Providers grow through buys
YARMOUTH, Maine – A pair of acquisitions that closed in January highlight the mindset of growing regional providers.
On the East Coast, Harrisburg, Pa.-based Dynamic Healthcare Services (DHS) acquired Clarion, Pa.-based Progressive Home Medical Equipment. Progressive holds a Round 1 re-compete respiratory contract for the Pittsburgh competitive bidding area (CBA), something that DHS did not.
“Given our presence in that market, it was important to retain a bid contract,” said Michael Holloway, president of private equity firm GMH Ventures, which owns DHS. “It was also just a good complement to our product and payer mix, and it’s within our current footprint.”
The deal is the fourth bolt-on acquisition for DHS since it was acquired by GMH as a platform company in late 2011. Despite the challenges of the HME market, GMH remains committed to the space, Holloway said.
“It’s a very difficult market, but it’s a space that’s going to stay,” he said.
DHS has its eye on other markets and has plans to grow organically, as well.
“You have to look at interesting acquisitions as they are presented because it allows quicker expansion into the market,” said Holloway. “But it’s still important to keep that hub-and-spoke organic model.”
With a similar growth philosophy in the Northwest, Boise, Idaho-based Norco acquired Walla Walla Home Medical in Washington state. Norco already had a presence in Walla Walla, via an industrial gas operation, and was familiar with the provider.
“They are very respiratory focused and align with what we do,” said Brent Seward, executive vice president. “We really like the town and the community, and it just fits in with what Norco believes and the way we do business.”
Norco now has more than 65 branches throughout the Northwest, including 16 in Washington state. Although Walla Walla is not in a CBA, Norco holds multiple contracts in other CBAs. The provider was recently awarded a Veterans Affairs contract in Walla Walla.
Seward said Norco isn’t looking to be the biggest company out there, but it does want to be the best.
“To a certain degree, any expansion right now is a gamble,” said Seward. “There are certain opportunities in our footprint that, if they become available and it looks good, we’ll decide on a case-by-case basis.”