Polk County success story sells to Apria
AUBURNDALE, Fla. - Butch Vanderpool, the Polk County HME provider whose journey through competitive bidding drew national attention during the demonstration projects, has sold his business to Apria Healthcare, a company he worked for as a sales manager before launching Healthcare Diagnostics in 1996.
Vanderpool retained his rehab and sleep lab business, and he will stay with Healthcare Diagnostics as the company reorients itself as a branch of the nation’s largest HME supplier chain.
“Apria had a lot of business in Florida, but they had pretty skimpy coverage in his area of the state,” said Bob Leonard, who brokered the sale at The Braff Group. “He [Vanderpool] had a nice mix of respiratory and respiratory meds business, and he ran a nice clean efficient operation.”
Terms of the deal were not disclosed. In February 2001Healthcare Diagnostics was generating about $5 million per year, and business was growing despite its participation in two rounds of competitive bidding from 1999 to 2002.
Vanderpool’s apparent success under competitive bidding, and his reluctance to condemn competitive bidding, rankled some industry advocates who believed that his ability to thrive in such a compromised reimbursement environment was not representative of suppliers at large.
Seven years after launching his business, and one year after the end of competitive bidding, Vanderpool’s chief regret is the scant attention he paid to cash flow while he focused on sales and bank funding.
“We competed for so much business, and sometimes we skipped the most important part, like getting paid.” He said. “I definitely went to the school of hard knocks and probably paid a couple of million in tuition.”
Since launching his business, Vanderpool received written offers from three other companies. The offers were tempting, partly because the banks were spooked by the rapid pace of his growth and financing was becoming problematic, and partly because he wanted to make sure the people who’d helped fund his growth would not lose their investment.
“When people approached me before, I was always under pressure. This time it wasn’t like that at all,” he said. “Cash collections and sales are going better now than ever before.”
Today, while Congress works to reconcile Medicare proposals that may bring either competitive bidding or a seven-year CPI freeze to the DME industry, this competitive bidding-veteran prefers the freeze.
“If they do the freeze, they get to see the savings immediately whereas with competitive bidding, they’ll have to wait until 2007,” he said.