Continuing its acquisition spree, Integrated Health Services Inc. announced yesterday that it will buy a Georgia company that provides respiratory services for hospitals and nursing homes.
The purchase of Primedica Hospital Services from Medserv Corp. of Marietta, Ga., supports two efforts by Integrated Health Services, based in Owings Mills.
The health care chain wants to add more nursing homes to its system while converting them to "sub-acute care facilities" that can accept sicker patients -- at rates that are several times higher than those at ordinary nursing homes.
Terms of the acquisition were not disclosed. Primedica has about $35 million in annual sales and is profitable, Integrated Senior Vice President Marc Levin said, but he declined to disclose Primedica's profits under privately held Medserv.
Primedica has about 100 contracts with health care facilities in 29 states. Mr. Levin said about 80 percent of the new unit's contracts are with hospitals, rather than nursing homes, and none of its contracts is with an Integrated facility.
"The game plan is to integrate their [Primedica's] services into our homes over a period of time," Mr. Levin said. "It's a continuation of our strategy to build a whole post-acute care network." Acute care in most cases means hospital care.
That strategy has underpinned Integrated's explosive growth. The company owns or manages 192 facilities in 30 states, three times as many as it did in mid-1993. It has also expanded from core nursing home and sub-acute care services into related businesses, such as institutional pharmacies, home health care and rehabilitation therapy.
Integrated posted sales of $177.2 million for its latest quarter, which ended Sept. 30, and made a $9.9 million profit. Both were company records.
Mr. Levin said the broader range of services will help Integrated attract more business from health maintenance organizations and other managed-care insurance plans. About 42 percent of the payment for Integrated's care comes from private health plans, he said, and a growing share of that money is controlled by HMOs, which Integrated hopes will be drawn to one-stop shopping for an array of care.
The other 58 percent of Integrated's patient payment comes from Medicare and Medicaid.
An analyst who follows Integrated said yesterday's move appears to fit well into the company's plan.
"Ancillary services are where the future is," said Susan Betso of Legg Mason Inc. in Baltimore. "They need integrated services to be able to attract the large managed-care organizations."
Mr. Levin said the company expects to continue its acquisitions, focusing short term on areas such as rehabilitation therapy and home health care. He said the company had $30 million in cash and a line of credit of more than $200 million as of Sept. 30, the date of Integrated's most recent financial statements.