NSM scores major N.E. acquisition

Tuesday, May 31, 2005

FRANKLIN, Tenn. -- National Seating & Mobility established the largest rehab seating and mobility provider in New England in April by acquiring Burke Medical Equipment. Terms of the agreement were not made public.
Burke Medical was founded in 1989 and provides custom wheelchairs and adaptive seating systems, manual and powered wheelchairs, and repair services. It operates from a new, 13,000-square-foot, state-of-the-art facility in Chicopee, Mass., and offices in Lawrence and Raynham, Mass.
The addition of these locations could increase NSM's presence in the Northeast by as much as 50%, said Mike Ballard, NSM's founder and CEO.
"[Owner Fran Burke] and his people are our kind of folks," said Ballard. "They are very clinically oriented, and they were running a first class operation there."
Fran Burke, who founded Burke Medical and is on the board of the New England Medical Equipment Dealers' Association, said a plethora of reasons factored into the sale of the company, most notably reimbursement pressures he faced from third-party payers.
"One of the problems that we have in this business is that it's hard to be geared up and be able to weather the idiosyncrasies of Medicare and Medicaid," Burke said. "We were very good at dealing with Medicare and Medicaid, and even with that we were very challenged."
Another factor was the departure of Burke's director of operations, Matthew Burke, who recently left to launch a DME-focused software company. He also resigned as chair of AAHomecare's RATC. NSM's nationwide appeal is what eventually led Burke to the company, which will hire Burke for its management team and keep many of the company's employees.
"When you can spread operations out and have the scale to do business from Honolulu to Boston, it's not likely that you are going to have a payment hiccup in all the states at once," he added. "But, when you are operating in one place, that hiccup can be fatal."
Although NSM has never been "acquisition oriented" in its growth strategy, Ballard said he will respond to opportunities that are presented -- opportunities that could increase due to the pressure small business owners face.
"It's not just the rehab market. It's just that the cost of doing business today as a small business is astronomical, and there is not a lot of scaling available to them," he said. "I think the rehab industry needs to consolidate a little bit and get the scaling, and I think NSM as a pretty good platform to do that."