Regional players hold on while others 'jump ship'

The future will bring more consolidation in the complex rehab market with regional providers broadening their service areas and smaller providers struggling to keep up, sources say.

“People working for small companies are going to read the writing on the wall and given the opportunity from the regionals, they'll jump ship before it sinks,” said Simon Margolis, executive director of NRRTS and former vice president of clinical professional development for National Seating and Mobility. “We're going to be looking at possibly no more than 10 major players controlling 90% of the work within the next five years.”

Although they are not immune from blows like the 9.5% nationwide reimbursement cut, regional providers are better suited to sustain setbacks, sources say. By virtue of their size, regional providers have diverse payer sources and more purchasing power, sources say.

“If a company has offices in five states, they have coverage from five different states and the Medicaid programs are not all going down the tube at the same rate,” Margolis said.   

Paul Bergantino, president of ATG Rehab, which has 20 locations in 15 states, agrees that scale is key, but so is “sticking to your core business.”

“Our laser focus on providing complex rehab versus being a full service provider has greatly contributed to our success,” he said. “We will continue to grow while at the same time continuing our regional structure.”

Additionally, regional providers can offer back office support and marketing opportunities to smaller providers that are stretched thin between complying with paperwork requirements and caring for patients.

“Small companies have to have billing experts and order processing experts and you have to stay on top of everything,” said Bob Gouy, president of Earth City, Mo.-based United Seating & Mobility. “I think there will continue to be successful small companies, but those people are very skilled or willing to put up with it.”