Q&A: Ed Murphy

SOMERSET, Pa. - DeVilbiss Healthcare may be 125 years old this year, but it has no plans to slow down. In fact, the company is making a number of moves that show it may be more relevant than ever, says President and CEO Ed Murphy. Here's what he had to say about the company's roots in atomizers, its rocky road to its current ownership, and its role in helping providers reduce costs.

HME News: How did DeVilbiss go from atomizers to a full line of respiratory products?

Ed Murphy: Atomizers are a small part of the company today, but we still have a line for the EMT industry. From atomizers, where you use a bulb to push drugs into the throat, we went into using a motor. That's when we got into aerosol products, putting us firmly in the respiratory space.

HME: It seems like DeVilbiss is best known for sleep products now.

Murphy: Our key products right now are sleep and suction products. DeVilbiss was a big name in oxygen concentrators for a number of years. We sell more of them overseas than in the U.S. right now, but as we bring production back to the U.S., it will make sense for us to re-enter this market (see related story).

HME: DeVilbiss has had a lot of management and ownership changes over the years.

Murphy: Sometimes we joke that if we're 125 years old, we've had nearly as many owners. In recent years, DeVilbiss was acquired by Sunrise Medical, when Sunrise's plan was to be a one-stop shop for providers. Sunrise was then purchased by Vestar Capital Partners. Under Vestar, DeVilbiss was first a respiratory division of Sunrise and then a separate entity from the company. In 2010, it was formally split up. Vestar has sold off all the other divisions of Sunrise except us.

HME: What's it like being owned by a private equity firm?

Murphy: Vestar has owned DeVilbiss for nine years, so they're a very patient private equity firm. They feel that there's a bright future in DeVilbiss. They've also helped us greatly increase our R&D budget so we can stay on the cutting edge. We'll spend 50% more on R&D this year than last year, and we'll spend 50% more than that next year.

HME: What has been the result of all of that R&D?

Murphy: We came out with a new suction unit in late 2012. We've come out with several new mask lines and we'll be coming out with a couple more masks this year. We're in the middle of a project to come out with a new generation of flow generators.

HME: There seems to be a plethora of mask introductions these days.

Murphy: Historically, the biggest issue with CPAP therapy has been the low compliance rates and the primary driver of that is the mask. The mask is the thing that sits on your face anywhere from four to eight hours a day. There is no one perfect mask, because it's so specialized. So everyone tries to have enough offerings that they have something for everyone.

HME: What's next for DeVilbiss?

Murphy: Our focus will be to continue to design and build products that help providers do their jobs better. Looking at some of the cuts that have come through—it requires a complete rethinking of their business model. It's not the type of thing were you say, “I'm just going to tell my manufacturer that we need a drop in price.” When you look at what dealers pay for equipment, that's dwarfed by service costs. If you give them equipment that works and doesn't need to be serviced too frequently, they can make money on it.