Fitness venture 'a heck of a commitment'

Saturday, June 30, 2007

SPARTANBURG, S.C. - Southern Home Medical Equipment's recent sprint into the fitness industry has some industry consultants, at least initially, scratching their heads.
"I'm curious--are they looking at complementing their HME business or creating an alternative revenue stream?" asked industry consultant Vince Crew, president of REACH Development Services in Naples, Fla. "Either way, it's a heck of a commitment."
Southern Home announced recently that it plans to franchise 50 health clubs in the Mobile/Pensacola, Fla., market and 40 clubs in the Charleston, S.C., market. The company kicked off its efforts earlier this year when it acquired Ladies Health & Fitness and Fast Track Fitness (See HME News, April 2007).
To answer Crew, Southern Home entered the fitness industry to diversify its product and payer mixes, says Greg Tucker, the company's president and CEO. Tucker realizes it's not a direct complement to HME, he said.
"We just didn't want to put all our eggs in one basket," Tucker said.
In addition to health clubs, those options include vitamins and minerals.
In that case, Crew said, Southern Home was wise to create a separate division, called Encore, to oversee its health- and wellness-related businesses.
"If you're going to launch an entirely different product line or service, like health clubs, you really need to have distinct management," Crew said.
At the end of the day, Southern Home's involvement in both HME and fitness may work in their favor in surprising ways, Crew said.
"The primary decision maker for healthcare needs often falls on daughters," he said. "If (Southern Home's) focusing on health clubs for women, they've putting themselves right in front of those decision makers."