New Rotech CEO talks strategy

Friday, April 18, 2014

ORLANDO, Fla. – Rotech Healthcare is speeding up turnaround plans, with a new CEO and some “aggressive goals.”

“We determined we weren’t working fast enough to make necessary changes to position ourselves to the new realities of our industry—now and in the future,” said Tim Pigg, CEO. “The Rotech management team has established some aggressive and difficult financial goals.”

Pigg, who took over the reins from Steve Alsene in January, is a 30-year veteran at Rotech. The company emerged from Chapter 11 bankruptcy in September, under a reorganization plan that reduced its debt by $300 million.

At the top of Rotech’s to-do list: dropping product lines where it’s a minor player. That includes enteral nutrition, though the provider stresses it continues to honor existing contracts.

“We want to simplify our business so we can shift more of our resources into assuring that we do things right and more efficiently for our core respiratory and DME patient-related products and services,” said Pigg. “We have substantially reduced the non-core, redundant products and services we previously offered.”

Rotech accepted nearly 200 contracts—mainly for oxygen and CPAP—in Round 2 of competitive bidding. With an average reimbursement cut of 42%, the provider, like everyone else, is cutting back where it can, says Pigg.

“We have made some adjustments in areas where we are not contractually obligated to provide these services,” he said. “Flexibility and keeping our break-even levels low are critical in our marketplace given the significant challenges we face in terms of reimbursement, increasing operating costs and additional regulatory and administrative requirements.”

Other plans include reducing operational costs, improving productivity and automating manual functions, says Pigg, who foresees a shift in the industry toward greater use of technology.

“Those companies that can balance all these inevitable changes—while still supporting a home respiratory patient with the care and support he or she truly needs—are those that can succeed in this industry in the future,” he said.