Business review of VNA-TIP Homecare's for-profit model

Business Review of VNA-TIP Homecare

Home healthcare and hospice providers pride themselves on their ability to provide the best quality care to the most needy patients. The mission of the Visiting Nurse Associations of America (VNAA) is "to support, promote and advance nonprofit providers of homecare, community health and hospice to ensure quality care for their communities" (2010). This mission is the goal of hundreds of home healthcare providers around the country. Hospice is a service that supplies an even greater need. This service is provided, through Medicare funding, to individuals who are terminal and have a doctor estimated less than six months to live. Both of these services are primarily the purview of non-profit groups funded by donation and government grants. There are very few such companies which operate on a for-profit basis.

One of those companies is the subject of this review. It is important to note that one of the guiding principles of the VNAA is that they "support…nonprofit providers." This seems like a good business model because nonprofit companies are seen by many as more compassionate since they do not wish to take a profit from the individuals they serve. However, as will be seen by the profit-seeking model of VNA-TIP, nonprofits are not the only organization types which can provide quality healthcare and hospice services. In actuality, the profit model may be the best possible alternative for small healthcare organizations which are seeing donations decline rapidly.

General Business

Sales

Exact sales figures for this business are not available because it is a privately held. The website did not offer any information other than that the company is in a "100% debt free position. With such unusual leverage, the company has the extraordinary capacity to acquire an eight (8) figure acquisition opportunity or pursue a sizable merger opportunity" (VNA-TIP). This means that the company is relatively secure in its position, whereas comparable companies that operate with part of their capital coming from donations or grants, may have taken a financial hit in the last few years. VNA-TIP is able to operate completely free from the influence of both outside investors and influence from charitable givers. Also, this communication tells the potential client that VNA-TIP has such a secure business model that when acquires another company (which happens quite often) it can do so as a cash-only transaction. This not only adds to the profitability of the company, but it increases the quality options that they can offer their clients.

Markets

The company began operations in southern Illinois and has since expanded to eastern Missouri. The company is a visiting nurses association which means that it is a healthcare organization that "provides care for all individuals regardless of complexity of illness or ability to pay" (VNAA). The company also provides hospice services. Both of these services will be further detailed below.

Trends

This is a company that has been growing since it entered the healthcare market in 1917. Recently it has acquired several smaller companies which have made the company the largest in eastern Missouri and southern Illinois, and these acquisitions have expanded its base of services. Acquired VNA of Illinois in 1999 and TIP healthcare of southern Illinois in 2001. In 2005 the company acquired a vaccination business that also offers phlebotomy. VNA-TIP has over 30 branches, that offer a variety of services, and they service 58 MO and IL counties.

Competition

The competition for this type of business is intense. Many small localities have similar services available and area hospitals likely have both home care nursing and hospice services. A list of these competitors in the area that VNA-TIP serves includes:

area hospitals, local visiting nurses associations (VNA of St. Louis, VNA of southeastern MO, Howard Co Home Health (MO), Trinity Visiting Nurse and Homecare, ENH Home Services, Southwestern IL VNA), and local hospice organizations (AmHeart, VITAS Innovative and BJC in MO, and Hospice of southern Illinois and Southeast Hospice in southern IL) .

Customer Attitudes

There are no complaints lodged with the BBB for the past 36 months and the company's website shows 37 positive, hand-written notes of thanks that they have received over the past three years. Since there have been no complaints to any agency during an intensive search and the company continues to receive letters of praise from clients, it seems that customers are being well-served and that they are very happy with the services offered.

Customer Communications

The company is available through its many on-call services 24/7/365. The nurses will even visit on major holidays to ensure the continued viability of their patients. The company is available through multiple telephone numbers to various departments, via the web via email, and a prospective client can also visit their corporate offices.

Problems and Opportunities

VNA-TIP has very few outwardly observable problems and a multitude of opportunities. However, there is at least on issue that could cause significant problems with clients if it is not addressed properly.

Problems Identified

A possible issue that the company may have to address is the company's rapid expansion. It is more difficult for a company to deal personally with its employees and customers if it expands too quickly. VNA-TIP has grown from a very small company to one with a sizeable income in just over ten years. They have also expanded their range. Many of the new sites are more than 200 miles from the central headquarters. With modern communications systems this may not seem like an issue, but it could become one in an industry that demands personal communication with patients. With a quickly growing list of services and business sites, it also seems like there could be logistical problems.

Sometimes customers will prefer a smaller, more intimate relationship with the people with whom they do business. Healthcare is an industry that has large, multinational providers. When a small company, such as VNA-TIP begins to grow, they may be linked with large healthcare providers who have image problems.

Obstacles to Goals

It is a business that has providers in every local, small town hospital. Many localities will also have a small hospice organization. This means that the company is always competing with a saturated field. Also, because they run based on a for profit model, they may be seen as more callous than the many non-profits that are available in the healthcare landscape.

Opportunities

This company has created a business model that is likely the envy of all other like businesses in its immediate area. VNA-TIP has been able to thrive in a business climate that has caused many such businesses to fold. It is likely that because they have adopted a for-profit stance since 1997, they have created a company which will continue the ability to grow. The opportunity for this company to not only continue its growth but to expand its service offerings is unmatched in its service area. VNA-TIP is also able to offer its employees better packages than nonprofit companies which must slight employees to offer competitive services to needy clients. Thus, the prospects of this company continue to be very promising.