Business merger pays off

Sunday, August 31, 2008

GREENSBURG, Pa.--When Conemaugh Home Medical Equipment approached MedCare Equipment Company, part of the Excela Health System, for business advice, the two companies realized maybe two heads really are better than one.

“We sat down to talk and realized it would make more sense to form a new company where we could both benefit from combined efforts,” said John Sphon, MedCare CEO. “We felt there was a lot of opportunity for us to grow and benefit the patients and region by working together.”

The new company, formed May 1, retained the MedCare name and covers a 12-county area in Pennsylvania. It offers DME, respiratory and supplies. MedCare has 69 employees and anticipates sales of $24 million in its first year of operation-a 14% increase.

There were obvious efficiencies to merging, said Sphon.

“We centralized billing, clinical customer service and warehouse distribution,” he said. “And we have more purchasing ability to get better pricing. You have to have scale to negotiate with vendors.”

The company does some Medicare business, but it focuses more on Medicare Advantage, private insurance and cash sales. MedCare also provides nursing homes and other medical offices with disposable medical supplies, scrubs and stethoscopes.

“Our ability to provide everything is attractive,” said Sphon. “We have a good balance and a good demographic.”

Staying diverse is crucial to success in the current environment, said Sphon, especially with the recent 9.5% Medicare cut levied on products included in Round 1 of competitive bidding.

“We are willing to take the Medicare cut,” said Sphon. “If that’s what was needed, we will deal with it to support the beneficiaries.”

MedCare serves Excela Health System patients and draws even more customers from the greater community. Still, the hospital background provides a patient care perspective that extends beyond profit margins, said Sphon.

“As part of a health system, it’s part of our mission to support the health system,” he said. “That ultimately benefits everyone.”