees that have been with us for 10, 20 years. HME: You advocate on a state and national level . With time and money in short supply, why is this non-negotiable? Smith: There are outside forces, whether it's the government or private payers, that con- trol our business. We're starting a new state association in Texas with a strong group of providers. We recently banded together on the Superior Health p lan-Medline contract. I look forward to getting the association off the ground and to Texas getting a voice again. The last couple of times I attended (AAHomecare's fly-in), it was me and two other providers. Texas is a large state with a lot of DMEs. We should be part of the movement to protect our industry. HME about 15 years ago. I was 24 and I had worked in sports marketing following graduation, so I came back with a mar- keting/sales/growth mindset. We were a small company back then—about 15 people servicing the Cape. My parents were getting a little tired, and I saw an opportunity to take a small company and When the competitive bidding program launched, Aeroflow won contracts across the country, requiring the provider to develop subcontracting relationships with local companies. That didn't last beyond the first round of the program, says Amoth. "With contract changes, we found there were a lot of scenarios where a DME had the bid before and then they didn't have it in the next round," he said. "It brought about a lot of opportunity for asset pur- chases in the C p A p resupply space." Aeroflow then applied that model to other products that didn't require open- ing bricks-and-mortar locations, said Amoth. "We still have our traditional DME footprint in the Southeast, but we are moving toward a pick, pack and ship model where appropriate," he said. "We can grow from that footprint and service anywhere in the country with these types of acquisitions." S m ITH c o n t i n u e d f r o m p r e v i o u s pa g e AERO f LOW SEE k S STRATE g IC B uy S continued from previous page t hr EE LEN s E s Aeroflow uses three lenses when it val- ues a potential acquisition: assets, rev- enue percentage and EBITA. That allows the provider to take a broader look at the seller's potential value, says Amoth. "A lot of buyers will just look at the bottom line, or they will just look at the EBITA and do a multiple of that," he said. "So, if a provider is struggling on the bot- tom line, but we still see some value on the top line, we don't discount that. We really want the seller to feel we are valu- ing their business as they would." Vo L u ME g AME To succeed in today's environment of compressed margins, companies have to build scale, says Amoth. "As far as remaining profitable and looking at specific product lines, it is a volume game and trying to be strategic with relationships and with other provid- ers," he said. "It definitely takes a lot of agility to stay ahead in this market." HME S HEEHAN : 'D OIN g THE RI g HT THIN g' c o n t i n u e d f r o m p r e v i o u s pa g e grow it significantly. HME: How did you find out you won? Sheehan: I got an email from Tom r yan (pres- ident and CEO of AAHomecare) while I was in the car with my wife. I didn't know I was nominated for it or under consideration. It's validating that there are other people who think I'm doing the right thing. HME Ned Pontious Local Company - Global Reach Barber Holding LLC Advantages of PROVENT Advantages of PROVENT Small, lightweight, disposable & convenient Does not disrupt bed partner's sleep Is not affected by an electrical outage 30 day supply easily fits in your pocket Can breathe normally using ambient air Can move freely while sleeping This product is the first of it's type in the treatment of OSA GREAT COST CENTER POTENTIAL BE A PART OF THIS BREAKTHROUGH TREATMENT FOR OSA F DA C L E A R E D B e c o m e a S u p p l i e r sleepwellrested.com | info@sleepwellrested.com 888-834-4381 TO GET STARTED CONTACT US TODAY FOR MORE INFO

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