Norco operates lean and large

BOISE, Idaho - Despite the constant juggling required by industry challenges, HME provider Ned Pontius manages to keep his eye on one ball in particular: profitability.

The key to profitability, he says, is to be as efficient as possible.

"In our particular business, where every year we get cuts from CMS, you either learn to operate lean or you don't survive," said Pontious, CEO of Boise-based Norco. "We've done that for the last 10 years."

Lean doesn't mean stagnant, however. In October 2011, Norco acquired the respiratory and medical supply business of Mednow in Boise; in December 2011 it acquired Valley Medical Shoppe, which has locations in Idaho Falls, Black Foot and Rexburg.

In January, Norco also restructured its senior management team, appointing three "zone" vice presidents who oversee day-to-day operations in the field, said Pontious. The arrangement will allow him to focus on strategic issues--previously, individual store managers reported directly to him--and allow more mentoring of those store managers, he said.

"As we become larger, it's a challenge to develop people," said Pontious. "We want to grow our own people as we grow, and mentoring is probably the key to doing that."

Norco has grown about 10% a year--a rate Pontious would like to see continue, he said. All together, the provider has about 40 HME branches in seven states. The provider offers a full line of HME, respiratory and medical supplies, and it has several oxygen filling plants.

With the exception of the Boise CBA in Round 2, Norco has so far avoided competitive bidding. One way or another, however, the program eventually will affect everyone, in the form of reduced reimbursement across the board, said Pontious.

"It's going to affect our insurance business, and there's no secret that state Medicaid programs are struggling for funding," he said. "It's going to affect our model and we're going to have to get leaner again."