An independent with plans to go national
Three independent distributors who announced plans in December to form Concordance Healthcare Solutions say they can service providers caring for about 70 percent of the U.S. population – and maintain their independent spirit while doing so.
That means they’ll maintain local customer service, sales and warehousing, and continue to support the branded products that their customers prefer. At the same time, they intend to share their specific areas of expertise and add field reps when necessary in order to present a full-service offering – that is, one encompassing products and services for both acute care and non-acute care – to their IDN customers.
In December, Kreisers, Inc. (Sioux Falls, S.D.), MMS – A Medical Supply Company (Earth City, Mo.) and Seneca Medical (Tiffin, Ohio) announced that they had entered into a definitive merger agreement to form Concordance Healthcare Solutions, LLC.
Concordance will have approximately 1,000 employees, 19 distribution centers and $1.1 billion in annual sales. MMS Executive Vice President Tom Harris and Seneca CEO Roger Benz will serve as co-presidents. An operating board has been established, on which sit representatives from each of the three founding companies. Serving on the Senior Advisory Board – along with Harris and Benz – will be Dave Larson, CEO of Kreisers; Gary Reeve, CEO of MMS; and William Schultz, founder of Seneca.
“It is easy to see the merit of this combination by recognizing not only what it is, but also what it is not,” said Benz at the time of the announcement. “It is not an acquisition. It is a merger. Three equally dedicated independent distributors, possessing like cultures and business approaches, sharing and improving as a combined entity. This is not a transaction that results in a loser being cannibalized and incorporated into a winner.
“It is about furthering the development of a customer-focused, agile, near-national, independent distributor, the likes of which the healthcare industry has not enjoyed for decades,” he continued.
All classes of trade
MMS and Seneca had been in discussions on and off for a number of years, said Tom Harris, speaking during a webinar sponsored by MDSI, publisher of the Journal of Healthcare Contracting. The process stalled for a time, but heated up about two years ago, when Harris approached Benz at an industry meeting. “We saw similarities in business models, but more important, in the cultures of the two companies,” said Harris. “We began discussions in earnest.” Dave Larson joined those discussions in the summer of 2014.
“It is our intent to have a highly experienced sales presence in every healthcare class of trade,” including acute care, primary care, IDNs, long-term care, government, home care, hospice, EMS, etc., said Harris. “While each of us provides high levels of service to [different] classes of trade, we feel that each entity in Concordance has expertise that the others did not. It is our intent to fully use that expertise to develop a best-in-class sales force in every region we serve.
“Seneca is highly concentrated in acute care and has had great success in servicing and growing that space,” he said. “Kreisers has a strong presence in both acute care and alternate site, and it has a very strong government division, which we’re all excited about. MMS has had a solid balance across all markets, and we’ve also been successful in a few niche markets, including our school health initiative and our direct-to-patient retail catalog. The expertise of each will be targeted across the entire space of Concordance.”
Independent spirit
“It really is our plan to continue to be responsive and customizable, and adapt to this ever-changing healthcare marketplace,” said Harris during the webinar. “We also will continue to expand our geographical coverage. Our ultimate goal is to truly become a national distributor.”
Even so, the plan is to continue to think like an independent.
“Just because we’ve merged doesn’t mean we will become a centralized, rules-driven, policy-driven organization,” said Benz. “We’ll continue to bend and mold to the customer and his or her needs. That’s how the three of our companies got to where we are today.”
For the same reason, Concordance will resist consolidating SKUs, he said. “It all goes back to customer focus,” said Benz. The majority – perhaps as much as 80 percent – of the SKUs each of the three founders carry are identical, he said. As for the remaining 20 percent, “we won’t tell the customer, ‘You can’t buy that one anymore.’ That’s when it becomes policy-driven, not customer-driven.”
Manufacturers should expect Concordance to emphasize branded products vs. generic ones, according to the three founders.
Implementation
“We do have some challenges and opportunities,” said Larson. “Our main challenge is ensuring that the culture of best-in-class service remains at the core of operational excellence as we move through the integration. The sooner we can be integrated operationally, the better we can go forward.”
Each of the founding companies has its own IT platform, said Benz. “Our IT people have already met and have begun the process of analyzing what each system brings to the table, so ideally, we can pick what would be best in class. While we wouldn’t rule out a new system for everybody, that would mean all three of us would have to change. But if we could settle on one already in-house, that would mean change for only two of us.”
“Over the last few years, we have really begun to see the independent distributor’s brand,” continued Benz. “We’re not here to bring a high marketing profile or questionable value-added services that one dreams up for the customer base. We’re here to bring fill rates, accuracy, service beyond expectations, customer service that’s localized to the customer, and a common-sense approach with phenomenal outcomes.”
The players
Kreisers Inc.
In 1905, Frederick Kreiser opened a pharmacy in Sioux Falls, S.D. Today, Kreisers is a regional distributor across the upper Midwest offering a complete line of medical equipment and supplies to hospitals, physicians, nursing homes, laboratory and home health providers. The company has six distribution centers, and is operated as a family business, led by the founder’s grandson, David Larson.
MMS – A Medical Supply Company
Founded in 1970, MMS – A Medical Supply Company services nursing homes, hospitals, physician practices, government facilities, specialty products, home care, hospice, EMS and pharmaceuticals, as well as healthcare industrial and redistribution businesses. MMS is headquartered in St. Louis, with a regional corporate office in New Rochelle, N.Y. The company has distribution facilities in Phoenix, Ariz.; Tamuning, Guam; West Chicago, Ill.; Wichita, Kan.; Baton Rouge, La.; Earth City, Mo.; Secaucus, N.J.; and Spartanburg S.C.
Seneca Medical
Founded in 1990, Seneca Medical is an independent medical/surgical supply company with distribution locations in Indiana, Michigan, North Carolina, Ohio, Tennessee and West Virginia. Through a stock ownership plan launched in 1998, the company’s 600 current and past employees own 90 percent of Seneca Medical’s stock. Seneca serves acute care, physician and surgery centers, long-term-care centers and government agencies in 11 states.