left to right: Arletta Samulak, chief financial officer; Elizabeth Woolrich, sales manager; Peter Storey, chief operations officer; and Donald B. White, founder and CEO.

You’ll have to pardon Don white for not panicking. Sure, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 prescribed some bitter medication. Yes, it will hurt when all its provisions go into effect over the next several years. But as the founder and CEO of Associated Healthcare Systems, White has seen worse. At one point in the ’90s, reimbursement changes threatened to wipe out the company he had worked long and hard to build. After staring into the abyss and surviving, White doesn’t think the future looks all that bad.

White, a former newspaper circulation manager, started his Buffalo, NY, respiratory care company in February 1983, in partnership with a respiratory therapist.

When the first order came in from a local hospital, White was chagrined to discover that none of the concentrators in his inventory functioned. He called the manufacturer, who asked him trouble-shooting questions, such as, “Where are the concentrators? What’s the temperature?” The answers: in White’s garage and 23° F, respectively.

After an hour in his living room with a blow dryer and a dozen concentrators, White hit the road to make his first delivery. He says no one had explained to him that concentrators contained water in their sieve beds and should be stored at temperatures above freezing. He had to learn it from experience.

The business prospered over the next 10 years, but its share of the overall market remained small. White wanted more.

In 1993, a paid consultant told White to diversify his offerings and go after managed care contracts. White listened, and Associated Healthcare soon added locations, offering retail sales at each as well as a full range of respiratory services. It also began providing pediatric products and opened a sleep-disorder treatment and testing facility.

In 1994, White purchased a rehabilitation company that established him as a custom-seating and power-mobility player. Infusion therapy, support surfaces, and wound care followed.

Associated Healthcare’s size and sales tripled in the course of 3 years, but the Balanced Budget Act of 1997 (BBA) put an end to the party.

Tightening the Belt
“One day we were fat, dumb, and happy, and the next day we were in the midst of it,” White says. “The stark reality of a 30% cut in our primary business line came home to roost. We lost a substantial amount of money in ’98. I wasn’t sure we would be able to get through that and survive. I’m a very confident person, but those were scary days.”

White decided his company’s best chance for survival lay in a renewed emphasis on its core strengths and improvements in efficiency, economy, and communication.

“We wrote action plans for each initiative that we knew had to take place,” White says. “We assigned responsibility and put a timeline on it. Each week we sat in my office in strategic meetings and reviewed each plan. We continue to use that same kind of methodology today, and it makes us a better business.”

But not a better retail, rehab, or pediatrics business. Asssociated Healthcare would focus on what it did best: respiratory services and medication, sleep-disorder treatment, and infusion therapy. As the company shed divisions, it whittled its payroll down from about 160 to 70 employees.

“When you’re facing tough economic times, you have to make those tough decisions, but they’re never easy,” White says. “They affected people’s lives and their families, so we tried not to make these decisions without a good solid basis for them.”

Today, Associated Healthcare operates 10 patient management centers throughout New York State.

The Brighter Side
White feels his run-in with the Balanced Budget Act of 1997 prepared him and Associated Healthcare for the effects of the Medicare Modernization Act of 2003. He expresses cautious optimism that the pain will be less intense this time around.

“I’m not standing here saying, ‘Bring it on,’” White says. “We’re going to have to work very hard to survive and prosper. The good news is that I have a very clear path ahead of me. With the BBA, I had only 3 months to react to some draconian changes. Now I’ve got essentially 4 years to get all of my ducks in a row. If I can’t get all of my ducks in a row in 4 years, than I should have my butt kicked.”

White anticipates that in 1 or 2 years, home health care providers will breathe a collective sigh of relief as Congress and the President look for ways to cut costs by reducing what the federal government spends on hospitals, physician services, and nursing homes—groups that, unlike home health care, did not suffer large cuts in last year’s Medicare Act.

“After the elections, they have got to come to grips with the budget deficit and implement changes to Medicare and Social Security to reduce costs,” White predicts. “I think they will go to hospitals, doctors, managed care, and nursing homes. Those industries were in there saying, ‘Give us more.’ They did get more in the Medicare reform, and they are going to be attacked by the people who need to cut expenditures. I have made my rounds to my local congressmen and all of them acknowledge we did more than our share in 2003. I think we are in a good position to be left alone in 2005 through 2009. That is a long time not to have Congress meddling in our business.”

However, White does not believe in leaving legislative action entirely up to chance. “I like to have a voice in my future,” he says. “A lot of people are happy having someone else tell them what they are going to do. That has never been my strong suit. I guess that is why I have my own business instead of working for somebody else. By being actively involved in my state and national trade associations, I feel like I’ve participated in the process, even though sometimes the outcome is not what I want.”

Technology For a Better Tomorrow
Knowing what the next few years will bring, White can plan accordingly. He plans to structure his company so he can deliver quality service at lower prices. Key to this is an investment in new technology.

“While we’re still enjoying some fairly decent profits, we’re making a huge investment this year and next year in upgrades to our technology in anticipation that we can use that technology to lower costs in the future,” he says. “We’re investing in things like electronic document storage, personal digital assistant technology for clinical staff to generate visit reports, contact-management software for district managers, and global positioning system technology to improve routing so each driver can make more calls.”

Challenging preconceived notions can result in further savings. For example, White says he had long assumed that what physicians wanted from his company was for it to make a lot of visits to patients’ homes. But physicians in his area actually just wanted the company to have frequent contact with the patients. As long as the results were the same, they did not care what form that contact took.

“If we can do it over the telephone as effectively as with a person-to-person call, then that is what we will do,” White says. “Certainly, we are going to use our clinical staff for setups and training of new patients, but the follow-up is going to be done by telephone. As rates go down, we have got to make contacts more productive and more frequent.”

Of course, a company does not live on technology alone. As important as having the right equipment is hiring good people to help you achieve your goals, White says.

“Make sure that you get the right people in your organization, because at the end of the day, having the right people in the right spots is what it takes to be successful,” he says. “I think we have been very fortunate that we have been able to attract and hold onto some very talented and bright people, and it certainly has made my life much easier.”

Easier, but not trouble-free. Through it all, White is confident that lessons from the last decade will help Associated Healthcare continue to thrive.

Keith Bush is a contributing writer for Dealer/Provider.