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Greensburg's MedCare maps out strategy to sustain growth

| Tuesday, Jan. 20, 2015, 10:39 p.m.
Steph Chambers | Trib Total Media
John Sphon, CEO of MedCare Equipment Co., a durable medical equipment supply company owned by Excela Health and several other hospital systems in Western Pennsylvania, stands for a portrait on Monday, Jan. 19, 2015 at Excela Westmoreland Hospital in Greensburg.

MedCare Equipment Co. in Greensburg has quadrupled revenue and employment since 2009, making it the largest supplier of home medical equipment in Western Pennsylvania.

The for-profit company, which was founded by hospital operator Excela Health, has grown by partnering with many of the region's hospital systems. The hospitals take an ownership stake in MedCare, and their patients can choose the company for home oxygen supplies, wheelchairs, sleep apnea masks and other equipment.

In addition to Greensburg-based Excela, which owns the largest share of MedCare, the company's owners are UPMC, Butler Health, Washington Health System, St. Clair Hospital, Heritage Valley Health System, Conemaugh Health System in Johnstown and Great Lakes Home Healthcare Services in Erie.

CEO John Sphon, 57, has run MedCare since 2008 and said the company had $64 million in revenue last year, up from $15 million in 2009. It employs 300 people, up from 70 in 2009.

In an interview with the Tribune-Review, Sphon discussed the challenges the company is facing and what it's doing to continue growing the business. Here are edited excerpts.

Trib: Is there growth outside of getting new owners?

Sphon: We think there are a couple different areas. It's going to be dictated by, a lot of times, the payers. It's not all about our owners. We have a pretty big business when it comes to nursing homes, what we call our commercial accounts. We have a nice book of business there that expands all the way out to Philadelphia. There are more and more hospitals and health systems looking to align their post-acute services. When they get discharged from the hospitals, it's important that whoever they discharge to, whether it be home health, a medical equipment company, a nursing home that they're managing, to help to manage them across the continuum and not get that readmission.

Trib: Is there more that MedCare and companies like it can do in the post-acute-care setting, beyond driving up and dropping off the wheelchair?

Sphon: Part of the misnomer is that we're like a UPS driver, and we drop off a box and say, “Sign here.” When you look at what happens with (chronic obstructive pulmonary disease) patients, for example, that are in need of oxygen, our delivery technicians — we don't call them drivers — they're delivery technicians because they're delivering the product but they're also educating, they're instructing the patient on the use of the equipment.

Trib: What's the biggest challenge for MedCare and your industry?

Sphon: I think our challenges are to continue to manage our existing business. The one thing we can't do is look too far ahead. I think the key to our success is continuing to manage the existing patient population that we have and any new patients that come in. Medical equipment is not just a one-and-done kind of thing where I deliver the oxygen concentrator and say, “It's nice knowing you.” We follow up with patients. We're in their homes. We're there, responsible if something goes wrong. ... The other challenge that I see is that as we do all this, we're getting hit with reimbursement cuts that are happening in our industry. Reimbursement reductions are happening at the same time we're seeing a greater demand for service. So the challenge is to manage all that.

Trib: So the challenge is increasing productivity and efficiency?

Sphon: Exactly. The other thing I see as a challenge is it's helping our customers understand their insurance coverage and what it means to them. If there's one situation I see it's the amount of time that we spend explaining to the patients what their insurance coverage covers. Insurance is so complex. We spend so much time trying to help them understand what their coverage allows and what their responsibility is. They have higher deductibles, co-pays, you name it.

Trib: Can you tell me something about your business that might surprise the average person?

Sphon: I think the thing that may surprise people are the relationships that are built with the patients in the home and the delivery technicians or our customer service people. We're part of their care, they rely on us. What the patients like is their relationship with the driver. I think they come back with more cookies at Christmas than I ever do.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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