For Arnie Burchianti, the weaknesses in the home health care industry are strong reasons for him to be in it and quickly growing his company.
Burchianti, president and CEO of Celtic Healthcare Inc., has developed software systems that help him acquire home health agencies that have antiquated management systems and are losing money, and turn them into profitable enterprises.
Celtic Healthcare recently acquired the home care division of Carlisle Regional Medical Center, part of a plan to buy three to five such companies in a three-year period. That acquisition is expected to add at least $1.5 million to Celtic Healthcare’s top line this year, and Burchianti says it has the potential of growing fivefold over the next 18 months. The 145-employee company, based in Mars, posted $9 million in revenue last year and expects to employ more than 200 by the end of this year.
Smart Business spoke with Burchianti about how he approaches and integrates acquisitions into his quickly growing company.
How do you approach acquisitions?
I have a philosophy of, if you’re not better than I am, then you’re not on my team. I get people around me who are better than I am.
That means I’ll get the best attorneys involved. I get the best around me, from tax advisers to health care consultants, I go into this with people who have been down this road many times.
My strength in leadership is coordinating their efforts, and then taking all their information and feedback and acting on it and building relationships with the hospitals and making it clear that it has to be a fit, because if our mission and values aren’t a fit, I’m not looking at your financials, and I think they respect that.
What is the biggest challenge to making these acquisitions?
First and foremost is getting the potential seller to understand that they should sell. We’re focusing on organizations that strategically need us.
I can go out tomorrow and do five acquisitions and overpay and capitalize it and be running, but we’re a strategic player. We’ve looking for organizations with strong referral sources that are linked with hospitals, where we can help the hospitals by reducing their length of stay and improving the service to the community and the medical staffs.
How will you make these organizations profitable when their previous owners couldn’t?
We had Carlisle about four or five months ahead of when we anticipated the first acquisition would hit. Carlisle opens up opportunities for insurance contracts, ones we didn’t have in Western Pennsylvania and ones they didn’t have out there.
By increasing our footprint, we’re going to be more attractive to the managed care companies, thereby getting better reimbursements. And with our information systems, getting economies of scale really is the goal. We decided in 1999 to develop our information technology systems, and by doing that, it’s really afforded us the opportunity to compete at a different level.
How does technology give you a competitive advantage?
Right now, only about 30 percent of the home care industry is using technology at the point of care, using laptops, electronic medical records and so forth. It doesn’t solve a business problem, it just automates paper.
What we’ve done is develop a work flow system using process technology. We take any area that we can automate, we look at the process and we try to improve it through the introduction of technology.
We have historically done our development with third-party consulting companies, and have found that it is a very costly, slow and poor-quality process. We are in the process of bringing our development team in-house.
I love technology, but it’s a challenge, focusing on your core business and letting technology be an enabler. It’s very easy to get sidetracked and feeling like you’re a technology company.
We’re not reselling software; that’s not part of our strategy. We’re building software because to me, leaders in industry have their own information systems. They don’t rent it from somebody. When you’re renting it from somebody, you’re no different from the rest of the field. You can’t scale it, you can’t modify it.
How to reach: Celtic Healthcare Inc., www.celtichealthcare.com