Working to Win

In a climate so hostile it is literally killing off home medical equipment providers, Rich Lerner is weatherizing his company so that at the end of the day, Allcare Medical is still standing.

It's the biggest challenge of his nearly 25 years in HME, he says, but Lerner is determined that his four-branch company, based in Sayreville, N.J., will survive the firestorm that includes DMEPOS competitive bidding, crippling audits, diminished reimbursement, increased red tape and a floundering economy.

"Our philosophy first and foremost is to provide excellence in care for our patients, at the same time being fiscally responsible so at the end of the day, when the smoke clears and the dust settles, Allcare will be one of the companies that is surviving," he says.

How is he fortifying Allcare for the future? Think reinvention.

Not His Father's HME

If there is one thing of which Lerner is certain, it is that the future of HME will look very little like its past — or even the present.

"I started in the business in 1987 in my father's drug store," Lerner recalls. "He had a small convalescent aid section. Mostly, he did fittings. He never accepted assignment, never got involved in billing insurance companies or Medicare. He was the community pharmacist."

When Lerner began attending seminars and Medtrade, he saw the possible scope of HME. "We started to do what we had to do to grow it," he says. "This was really pre-managed care. In New Jersey, it was in the early '90s when managed care started coming into our market."

Under Lerner, the little pharmacy began aggressively pursuing managed care contracts and marketing the Medicare part of the business. Then, in 1993, his dad decided to retire.

"With me not being a pharmacist, we sold the pharmacy to a chain," Lerner says. Committed to HME, he moved to a new location and became president of a small 1,500-sq.-ft. operation with four employees.

Two years later, Lerner's company purchased Allcare Surgical and expanded to the northern half of New Jersey. In 2003, Lerner opened a distribution center outside of Philadelphia to cover the southern part of the market, which allowed him to garner even more managed care contracts.

Today, his company does $25 million in revenue, much of which is from managed care and subacute facilities. Medicare comprises about 20 percent of the business, as does Medicaid.