The home-care industry continues to play its game of musical chairs. Home-care companies completed a record number of mergers and acquisitions in 1996, according to Irving Levin Associates. The New Canaan, Conn.-based research firm found that through the third quarter of 1996, home-care companies have wrapped up 100 deals, compared with 58 by that time last year. This year's transactions total $830 million.
New players kept seven companies from retaining their seats on MODERN HEALTHCARE's top 10 list of home-care and home medical equipment companies. MODERN HEALTHCARE's 1996 Home Care and Durable Medical Equipment Providers survey generated 40 responses from companies across the country this summer.
Combined revenues from the firms that provided financial data for the survey rose 20% to $5.5 billion in fiscal 1995 from $4.6 billion in fiscal 1994. The combined number of home-care branch offices increased 45% to 2,220 in fiscal 1995 from 1,541 in fiscal 1994.
Only three companies were at the top of both the 1995 and 1996 lists for most number of operating branches.
Melville, N.Y.-based Olsten Kimberly QualityCare clung to its No. 1 position for the third year in a row with 612 branches operating in 1995 and revenues of $2.5 billion. Brentwood, Tenn.-based American HomePatient, with 221 branches and $162.4 million in revenues, moved up to third. Lake Success, N.Y.-based Staff Builders, with 170 branches and $325.1 million in revenues, moved up to fifth.
The rest of the spots in the upper echelon were occupied by some aggressive upstarts.
Costa Mesa, Calif.-based Apria Healthcare Group, formed by the June 1995 merger of Abbey Healthcare Group and Homedco Group, came in second with 350 branches and $1.1 billion in revenues. Housecall Medical Resources, an Atlanta-based holding company that got its start in July 1994 with $25 million from venture capitalists, took fourth with 190 branches and $84 million in revenues.
Other companies-such as CareSouth, Arcadia Health Services, HealthCor, Lutheran Health Systems, and Medical Innovations-helped to knock out providers that enjoyed top-dog status on last year's list.
Those who didn't make a return visit included New Brunswick, Ga.-based First American Health Care, which spent 1995 in court unsuccessfully fighting charges that its owners and other executives tried to defraud Medicare. First American may yet find its way back onto the charts as a subsidiary of Integrated Health Services, a rapidly expanding post-acute provider based in Owings Mills, Md., that purchased the troubled company in October.
The entrance of competitors such as Nashville, Tenn.-based Columbia/HCA Healthcare Corp. and IHS promises to similarly shake up next year's rankings.
During 1996, Columbia acquired 17 home-care agencies. That brings its total number of agencies to 235, representing 310 branches. IHS now operates more than 700 home-care branch locations in 44 states that are expected to bring in $1.2 billion in revenues.
Internal issues also may cause some companies to lose their high rankings. For example, in the wake of its $1.1 billion formative merger, Apria has paid the federal government more than $5 million to settle one dispute over an alleged Medicare kickback scheme run by one of its predecessors and another over the termination of its planned merger with the hospice provider Vitas Healthcare Corp.