National complex rehab providers accelerate growth

Thursday, September 23, 2010

YARMOUTH, Maine - It's been a busy year for national and regional complex rehab providers.

ATG Rehab, United Seating & Mobility (USM) and National Seating & Mobility (NSM) all have expanded into new markets in 2010. Most recently, ATG Rehab in Oklahoma City, Okla., and Chattanooga, Tenn.; USM in Cape Girardeau, Mo., and El Paso, Texas; and NSM in Las Vegas.

"We continue to evaluate opportunities wherever they may be," said Cody Verrett, vice president of sales and marketing for ATG Rehab.

ATG Rehab now has a total of 26 branches; USM 42; and NSM 71 (See related story below).

The modus operandi at ATG Rehab has been to find areas without national competitors but with dedicated assistive technology providers (ATPs). In Oklahoma City, that ATP is Randy White, formerly of Westmont Medical Services.

"We just want to keep bringing onboard the best ATPs out there who are looking to partner their skills with a dedicated complex rehab company," Verrett said. "Randy is a very strong ATP. He has been in the industry for a long time. Once an ATP gets a foothold in a market and becomes a mainstay of that market, they command a significant portion of the business in that market."

The availability of a dedicated ATP in any given market has also been a factor in USM adding a total of seven branches so far this year, says President Bob Gouy.

"Our growth has been a little accelerated," he said. "But there's a lot of instability out there and ATPs are looking for stable platforms to do business with."

National complex rehab providers aren't the only ones expanding into new markets. So are regional providers. Baltimore-based Chesapeake Rehab Equipment has opened new branches in Virginia and North Carolina in the past year and a half, bringing its total to 13.

"I anticipate that we're going to be opening at least two more locations in the next six to nine months," said CEO Gary Gilberti. "Our focus is the Mid-Atlantic. We don't have the desire to go beyond that footprint."

Consolidation creates opportunities

By Liz Beaulieu Editor

The growth that national and regional complex rehab providers have experienced this year has been fueled, in large part, by consolidation in the market, they say.

Repeated reimbursement cuts have picked away at the number of complex rehab providers, opening the door for national and regional providers to step in.

"It really has created some opportunity for the Garys and Bobs (United Seating & Mobility's Bob Gouy) of the world," said Gary Gilberi, CEO of Chesapeake Rehab Equipment, a regional provider with a presence that stretches from Pennsylvania to South Carolina.

Most recently, in 2009, reimbursement for complex power wheelchairs was cut by 9.5%.

To make any kind of return in the complex rehab market nowadays, providers need economies of scale, something providers that are small or that only dabble in the market don't have, national and regional providers say.

"There are only a few companies that I can think of that have leveraged the scale that's needed," said Bob Gouy, president of United Seating & Mobility, a national company with 42 branches. "You have to be a certain size just to be successful--moderately successful."

For national or regional complex rehab providers, once they have their back-office set up and centralized, it's relatively easy to boost revenue, but not necessarily costs, by adding branches, they say.

Even though complex rehab has been carved out of competitive bidding, which has, in part, lured newcomers to the market like The Scooter Store and Fuller Rehab, it's still an acquired taste, national and regional providers say.

"I think people who don't know the business may think it's attractive," Gouy said. "But it's just not a high margin business and it probably never will be. It's a stable business that you have to work hard at and understand completely."