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Preparation for a boom

Posted: February 5, 2012 2:00 a.m.
Updated: February 5, 2012 2:00 a.m.

Worker answer customer calls at the Shield Healthcare Customer Service Center in Valencia last Friday. The company focuses on disposable equipment, according to Roger Miller, the company’s chief marketing officer.

 


The health care industry is anticipating rapid growth as the baby boomers approach retirement age. The 65-plus population saw the largest increase of any age group between the 2000 and 2010 censuses — it increased by 15.1 percent, which is almost twice as fast as the U.S. population‘s growth as a whole. 

And home health care — medical staffing, services and supplies operated at the patient’s home — is becoming more popular with baby boomers who want to maintain their independence for as long as possible.

As this industry starts to pick up even more speed, the Valencia-based medical supplies provider Shield Healthcare is carefully increasing its nationwide markets and adapting its infrastructure.

The National Association for Home Care & Hospice reported that approximately 12 million individuals received home care in 2010, compared to 7.2 million in 2000. Total employment for the home health care industry shot up from 630,000 in 2000 to more than 1 million people in 2009.

Shield Healthcare started as a special pharmacy in Van Nuys in 1957, eight years before Medicare began. Since then, it moved its corporate office into a larger building in Valencia and focuses on the disposable equipment, such as diapers, catheters and bandages, which, according to Roger Miller, Shield’s chief marketing officer, is a completely different animal from the other side of medical supplies — durable equipment, such as beds, wheelchairs and the like.

“This side of what we do is less attractive,” Miller said. “You don’t just keep track of your assets, but in this business you really have the track the quality and state regulations of what you sell.”

And Shield currently sells and — and tracks the regulations for — more than 2,500 items. Although the company has dipped into all home health care markets — including oxygen, wheelchairs, nurses’ uniforms — for the past 25 years, it has remained focused on six areas: incontinence, diabetes, nutrition, ostomy, urological and wound.

However, Miller, who has worked on both sides, says Shield’s strength, businesswise and philosophically, is that it is meeting a basic need for many people. 

Customers “are chronically ill people for the most part, with complex medical needs,” he said. “Take it away and see how many people’s lives are affected.”

Acquisitions, streamlining

Shield is affecting a lot of people, as it continues to acquire smaller pharmaceutical and medical supply companies across the country. It has 11 offices in California, Illinois, Texas, Colorado and Washington State.

Locally, 225 of the some 350 employees work out of the company’s Santa Clarita headquarters.

Since 2001, Shield has been the exclusive supplier to all Kaiser Permanente patients for the state of California. Such contracts create stability, but also help streamline customer service and billing.

Shield’s employees have access to Kaiser’s database, which means they can see a patient’s information directly, which saves time and prevents mistakes.

Shield only supplies to individual patients, as opposed to contracts with hospitals or other medical centers. The Valencia office is the largest of Shield’s three distribution centers, sending 40,000 orders a month. Most customers order on a monthly or quarterly basis, according to Laura McIlvaine, vice president of government affairs for the company.

To deal with the demand, the company has streamlined its orders and shipping processes with automated machinery, with a computer reading the order and automatically moving the needed supplies along a conveyer belt.

“We have quite a lot of automation in the warehouse that we didn’t have before,” McIlvaine said. Most of the new machinery was installed when Shield moved to Valencia almost three years ago.

Its warehouse runs Monday through Friday on a schedule only slightly off from those of the customer service and ordering agents, in order to ship all of that day’s orders for next-day delivery. The company has also streamlined its online ordering process in the last two years.

These changes have helped keep Shield’s customer satisfaction above 98 percent in shipping time and shipment accuracy, according to annual quality reports conducted by a third-party surveying firm.

Health care’s future

Shield and the rest of the home health care industry is watching state and federal budget cuts closely, as the majority of home health care’s funding comes from Medicare, Medicaid or state and local governments. Only 30 percent of home health funding in 2009 came from private insurance or out-of-pocket.

These cuts and the growing number of people depending on government aid mean the coverage might not pay for the same quality of products as it used to.

“We are paid less for some of the items today than in the 1990s,” McIlvaine.

Miller added that customers oftentimes don’t understand the limits of their Medicare or Medicaid coverage, and how the top-of-the-line equipment may not be covered by their plan.

“I think with the baby boomers is an expectation that Medicare should cover what (their previous) private insurance does,” he said.

Shield has responded to this by consolidating providers for their products. The company has shrunk its provider list to 80 manufacturers, and the top 10 account for 85 percent of total purchases.

But despite the acquisitions and efficiency in technology, purchasing and customer service, McIlvaine said there’s not much more room to streamline.

“That’s a challenge we’ve got to face in the coming 15 years,” she said.

Despite the challenges ahead, Shield hopes to eventually expand from coast to coast, Miller said, and this will likely happen as smaller suppliers continue to falter under heavy regulations.

Giving an example, Shield employees must know and stay on top of state Medicare and Medicaid regulations for multiple states, she said. For smaller suppliers, this can be difficult and they will continue to turn to a larger company.

Miller said the health care industry will likely see more integrated models, such as Kaiser, across the country. Shield is looking to create more partnerships like with Kaiser in California as these models crop up. 

“I think we’ll see more organizations like Kaiser looking for a consistent, solid partner,” McIlvaine said.

But Shield’s market is going to stay fairly consistent, both Miller and McIlvaine said.

“What we do is basic health care needs,” Miller said. “And this is never going to go away, regardless of what health care reform happens.”

Shield Healthcare is located at 27911 Franklin Parkway in Valencia. More information can be found at www.shieldhealthcare.com or by calling (661) 294-4200.

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