Supplies giant ramps up growth strategy

Thursday, October 31, 2002

MILFORD, Conn. — Byram Health Centers completed several acquisitions last month worth $2 million and has begun a full court press to increase its share of the medical supplies business.

In August, the $65-million company hired its first-ever director of acquisitions. What's more, to boost its referral business, Byram plans to increase its sales force by four every six months for the foreseeable future, starting in January, said Steve McCoy, vp of market development.

The company, which handles only medical supplies, currently employs 17 salespeople who call on referral sources, four that call on manage care companies and four that call on home healthcare companies.

"There's no question we are ramping up our acquisition efforts," McCoy said. "I think having an executive on board who lives, eats, sleeps and breathes this stuff is an important investment for us, and we think it will pay dividends."

Byram's most recent acquisitions occurred in New York, Ohio, Georgia and Kansas.

Byram acquires patient bases, often from providers who want to focus on their more lucrative product lines. Byram's economies of scale —purchasing power, billing expertise, customer service — allows the company to succeed in the supplies niche (wound care, diabetes, ostomy, urological and incontinence products) where smaller providers find profits hard to come by, McCoy said.

"I'm an old Apria guy, and we used to think you can't make money in supplies," said John Reed, administrative director Lima Medical in Lima, Ohio. "It's interesting to see the evolution. You can make money and provide a high level of service in anything if you can commit to it and not have to be so diverse you can't develop economies of scale."

Lima finished transitioning $1 million (1,000 patients) in supplies business to Byram in late September. By doing that, the company will save an estimated $300,000 a year by reducing shipping costs, postage and dropping its full-time employee count from 35 to 24, Reed said.

(The company reduced its FTEs by not filling four empty positions, eliminating four temporary workers and through attrition, Reed said.)

"What it came down to was that we were losing money on this business," Reed said. "Our options were to lower service, substitute less costly products, consider doing it unassigned and maybe have patients not come into the showroom to get their supplies. But if we did all that, would patients still come? Our belief was that they would not." HME