AdaptHealth amps up supplies portfolio

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Friday, December 20, 2019

PLYMOUTH MEETING, Pa. – AdaptHealth’s acquisition of Patient Care Solutions gives the provider a nice platform for expanding its supplies business, say analysts.

PCS offers disposable medical supplies, including urological, incontinence, wound care and diabetes supplies, as well as breast pumps.

“They’ve been doing supplies as a matter of course and I think this gives them the opportunity to leverage the customer base they have,” said Pat Clifford, managing director, the Braff Group. “It’s a good acquisition.”

Also part of the deal, announced in November: AdaptHealth will enter into a supply and distribution agreement with McKesson for PCS’s service lines.

The pack-and-ship model for supplies is one AdaptHealth already knows, thanks to its acquisition in 2018 of Verus Health, a national provider of CPAP supplies.

“This allows us to leverage some technology that we have there to drive efficiencies and drive the overall patient experience,” said Josh Parnes, AdaptHealth president and COO.

The deal also positions AdaptHealth well in a supplies market that is trending toward single-source and preferred provider contracts.

“This plays into the managed care model, when you can say, ‘Hey, we’ll take care of everything for you,’” said Brad Smith, managing director/partner, Vertess.

If there’s any downside to supplies, it’s that margins are tight. But that’s also the reason they’re unlikely to be included in future rounds of competitive bidding, says Parnes.

“There’s a relatively small group of providers in the market and the margins are reasonable,” he said. “My gut feeling is that this is not a huge opportunity for Medicare to extract big dollars out of the program. Of course, we’ll be prepared should it come to that.”