Taking the Plunge

Medline to expand its presence in the physician market

Medline Industries Inc. intends to use its recent acquisition of physician supplier DiaMed USA as a springboard to become a national physician supplier with a dedicated physician market sales force. Mundelein, Ill.-based Medline announced it had acquired DiaMed of Canton, Ohio, in November.

Jumping into the physician market isn’t quite the stretch it seems, says Mike Sjoerdsma, vice president of sales. “Over the past few years, we have continued to aggressively grow our prime vendor distribution business, and we’ve been asked by IDNs to go into this space,” he says. “We think that with what we’re doing out of our distribution centers, we can service them.” The company says it serves as primary distributor to more than 450 major hospitals and healthcare systems.

Medline was already doing about $11 million in business with physician practices around the country at the time of the DiaMed acquisition. The acquisition brings that total to around $24 to $25 million.

Medline already services a variety of other non-acute-care customers, says Sjoerdsma. “If you look at our business today, we service hospitals, nursing homes, surgery centers, home care and hospice care. We’re doing pick-and-pack out of our automated distribution centers in low-unit-of-measure to patients’ homes today.”

“We deliver the majority of our shipments on our own fleet of a couple of hundred trucks,” adds Chief Financial Officer Bill Abington. Those vehicles range from 22-foot straight trucks to 53-foot high-cube trailers and tractors. “But we also do a substantial volume of parcel.

“Our distribution centers are large, fully integrated, and we will have no issue incorporating even a large amount of physician office volume in them. We plan to add SKUs, obviously. But we have a good solid base, and we’ll build from that.”

Over the course of 2011, Medline intends to add 30 to 50 sales reps to service the physician market. Already, the company has approximately 900 reps in the field. “We hope to grow this into a very large business,” says Sjoerdsma.

The Medline executives believe that their existing relationships with hospitals and hospital systems will serve them and their customers well as the company expands into the physician market. “One of the reasons [hospital executives] want to work with someone like Medline is that, in today’s world, they need a lot of coordination between their hospitals, nursing homes, surgery centers, home care and, of course, their physician base,” says Sjoerdsma. “As they buy up practices, they want somebody who can help them integrate them, and bring consistency in quality of care, as well as the product mix they’re using. The more they can find a single partner to do that and understand their objectives, the better off and more successful they will be in achieving that coordination.”
“IDNs are looking for consistent product, consistent education and consistency in processes throughout their entire system,” says Abington, summing up Medline’s perception of IDNs’ needs.

All that said, Medline intends to vigorously pursue independent physician practices, not merely those owned or affiliated with a hospital system. “Medline has built itself into a market share leader in many different marketplaces by being that manufacturer selling direct,” says Sjoerdsma. “We believe we can bring cost-savings to many customers because of our product line.”