Taking the bull by the Longhorn
AUSTIN, Texas – After seven years of “winging it,” provider Britt Peterson knew it was time to bring in some outside help.
“We got to a size where we wanted to have people who could really guide us,” said Peterson, founder and CEO of Longhorn Health Solutions.
Enter Satori Capital, which in February announced it had invested in the provider. Terms of the deal were not disclosed, but Satori typically invests in “middle market” companies with revenues between $25 million and $200 million, according to its website. It’s the Dallas-based private equity firm’s first foray into health care.
“Longhorn is a rapidly growing market leader in an industry with favorable demographics and a value-creating service model,” said John Grafer, principal with Satori. “They need capital to support that growth.”
Longhorn provides disposable medical supplies, including incontinence and diabetes supplies, as well as enteral nutrition products and durable medical equipment.
The provider is about 80% Texas Medicaid—it has contracts with managed care organizations STAR+PLUS and STAR—and about 12% to 15% Medicare.
Despite the notoriously low rates paid by most Medicaid plans, Longhorn won’t skimp on services, says Peterson.
“Where everyone else is eliminating services and downgrading product, we are going in the other direction,” said Peterson. “We communicate the value we provide, we touch these patients’ lives and make sure the services are utilized correctly.”
To do that, Longhorn, which covers the entire state, runs an efficient ship. Routed deliveries are made from several strategically located distribution centers, and the provider’s buying power is “phenomenal,” says Peterson. Last year, Longhorn added a retail pharmacy, an experience he calls “eye-opening.”
“All the opposition we face in DME about having to provide equipment first, then bill it, and then get denied—that doesn’t happen in pharmacy,” said Peterson.
Looking ahead one year, Peterson would like to see the pharmacy business double.
He’d also like to see the market-pricing program replace competitive bidding. Longhorn accepted Round 2 contracts to provide hospital beds throughout Texas.
“We lost a ton of bids, but after seeing the rates we feel better about it,” said Peterson. “I care deeply about how flawed the program is.”