Former Apria CEO Carter brings his magic to Rotech
ORLANDO, Fla. - Superstar executive Phil Carter took over as Rotech Heal-thcare's CEO and president this month, and company officials hope he can lead them to the Promised Land, just has he did his last employer, Apria.
"Phil Carter executed one of the greatest turnarounds in the home healthcare field at Apria," said Todd Richter, managing director and group head, healthcare equity research at Bank of Am-erica Security. "He's a tough guy. He gets to the heart of a company's problems. He very quickly identifies good managers. He's a good motivator. He has a low tolerance for excuses."
Carter, 54, served as Apria's CEO from 1998 to February 2002. During that time, he lead a reorganization that grew the near-bankrupt company's market capitalization from $200 million to roughly $1.4 billion and turned Apria into one of Wall Street's darlings.
It's that kind of eye-popping success that engenders a kind of giddiness among some industry watchers who consider Carter one of the hottest names in healthcare, not just DME.
"Rotech is doing OK - it's just that it could be doing significantly better," said Rotech's interim President and co-CEO Guy Sansone. "I'm now comfortable saying that management is focused on going forward and will have a good strong leader in Phil Carter. "
Sansone and co-CEOWallace Abbott will remain on the company's board but step down from their executive positions to make room for Carter.
Carter's experience and track record will come in handy at Rotech, which needs to rebound from a particularly disruptive year and boost investor confidence. This spring, in an unusual move to satisfy creditors, the company spun off from its bankrupt parent company, Integrated Health Services. Over the summer it suffered an embarrassing internal billing scandal that along with unsatisfactory financial results forced former CEO Steve Linehan to resign.
Carter's task at Rotech, while less daunting than the Apria debacle he inherited (Rotech's profitable), is nonetheless monumental. In rolling up 650 branches around the country, Rotech has allowed acquisitions to operate more or less independently. Carter's job, just as it was at Apria, will be to integrate the locations, creating uniformity and consistency in employee pay and bonuses, routing, therapist visits and other day-to-day operations. Only then will Rotech be able to control costs, leverage its size and maximize profits, Sansone said.
According to industry watchers, it makes all the sense in the world that Rotech would pick a high-profile executive who has been in a similar situation and succeeded. The hiring should provider additional investor capital, and if Carter succeeds in cleaning up Rotech's operations, the company also becomes a viable acquisition candidate.
"There is always a buyer for a clean business," said one high-placed industry watcher. "If Phil Carter is able to cleanse and clean Rotech, they become attractive."
At Apria, COO Larry Higby served as Carter's right-hand man, orchestrating much of that company's operational changes, while Carter kept the banks at bay. Look for Carter to assemble another high-powered, talented team at Rotech, possibly even drawing from Apria's talent pool, say industry watchers.
Apria officials did not return phone calls. But rest assured, if they weren't taking Rotech seriously before, they are now, said healthcare consultant Schuyler Hoss said.
"There's enough space in this industry for Rotech to grab more and more marketshare and be successful in many of the ways Apria and Lincare have been," Said rim President and co-CEO Guy Sansone. "Phil Carter is the first major piece of that puzzle to lead us there." HME