MHA Acquires The MED Group

FLORHAM PARK, N.J. — The name remains the same, but new
owners say that buying power for The MED Group will increase
dramatically. With the deal officially closing last week (terms
were not disclosed), officials from Managed Health Care Associates
(MHA) will soon be working with approximately 380 MED members
representing 1,250 locations across the country.

Despite competitive bidding, Michael J. Sicilian, president of
MHA, is confident that patient demographics, bargaining power and
know-how can only expand opportunity for the group’s members. “We
have done our homework and understand the short-term risks and
potential challenges. We are showing our commitment by jumping into
it,” said Sicilian, adding that The MED Group “just went from being
a buying group that is in the neighborhood of $350 million a year
in purchasing contracts to in excess of $5 billion a year by
aligning with MHA. All of the sudden our group purchasing
organization (GPO) is much more powerful.”

According to Sicilian, MHA is the largest GPO in the country in
the alternate site market. “We contract on behalf of our membership
to maximize discounts and rebates,” said Sicilian. “We have a
managed care division which contracts with payers on behalf of our
members to help them participate in payer networks. A clinical
software division also helps to manage patient care. The MED Group
is in a space that we think is absolutely terrific in terms of
growth opportunity, notwithstanding short-term challenges such as
competitive bidding.”

The new alignment will allow MED to expand its model and make
additional investments in business solutions, both companies
said.

MED Group CEO Bill Elliott will be resigning from his position
but will remain as a consultant to assist with the transition. All
other members of MED’s management team (including Jeff Woodham,
Wayne Grau and David Low) will be joining MHA in full-time
capacities, with MED Group headquarters remaining in Lubbock,
Texas. “We think our members will fare very well under competitive
bidding,” said Elliott. “Our philosophy is to find market leaders
and make them stronger. We think they will fare well in whatever
environment comes down.”

MED members did not know about the transaction, but Sicilian
said personal telephone calls have gone well. “The response we are
getting is universally favorable,” he said. “MED is already a good
company, and the demographics continue to work. The term I hear
from all these calls is that this is a ‘game changer’ in the HME
sector … All of a sudden this company is a whole lot stronger
and creating a lot more value — not just to members but also
our business partners.”

MHA describes itself as a health care service company in the
alternate site market servicing the long-term care, home infusion,
specialty pharmacy and retail industries. The company has dealt
with strife in other markets, and Sicilian believes he can use that
experience to benefit the home care industry.

“We are still working very hard with industry stakeholders such
as AAHomecare and our members to get [competitive bidding] killed,”
added MED’s Grau. “And if we don’t, we are going to continue to
work even harder next year to make sure that we eliminate
competitive bidding — not only Round 2 but Round 1.”

“Prudent business operators also look at what it potentially
will be,” said Sicilian, “and you must create solutions in the
event that does not change. If we stand still, our members will get
hurt. Competitive bidding is not good for the industry, and we
don’t support it. But you can’t put your head in the sand and hope
it goes away … you have to have a solution that gives your
members the ability to be viable and compete and be leaders.”