‘Black Friday’ rocks Rotech

Wednesday, April 30, 2003

ORLANDO, Fla. — In what some former employees are calling “Black Friday,” Rotech Healthcare’s new CEO Phil Carter implemented his reorganization plan by laying off dozens, if not hundreds, of employees January 24, including many senior managers.

Carter reportedly met with many Rotech employees last December and gave them the lay of the land.

“Phil Carter said that when he starts restructuring he starts at the top and works down,” said an ex-employee who got a pink slip Jan. 24. “He started at the top with division and regional managers and now he is down to the clinicians.”

Carter ultimately plans to reduce Rotech’s workforce by 1,000, and as many as 750 employes may have been let go on Jan. 24, say several of those fired that day.

One former Rotech employee, quoted Carter as saying: “This is not a high-tech clinical business — this is a distribution business within the healthcare arena.”

“People at Rotech are starting to get real disillusioned with cuts,” especially cuts in clinical services, said another ex-employee.

Carter took over as Rotech Healthcare’s CEO and president in December, following a tenure at Apria where he was lauded for masterminding that company around.

Carter did not return three phone calls by HME News.

However, in a March 25 press release, Carter stated: “It is apparent that considerable restructuring is needed in order for the company to be competitive with others in the home healthcare business. While much was accomplished as Rotech emerged from the Integrated Health Services, Inc. bankruptcy there is still more to do, particularly in head count reduction, fleet management and downsizing, driver scheduling, transfill station and real estate efficiencies, purchasing and inventory management, and billing consolidation.

“With over 500 branches nationwide it is expected that it will take the balance of 2003 to make significant progress on the many tasks in front of us before the new financial model emerges.

Carter listed five components of his plan to make Rotech a more profitable company.

1.) The fundamental nature of the business will not change. A small rural branch model primarily targeting Medicare respiratory patients, with careful pursuit of managed care contracts.

2.) Exit product lines, business units and contracts that are inconsistent with profit objectives or strategic direction.

3.) Reduce costs as a percentage of revenue by head count reduction, and implementation of standard operating procedures.

4.) Strengthen the balance sheet by reducing debt, increasing inventory turns, and capital expenditure control.

5.) When the new model is established increase revenue by internal growth and acquisitions. HME