Strategy

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Thursday, February 28, 2002

DALLAS - A 19-location HME that targets orthopedic surgeons as referral sources and offers a one-stop-shop solution for all their equipment needs, is taking its show nationally, thanks to about $6 million in backing.

"Whatever product the surgeon wants, however he wants it applied and wherever he wants it delivered, we make detailed notes on all those issues and put it into our database," said Mike Smith, v.p. of sales for Ortho-Rx.

Smith founded the company about four years ago. He eventually sold it to Orthofix, a manufacturer of orthopedic products. In January, after a three-year pilot program in St. Louis, Orthofix signed a joint venture with HealthSouth, the nation's largest provider of outpatient surgery. Orthofix and HealthSouth have committed about $3 million each to fund OrthoRx's expansion over the next three years.

The company has its eyes on a huge market, estimating that there are 27,000 orthopedic surgeons across the United states with a need for DME products for their patients. OrthoRX aims to handle all their equipment, insurance and patient education needs, Smith said.

Smith plans to take OrthoRx's model national may be novel, but he's hardly the first to recognize the business benefits of targeting orthopedic surgeons as referral sources. In fact, they are the "biggest and best referral sources you can have," said Mark Manchester, president of Manchester Orthopedics in Middletown, N.Y.

"It can be a logistical nightmare," Manchester said. "The wheelchair won't be there until Thursday. The walker comes on Tuesday. You've got to time it all. So if they can have one guy take care of the whole package, it's better for them."

OrthoRx plans to be in all 50 states within three years. The company distinguishes itself from "little dark, dingy DME warehouses" by having well-lit modern stores staffed by athletic trainers, nurses and other medical professionals, not former UPS drivers, Smith said.

OrthoRx is also "vendor neutral," and will provide whatever product the doctor desires, not necessarily the one with the best profit margin. And the company keys on education.

"Our feeling is that a patient that has been educated well in the use of tall the products associated with the surgery will have a better outcome," Smith said. "Hopefully, the physician will see the service and refer more of the patients to us." HME

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