Upstate marries infusion, specialty

Monday, June 30, 2008

UTICA, N.Y.--Upstate Home Care cracked a tough nut in May when it acquired Rochester-based specialty pharmacy PharmHealth Infusion.

Specialty pharmacy is a difficult market to get into, said Greg LoPresti, Upstate’s vice president and COO. Certain drugs may be available only through closed networks, while some private insurers-the biggest payers-often subcontract with just one or two pharmacies or form networks to increase buying power through wholesale manufacturers.

“Buying an established company makes sense,” said LoPresti. “You need a lot of contacts to get into some of those markets.”

The specialty pharmacy complements Upstate’s existing home infusion services, which comprise about 50% of the company’s overall business.

“There’s a lot of synergy (between the two),” said LoPresti. “We will be cross-marketing to a lot of the same referral sources and (positioning ourselves) as a one-stop shop.”

Upstate serves most of upper New York from its seven locations. Besides home IV therapy, the provider offers respiratory and DME, but with the looming twin specters of competitive bidding and the 36-month oxygen cap, Upstate is actively moving away from those areas.

The company earns $12 million in revenues; PharmHealth $6 million.

Unlike DME, both the home infusion and specialty pharmacy sectors continue to enjoy a growth rate of about 20% a year and are considered relatively immune to market upheavals.

Competing against larger companies is a challenge, said LoPresti.

“The big nationals have economies of scale that we don’t,” he said. “Many medications, if you are not buying at the right level, your cost is higher than the reimbursement.”

Upstate will continue to operate PharmHealth as a standalone for now, eventually folding in various functions like payroll and human resources, said LoPresti.