HME Companies Nab Spots on Inc. 500/5000 List

NEW YORK — Despite the calamitous environment for home
medical equipment companies and their ancillary partners, at least
a score managed to land on Inc. magazine’s annual 500/5000
list.

The 2010 list, released Tuesday, ranks the nation’s
fastest-growing private companies based on percentage revenue
growth over the last three years.

“Fast growth at any time is a big achievement; fast growth
during the past few years is just short of miraculous,” said
Inc. editor Jane Berentson in a release. “The
Inc. 500 consists of these just-short-of-miraculous
companies, the ones that through ingenuity and ambition have
increased revenue, hired employees and grown fast in difficult
economic times.”

Comfort Medical Supply in Ormond Beach, Fla., came in at 461 on
the list. The 5-year-old company, which specializes in power
mobility, orthotic back support devices and drug-free pain therapy,
grew 649 percent, building revenue from $549,042 in 2006 to $4.1
million in 2009.

“We attribute our growth and success to our ability to be
‘nimble,’ react quickly to change and — more importantly
— our dedicated employees who possess an entrepreneurial
spirit and take personal ownership in their work,” said Craig
Daley, CEO and managing member, in a release. “We anticipate
continued expansion of market share as we develop and implement
unique and creative marketing strategies.”

Neighborhood Diabetes, a 12-year-old mail-order diabetes supply
company based in Woburn, Mass., nabbed the 1,139th slot on the
expanded list of 5,000. Between 2006 and 2009, it grew 264 percent,
from $14.3 million to $52 million.

“We think we have a model that is different than most folks in
our industry, so we have been very lucky to be able to grow as a
result of that model,” CEO Tom Cronin told HomeCare,
adding, “We have always believed that if a company can use its
status as a distributor to clearly improve the health of patients
and decrease the cost of caring for them … we will succeed in the
long run, and we feel we have achieved that.”

Cronin said a recent study by an insurer supported the company’s
philosophy. According to the study results, patients using
Neighborhood Diabetes had 71 percent fewer hospitalizations than
those using other area providers, he said.

So far, Neighborhood Diabetes’ growth in its main coverage areas
— the Northeast, metropolitan New York and the Southeast,
specifically Georgia and Florida — has been steady, Cronin
said. He recognizes that with the advent of competitive bidding and
the probability of a nationwide bid for mail-order diabetic
supplies, the picture could change for his company. The Round 1 bid
rates to be implemented Jan. 1, 2011, are “crazy,” he said.

“The bid amounts are well below our costs on 95 percent of the
products that we sell. So it is crazy. And we don’t know that many
people are buying at a cost much lower than ours.”

Still, there is hope that Neighborhood Diabetes will continue
its upward movement. “One of the things that has been helpful to us
is that our reliance on Medicare has been declining over time,”
Cronin said. “We have [fewer] eggs in one basket.”

Extrakare, a Norcross, Ga.-based provider specializing in home
oxygen and CPAP, ranked 1,564 on the list. It grew 183 percent, up
from $1.9 million in 2006 to $5.4 million in 2009. Last year, the
company was No. 271 on
the list.

Extrakare’s continued growth in patient census and revenue is
significant considering industry conditions, among them the 9.5
percent DME cut for the majority of its products and the 36-month
oxygen cap, both of which took effect in 2009, according to
Co-Founder and President Scott Lloyd.

“I think it’s a matter of the business plan that we have put
together. We’re trying to continue in a single direction and not
respond too quickly to all the news that comes out in this
industry,” said Lloyd. The company utilizes technologies such as
home filling for oxygen that allow cost control and reinvestment in
the business.

It is clear that with competitive bidding, HME companies will be
paid less for what they are doing, Lloyd said. “We believe that, in
the competitive bidding world, having a larger patient census is to
our advantage.”

Still, he is under no illusions that Extrakare’s growth rate
will continue at the same level. “Any of us will have a great year
and then hit a wall,” he said. “Companies go through these growth
spurts … But Atlanta is a dynamic market. We are clearly a
single-digit presence in the market here. There’s a lot of runway
ahead of us.” The company ranked 53 on Inc.’s list of
fastest-growing companies in the Georgia capital city.

Vail Horton, founder and CEO of Keen Healthcare in Portland,
Ore., which ranks 2,319 on the list, calls himself the “cowboy of
the industry” — and that could be why Keen’s revenue grew 109
percent, from $1.4 million in 2006 to $2.9 million in 2009.

Horton has a unique view of the industry and the
Medicare/Medicaid system that mostly runs it. “I was born without
legs [and] funny looking arms,” he said. “I was adopted at birth so
I was part of California Medicaid. I know the needs and I know the
system. And there is no incentive for innovation.”

So Horton decided to innovate anyway. His company manufactures
and distributes mobility products to hospitals and nursing homes.
At the behest of patients, it also opened three storefronts in
Oregon and northern California within the last year-and-a-half,
Horton said. 

“We innovate our products, our delivery from manufacturer
through distribution to the end-patient,” he said. “We’re
business-savvy. Our goal is to continue to grow.”

He doesn’t think competitive bidding will stop that growth.
Indeed, he is pretty positive the CMS program will implode. “I’m
not worried about competitive bidding. It is going to iron itself
out,” Horton said. “The vendors who win it aren’t going to be able
to do it.

“It is a stupid program,” he continued, noting that competitive
bidding might be good for building bridges, but it does not
translate to a relationship between a provider and an end-user.
“For [CMS] to put out to bid an exclusive relationship with
Medicare is hogwash, and it eventually is going to veer off in a
whole new direction or Medicare is going to not do it.”

Others that Scored

Also among the HME and related companies on Inc.‘s 2010
list:

• 142, Hometown Oxygen, Charlotte, N.C.: The
  respiratory therapy and equipment company boosted its revenue 1,898
  percent, from $214,177 in 2006, when it was just about a year old,
  to $4.3 million three years later. It ranks eighth in the health
  industry overall on Inc.‘s list.

• 147, Alliant Healthcare Products, Richland,
  Mich.: Maker of a twin nasal oxygen cannula, Alliant is an
  8-year-old medical device company. Its revenue grew 1,851 percent
  from $270,374 in 2006 to $5.3 million in 2009.

• 186, Simplex Healthcare, Franklin, Tenn.: An
  8-year-old mail-order diabetic supply company that is branching out
  into CPAP supplies, Simplex grew its revenue from $11.7 million in
  2006 to $192.8 million in 2009, a 1,542 percent increase.

• 636, Brightree, Lawrenceville, Ga.: Offering
  Internet-based business management software for HME providers and
  sleep labs, Brightree was founded in 2002. Its 478 percent growth
  took the company from $3 million in 2006 to $17.4 million in 2009.
  Earlier this month, the company announced it had acquired
  Computer Applications Unlimited.

• 1565, ZirMed, Louisville, Ky.: A provider of
  Web-based software to help HME companies and others process claims,
  ZirMed was founded in 1999. By 2006, it was pulling in $15.5
  million; in 2009, that revenue swelled 184 percent to $43.9
  million.

• 1725 RemitData, Plano, Texas: This provider of
  Web-based reimbursement analysis and related services for HME
  companies and others was founded in 2000. In 2006, it tallied $2.4
  million in revenue. By 2009, that revenue had grown 161 percent to
  $6.2 million.

• 1775, VitalWear, South San Francisco, Calif.:
  Offering thermal and compression medical wrap devices, the company
  grew 154 percent from $2.1 million in 2006 to $7.9 million in 2009.
  VitalWear was founded in 2001.

• 1790, SeQual Technologies, San Diego, Calif.: A
  19-year-old manufacturer of oxygen concentrators, SeQual’s revenue
  swelled 153 percent in three years, from $15.7 million in 2006 to
  $39.9 million in 2009.

• 1968, United States Medical Supply, Miami: A
  mail-order supplier of HME products, mostly diabetic supplies,
  since 1996, the company has seen rapid growth in other product
  categories such as sleep apnea treatment and bladder control
  products. It had revenue of $19.4 million in 2006. That grew 136
  percent, to $45.8 million, by 2009.

• 2185, Roscoe Medical, Strongsville, Ohio: A
  17-year-old manufacturer and distributor of respiratory equipment,
  CPAPs and DME, the company grew 118 percent in three years, from
  $17.2 million in 2006 to $27.4 million in 2009.

• 2572, BlueDot Medical, Charlotte, N.C.:
  Specializing in respiratory, sleep and rehab equipment, the
  8-year-old company brought in $1.6 million in revenue in 2006. By
  2009, its revenue had grown 92 percent to $3 million.

• 2733, eSolutions, Olathe, Kan.: Started in
  1999, the company provides Web-based billing help for DME
  companies, particularly with establishing eligibility for Medicare
  claims. It charted 83 percent revenue growth, from $4.2 million in
  2006 to $7.7 million in 2009.

• 2925, Reliable Respiratory, Westwood, Mass.: A
  direct-to-consumer distributor of sleep apnea and oxygen products,
  the 8-year-old company was founded in 2002. By 2006, it had revenue
  of $2.3 million; by 2009, that had grown 73 percent to $4
  million.

• 3440, Total Medical Solutions, Sanford, Fla.:
  Established in 1994, the HME company is targeted specifically to
  claimants on behalf of workers’ compensation carriers. In 2006, it
  had revenue of $12.1 million. By 2009, that figure had grown 53
  percent to $18.5 million.

• 4179, Cape Medical Supply, Sandwich, Mass.: The
  33-year-old HME company, which recently opened a 5,000-sq. ft.
  distribution and patient service center, charted 33 percent
  revenue growth, from $4.1 million in 2006 to $5.3 million in
  2009.

• 4547, Pentec Health, Boothwyn, Pa.: Founded in
  1983, Pentec is a national home infusion company specializing in
  patients with end-stage renal disease and chronic pain. Its revenue
  grew 17 percent from $26.1 million in 2006 to $30.5 million in
  2009.

See the complete Inc. list at www.inc.com/inc5000/list.