‘King of HME finance’ looks back on 25 years

Friday, April 30, 2004

When it comes to HME leasing and financing, few have more perspective than Jim Phillips. His arc of experience stretches back to 1979 when, as an agent for LeaseAmerica, he put together a financing package for Bendix, a manufacturer that was developing oxygen concentrator technology.
Jim Phillips

“Like most people I saw healthcare as being confined to the hospital,” said Phillips. “But Bendix had quite a facility and was doing some very interesting work at that time.”

In fact, it sparked Phillips’ interest in the HME industry, prompting him to learn more about its dynamics at trade shows and association meetings. Because of the Bendix relationship, Phillips came across a growing HME provider called Miller Medical, which is where he first met his future VGM boss, Van Miller.

“As Van grew the franchise, he became an extremely important customer for us,” Phillips said. “When he formed VGM in 1986, he recognized financing was something the dealer needed. As he put together his first package of services to members, he referred them to LeaseAmerica.”

By 1990 Phillips had worked his way up to vice president of sales and marketing before GE Capital acquired the company. He went to work for Chase Manhattan in Moberly, Mo., for about a year before Van Miller gave him a call to start VGM’s Financial Services division.

In a letter to VGM employees announcing the division’s sale in March to a Minnesota-based banking company, TCF Financial, Miller wrote about those beginnings: “Access to finance was an essential part of the HME business. VGM had no finance customers at that time and we had very little money. Starting from zero was ‘no problem’ for Jim. With his ability to find the right people and his gift at finding money, the division grew and grew.”

Although the industry has experienced a number of economic hiccups during Phillips’ career, it has always emerged stronger for it, he said. Overall, he said, the caliber of HME companies has improved dramatically.

“As they have had to endure more reimbursement changes, businesses have gotten smarter,” Phillips said. “We’re seeing bigger dealers and bigger projects than five years ago. Companies that are doing between $1.5 million and $4 million probably comprise about 60% of the market now. We have a significant number of customers with multiple locations.”

Among the most common investments HME companies request capital for is sleep products, primarily CPAP and bilevel systems, Phillips said.

“This is an area where we are seeing a lot of money being spent,” he said. “There is huge growth in the sleep industry.”

The need for capital in the HME industry has remained consistently strong over the years, and Phillips prides himself as someone who is intimately familiar with the nuances of the home healthcare business. VGM Financial Services has remained dedicated to HME as others came and went throughout the 1990s. And even though TCF Financial now owns the division, it is staying put at the VGM office with Phillips at the helm and conducting business as usual.

“We’ve been working with TCF for three years, so we know them well,” said Phillips. “Van places a high value on relationships and he had to be very comfortable with them before making this move.”

Over the years, Phillips, who is now senior vice president and general manager for the TCF-owned leasing business, says he and VGM remain as committed to providing financial services to the HME industry as they did in 1991. They just reached a point where they needed access to a deeper dollar pool to remain competitive.

“In the last five years, Puritan Bennett, Sunrise and Invacare have all stopped carrying their own paper,” Phillips said. “It reached a point where they needed to find a strong partner so they turned it over to those who do it for a living. We too have a committed partner.”

Jim Walsh, president of VGM Management, calls Phillips “The king of HME finance” and that working for TCF only solidifies his status.

“Jim always had the skills, people and technology. Now he has the source of funds,” Walsh said. “He has the tools in his basket to beat anyone in the business.”