At the rate Med Diversified Inc is growing, it could dominate the home respiratory care market, and HME/respiratory-only providers should realize the implications of its business model, which marries the once separate nursing and HME components, says CEO Frank P. Magliochetti, Jr, AMP, MBA.

“The HME industry is going to have to move toward the single-point-of-access model in the future,” Magliochetti says. “A one-service company will not have the same benefits as a company that has diversified its service offering and coordinates delivery of that basket of services through a single point of access.”

The Andover, Mass, health care conglomerate is quickly gaining ground against giants such as Apria and Lincare through a combination of large-scale acquisitions (Addus Healthcare Inc and Tender Loving Care Health Care Services Inc were purchased by the company in the last 6 months), new service contracts, and referral-base expansion, Magliochetti says.

Thanks to those efforts, Med Diversified’s revenues 9 months into its 2002 fiscal year totaled $107.9 million, a 63% increase over the same period in fiscal year 2001, the publicly traded firm reports.

Med Diversified, as the name suggests, operates subsidiary companies in an assortment of health care segments, which—in addition to respiratory—include home infusion, HME, and pharmacy. Until early January, Med Diversified was known as e-Medsoft.com, which originally provided telemedicine services and online product procurement. Last August, e-Medsoft.com entered the home care arena in a big way with its acquisition of Chartwell Diversified Services Inc.

“Chartwell was a joint-venture company started in 1986 by Massachusetts General Hospital and New England Medical Center so they would be able to continue providing care—including respiratory therapy—to patients they were forced to discharge quicker and sicker from the inpatient side,” says Magliochetti, who was CEO of Chartwell before becoming chairman and CEO of Med Diversified.

Cutting-Edge Protocols
In the decade that followed Chartwell’s launch, the venture partnered with other academic medical centers. Among them were Rush-Presbyterian-St Luke’s Hospital, University of Pittsburgh Medical Center, Yale Medical Center, and University of California at Davis Medical Center.

The partnerships with those institutions, which remain operative now that Chartwell is Med Diversified, give the company a potent competitive advantage, Magliochetti says. Specifically, the company gains access to the latest and best home care treatment protocols developed by those teaching centers.

“This enables us to get farther out on the edge in terms of just how critically ill a patient can be when sent home,” Magliochetti says. “The protocols we use include those for respiratory care, and we are using them before any of our competitors can adopt them.”

Med Diversified actually has a hand in the development of those protocols, meaning its clinicians are already familiar with the protocols by the time they are rolled out for marketwide use. That, along with the protocols themselves, inspires greater confidence in referral sources, who tend then to be more comfortable sending patients to Med Diversified than to its rivals, Magliochetti says.

Protocols also are an especially effective tool for Med Diversified because of the particular model of care employed by the company, Magliochetti says. “We believe that the one health care professional in the home who has developed the most trusted relationship with the patient should become the single point of access for the patient, the physician, the insurer, and the provider,” he says. “Take ventilator patients, for example. Our position is that it will work best for these patients if their physicians have to go through only one person for information and recommendations concerning the respiratory care, the prescriptions, the DME, the infusion, and the rehabilitation. Just having all of this flow through a single source means quality of care is going to rise.”

Streamlining communication has helped Med Diversified earn the affection of referral sources. “Physicians appreciate this single-point-of-contact approach,” Magliochetti says. “It makes everything much, much easier for them because they have to deal with only one person for all the different services, modes of therapy, and administration of change orders.”

Magliochetti asserts that the individual best qualified to function as this single point of access is a nurse because nurses visit homes more frequently and for longer periods than other health care practitioners. Therefore, nurses have the broadest picture of the patient’s situation and can, as a result, more successfully coordinate the activities of the other disciplines involved, including respiratory care.

“In our model, respiratory therapists interact with the nurse for the provision of care within the home,” he says. “The respiratory therapist comes in and helps facilitate the quality of care with the nurse. The respiratory therapist is likeliest to visit the home separately after the nurse has already performed initial tasks, such as obtaining a baseline on the patient’s vital signs. Those visits will occur on a schedule provided by the nurse in coordination with what the physician orders. However, if the nurse believes the condition of the patient is such that an in-home visit by a respiratory therapist is unwarranted, she will convey that to the physician and recommend he or she not order in-home respiratory therapist visits. Even so, the nurse may wish to confer by phone with one of our respiratory therapists for advice during the course of providing home care, and this is an option that remains available. It is all about avoiding redundancy.”

As for the delivery of oxygen, Med Diversified performs this task in much the same fashion as other home care companies, although the initial setup of oxygen equipment is the nurse’s responsibility.

“Setup is the only aspect of home oxygen that the nurse does himself or herself,” Magliochetti says. “Delivery and pickup of equipment and canisters are done by technicians whose visits are coordinated by the nurse. The advantage of having a nurse coordinate those deliveries and pickups is it virtually eliminates the potential for leaving canisters and oxygen equipment in homes long after patients no longer need them or have died. With these items retrieved promptly, we are able to put assets back into service. This prevents underutilization of those assets and saves us from having to purchase new ones that are not really needed.”

Remote Monitoring
Another competitive advantage Med Diversified enjoys is its expertise with telemedicine, gained from its days as e-Medsoft.com. “In our ‘distance medicine’ application,” Magliochetti says, “we have a health care professional—usually a nurse—at a central location monitoring a number of patients’ vital signs and other parameters. We have one such professional responsible for monitoring each type of disease state in a given geographic area.”

Med Diversified installs the necessary monitoring equipment—pulse oximeters, for instance—in homes and links the equipment via telephone to the central location. In most situations, the monitors continuously collect data, store it, and transmit it at designated times throughout the day to the central location.

In addition, Med Diversified often provides these patients with an online, voice-recognition computer terminal that at regular intervals asks them a series of disease state-specific questions that they verbally answer. The computer then transforms the words to electronic input to help the nurse at the other end better understand the patient’s health status at that moment.

“We use this question-asking technology most often with our congestive heart-failure (CHF) patients,” Magliochetti says. “It asks them, for instance, if they have gained more than two pounds in the past 2 days, whether they are experiencing any swelling of the ankles or shortness of breath, if they have developed a persistent cough, and so forth. Depending on how they answer, the console at the central location is going to show either a green light or a red light. If the light is red, the professional sitting in front of the console knows the patient is having a problem and will telephone him or her to obtain further information or relay instructions. The idea is to be able to intervene at the earliest possible moment so as to prevent the patient from heading into a CHF episode and having to be rushed to the emergency room with an inpatient stay to follow.”

Magliochetti believes Med Diversified will be a company that changes the home care landscape. “We are a fast-growing enterprise, but our plan is to develop regional density,” he says. “That means we want to saturate a region and become the best in that region before making any major expansion beyond that point. Our biggest presence now is in the Mid-Atlantic states. Our next target is New England. From there we intend to begin dominating in other parts of the country.”

He is certain Med Diversified’s care model will emerge as the most successful of any within a few short years, but small HME/respiratory companies may find their own niche. “I think all models of delivery of care will work in the future,” he says. “But the demand for simplicity will increase. For that reason, over time, the model that will emerge as the most successful is the one that is simplest from the physician and patient perspectives. That model is single-point-of-access. It is what we are building our reputation on.”

Rich Smith is a contributing writer for Dealer/ Provider.