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Lincare-AHP aftermath: Opportunity for regionals?

Lincare-AHP aftermath: Opportunity for regionals? �I don�t believe one plus one equals two�it�s more like one and three quarters�

YARMOUTH, Maine - Regional HME providers don't see any negative impact on their businesses from Lincare's acquisition of American HomePatient. In fact, they're looking for new opportunities as a result of the mega-merger.

Financial analysts say the deal looks good on paper, with Clearwater Fla.-based Lincare gaining more financial muscle, market share and geographic coverage, as it absorbs Brentwood, Tenn.-based AHP's 220 locations. The union gives Lincare extensive penetration, as CMS applies competitive bid pricing to non-bid areas, sweeping the country with large reimbursement cuts.

While Joel Marx, chairman of Cleveland-based Medical Service Co., concedes the acquisition makes sense and Lincare should see benefits, he doesn't believe it will result in stiffer competition or losses for his company.

“Whenever a national or large regional player is acquired, not all the business transfers and it becomes an opportunity for strong independents to pick up the residual,” he said. “I don't see this as bad for the independent, and I don't believe one plus one equals two—it's more like one and three quarters.”

But that opportunity may come at the expense of smaller companies that are being squeezed out of the Medicare business, and overpowered by the nationals and to some extent growing regionals.

“There are good companies out there—$1 million to $2 million—that just don't have the wherewithal or economies of scale to make it work,” said Frank Trammell, president of Carolina's Home Medical Equipment in Charlotte, N.C. “Any time an independent goes out of the business, it is an opportunity for me. It's sad, but that's the case.”

While Lincare and AHP have locations throughout south Florida, Bob Lichtenstein, president of Hollywood Medical Supply, doesn't think they will gain a tremendous advantage in the highly competitive market there.

“The nationals don't have a strong presence unless they land a major contract,” he said. “I don't consider them competitors—I don't see them much.”

 

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