Suburban limits exposure
WEST HARTFORD, Conn. - Suburban Home Medical doesn't have its eggs in one basket; it has them in four baskets.
The provider, which opened a new location in Colchester, Conn., in January, earns a living through retail sales; hospice contracts; wholesale contracts, mostly with the Department of Veterans Affairs (VA); and insurance payments from Medicare, Medicaid, Blue Cross Blue Shield and others.
"We're a well-balanced company," said Gregory Czapiga, one of Suburban's three owners. "Eight years ago, we had five employees. Now we have 40 employees, three locations, 12,000-square feet of distribution space and seven delivery vehicles."
Czapiga, along with James Czapiga and Richard Korris, bought Suburban Home Medical in December. He ran the company for eight years, and before that, he worked for Glastonbury, Conn.-based AeroMed for five years.
Suburban Home Medical relies on each payer group for about 25% of its business, limiting the company's exposure to national competitive bidding and other reimbursement cuts, Czapiga said.
"We analyzed the competitively bid items and they account for, literally, 8% to 10% of our total volume, business-wise," he said. "So we'll not only survive competitive bidding but also submit bids and maybe do well with it."
Industry watchers have been telling providers to diversify for some time, especially by adding retail sales, but Suburban Home Medical is ahead of most, says consultant Roberta Domos.
"I advise start-ups to try and limit Medicare to 40% to 50% of their payer mix," said Domos, who owns Redmond, Wash.-based Domos HME Consulting Group.
It's a strategy that Czapiga plans on spreading. Guided by Korris, who is a real estate developer, he hopes to open two new locations each year.
"We're looking at where there's a need driven by demographics, where the competition is, whether the market is saturated, what kind of referral sources are in the area--those kinds of things," he said. "We want to expand aggressively."