Sell? Buy?

I have had many discussions with providers these past few months about whether they should consider selling their companies. I never can answer that question because it is such a personal one. What I always do is allow the owner to tell me about his company: how much volume it produces annually, which disciplines they provide, who their customers are, and we go on and on.

I understand that hanging over DME today are many changes that will affect the industry, whether it is the effects of the Medicare Modernization Act, bids, reduced reimbursements, competition, accreditation or any of the other problems that abound. None of this is new. In the more than 50 years that I have been involved with health care, there always have been problems to resolve. And this happens in every industry, not just DME. We are not unique.

When the pressure starts to mount, many providers think it is time to sell. I will not comment. However, before making such a decision there are several things that should be accomplished so that you will make the correct one.

You and your accountant should study which disciplines provide the best volume and which the best profits. Then you should study how your market may have changed since you began the operation. The new demographics of the community can provide some interesting guidelines. I also suggest looking at all of your competitors. Are they chains, are they run by a hospital or are they independents? How successful are they?

When another company offers to purchase your company — whether they are a conglomerate, a hospital or a competitor — know one thing: They have already done very careful market research and have assured themselves that there will be a good return on the investment. You, too, have to do the same; study the market. (Use the Chamber of Commerce as a source when you do your research. I have always been impressed by what one learns from this resource.)

If, after all of this study, you still feel it is time to sell, then do it. But if there is any doubt in your mind, then think instead about becoming a purchaser. Rather than selling your company, consider buying one. In order to do this correctly you should work with a good professional business broker. The broker can assist you in arriving at the correct price to pay. With his knowledge of the laws in the community and the market potential, a good broker can help make the deal go smoothly.

Your competitor may have been thinking the same as you. I suggest making contact with him and sitting down together. Then, there is the option of offering to buy him or her out, or perhaps, you both might just decide to merge into one larger entity. By sharing expenses and staff, buying together and marketing as a team, sales and profits should grow. Your accountant can confirm much of this.

I have seen a great amount of panic selling over the years. Don’t allow that to happen to you. I have also seen some companies make very excellent deals when they sell. And I have watched some companies join forces to develop much more market share.

Sell? Buy? The choice is yours, but it should never be made without some very careful research.

A New Year’s Resolution

It’s like a game. We all make resolutions to start our New Year. Some resolutions may be to take off a few pounds of extra weight or to call Mom and Dad more often or stop smoking. Most of these will last a week or two.

This year, I want you to make a resolution that will protect your business. If you are a member of the American Association for Homecare or your state HME association, then your resolution is to find one new member to join with you.

If you are not a member of these organizations, please pick up the phone, call and join. I work with many of the state associations; I give as much effort as I can to AAHomecare. Why? Because I recognize how effective they are when working in the state capitols or with legislators in D.C. You must support them so that your business can remain solvent. You can read above some of the difficulties currently hanging over everyone’s head. I don’t have to list them again, do I?

Sheldon “Shelly” Prial is based in Melbourne, Fla., with Prial Consulting and also serves as the director of government relations for Atlanta-based Graham-Field Health Products. In 1987, he founded the Homecare Providers Co-Op, now part of The VGM Group. He can be reached by e-mail at [email protected] or by phone at 321/255-3885.