Incorporated: 1982 as Analytical Nursing Management Corporation
Sales: $110 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: AMED
NAIC: 561310 Employment Placement Agencies; 621610 Home Health Care Services
Amedisys, Inc., with its main office in Baton Rouge, Louisiana, operates 60 home-care nursing locations in nine southern and southeastern states: Alabama, Florida, Georgia, Louisiana, North Carolina, Oklahoma, South Carolina, Tennessee, and Virginia. In addition to providing expert, regular nursing care, the company offers several specialized, home-health programs, including physical, speech, and occupational therapy as well as pain management, wound care, cardiac, infusion therapy, oncology, pediatric, and psychiatric services. When needed, Amedisys also provides medical social workers. Founder William F. Borne, who owns close to 10 percent of Amedisys, is the company’s chairman and CEO.
Founding a Network of Nursing and Home Health Care Services: 1982-92
William F. Borne was the founder of Amedisys, which he started up in Baton Rouge, Louisiana, in 1982, as Analytical Nursing Management Corporation (ANMC). A graduate of the Charity Hospital School of Nursing in New Orleans, Borne, a registered nurse, worked clinically in medical-surgical areas with supplemental staffing agencies in that city from 1979 to 1980. Between 1980 and 1983, he served as director of nursing at West St. James Hospital in Vacherie, Louisiana. At the time he started up ANMC, he was also an intensive care supervisor for Key Nursing Corporation, a position he had taken in June 1982.
Initially, the company focused on providing nurses and nursing services for both home health care and other health care facilities. The focus was reflected in the fact that some of Borne’s early associates were also trained nurses, including current board members William Hession and Lynne S. Bernard. Hession, who has served as a director of the company since 1983, holds a nursing degree from Nicholls State University in Thibodaux, Louisiana. He was president of Key Nursing Corporation at the time Borne founded ANMC. Bernard, who holds a nursing degree from Southern Arkansas University and now holds the post of president of the company’s nursing services division, joined the company in 1988 and held various posts with an ANMC subsidiary. Prior to joining the company she had served as director of home health care services for Medical Personnel Pool in Baton Rouge.
Although nurse staffing services and home health care were the central focus of ANMC during its first decade, it soon diversified its business, developing allied areas that would become the company’s primary divisions when it underwent reorganization in 1993. In December of that year, in a reverse acquisition arrangement, M & N Capital Corp., created as a blind investors’ pool registered with the Securities and Exchange Commission (SEC) as a public corporation, obtained ANMC. The upshot was that ANMC became M & N’s wholly owned subsidiary and received a capital infusion of $1.265 million. M & N, initially incorporated in New York, was reincorporated in Delaware, changed its name to ANMC, and began trading on the NASDAQ small cap market. Subsequently, ANMC changed its name to Amedisys, Inc. The company consolidated the holdings of it various subsidiaries via stock transfers so that these were then wholly owned by Amedisys.
Growth through Acquisition in the Mid-1990s
When the reorganization was completed, Amedisys’s network of subsidiaries consisted of a group of companies that evolved somewhat amorphously through mergers and acquisitions. Among these were Amedisys Staffing Services, Inc. (ASS), Amedisys Nursing Services, Inc. (ANS), Amedisys Specialized Medical Services, Inc. (ASM), Amedisys Home Health, Inc., Amedisys Home Health, Inc. of Texas, Amedisys Surgery Centers, L.C. (ACS), and Amedisys Physician Services, Inc. (APS). ASS, the staffing service, provided registered and licensed practical nurses to all kinds of health care facilities. ANS, an employee-based staffing agency, also provided nurses and aides as relief personnel in the same sort of facilities. In 1996, another staffing agency, Amerinurse, Inc., previously a separate subsidiary, was merged into ANS. Amerinurse supplied highly trained nurses to health care facilities on a contract basis.
A wide range of health care services were provided by Amedisys Specialized Medical Services, Inc., Amedisys Home Health, Inc., and Amedisys Home Health, Inc. of Texas. In addition to providing nursing care in the home, they provided other home health aid, including physical therapy, occupational therapy, speech therapy, and medical social workers.
Through its Amedisys Surgery Centers subsidiary, Amedisys operated two outpatient surgery centers in Houston, Texas, and another, which began operations in Hammond, Louisiana, in 1996, as St. Luke’s SurgiCenter, a joint venture undertaken with physicians practicing in Hammond. In addition, through Amedisys Physician Services, the company provided management for both practitioners and networks, including Independent Practice Associations, and for home health agencies. APS evolved from the Rural Health Provider Network, Inc., which had been formed in 1994 as a corporation to manage both an internal medicine clinic and rural health clinics. That corporation, jointly owned by a group of physicians and Amedisys, became Amedisys Physician Services in 1995. In 1996, Amedisys entered an agreement with the Louisiana Health Care Authority, which governs public hospitals in Louisiana, to manage physician services at a public hospital in Lake Charles. The agreement gave Amedisys the responsibility of integrating the inpatient staff’s services with those of outpatient clinics in the Lake Charles community. In addition, APS operated a laboratory, though by 1997 its chief focus was on providing management services to practitioners and networks through its physician services division.
In October 1996, Amedisys announced plans to merge with Complete Management Inc. of New York, an expansion plan that initially seemed promising but ended up falling through the following March because the two companies could not reach a final agreement on the buyout price that Complete Management would pay for absorbing Amedisys. Initially, Complete Management offered $23.3 million in stock for Amedisys, but over the next five months its stock fell in value from around $15 to $11.88 per share, souring the proposed merger. Its failure meant that Amedisys looked to alternative expansion plans, including the purchase of additional outpatient surgery centers and managing doctors’ group practices in other regions. More closely linked to its shifting business focus, the company began acquiring home-care service companies, including, in September 1997, Allgood Medical Services Inc., a Louisiana enterprise that conducted business as Care Medical and Mobility Equipment Co. Allgood provided medical equipment in home-health settings as well as HMO’s and medical facilities in both Louisiana and Mississippi.
Takeover Attempt in the Late 1990s
Major changes in Amedisys’s core business began in earnest in 1998, when it purchased 116 home heath sites from Columbia/HCA Healthcare Corp., which, at the time, was undergoing a major downsizing. The facilities were located in six states: Alabama, Georgia, Louisiana, North Carolina, Oklahoma, and Tennessee. The acquisition was the first major step in a restructuring plan that chairman and CEO William Borne had announced in August of that year. Under that plan, Amedisys was to focus on its home-health nursing and infusion therapy.
The restructuring plan was in part prompted by new government guidelines, which, in 1998, left Amedisys in financial turmoil. The company took a big bottom line hit from new payment rules for home health care afforded Medicare beneficiaries. Its revenues for the first nine months of 1998 dropped 22 percent below those of the same period in the previous year, and in November it announced a third-quarter loss of $4 million. Further, the company was forced to delist its stock with NASDAQ and trade over the electronic Bulletin Board, where its stock fell to half the $4.88 peak it had reached the previous year.
In order to refocus its energies almost exclusively on home health care, Amedisys began retrenching services in other areas. In September 1998, for an undisclosed selling price, the company sold its staffing services division to Nursefinders Inc. of Arlington, Texas. The sale included offices in Florida, Louisiana, Minnesota, Mississippi, North Carolina, Oklahoma, Tennessee, and Texas, and involved about 90 employees.
Our Purpose: To serve and care for people at home. Our Strategy: To offer low-cost, outcome driven health care at home as an alternative to facility based care. Our Mission: To become the home care agency of choice in the markets we serve.
Amedisys’s corporate make-over efforts were complicated by the fact the company was mired in legal battles with some of its former executives. The principal dispute was with James Cefaratti, whom the company had hired as president in August 1997 but then fired on the grounds that Cefaratti had misrepresented himself with regards to his prior employment accomplishments and reasons for his previous terminations. Under legal siege and financially reeling, Amedisys was very vulnerable. Its condition prompted William Smith, a New Orleans investor, to attempt a leveraged buyout of the company. Smith tendered an $23.5 million offer to buy Amedisys’s 4.7 million shares of common stock at $5 per share. It was an unsolicited and unwanted offer, and, as the Baton Rouge Advocate reported, one that William Borne described as a “less than up front way of going about getting what you want.” The company dodged the buyout bullet, however, helped by its restructuring moves and the fact that it secured a $25 million line of credit arranged with an Ohio finance company. Although Amedisys denied that the capital infusion was related to Smith’s takeover move, it did shore up the company’s sagging fortunes. It also allowed it to continue its restructuring, and, among other things, acquire a 67 percent interest in another business, the Tanglewood Surgery Center in Odessa, Texas.
At the time, Amedisys appeared committed to maintaining its surgery centers. It owned and operated three surgery centers in Houston and one in Hammond, and it was also building one in Lafayette, Louisiana, that opened in March 1999. However, it would soon divest itself of these operations as, in 1999, it continued to shift its basic focus still further away from providing alternate site provider health care services to concentrate almost strictly on home health care nursing services. That change was prompted by the company’s major investment in home health care, namely the 83 home care offices it acquired from The Healthcare Company; changes in Medicare’s home-care reimbursement allowances, which made such care profitable; and the company’s by then well established reputation for home care nursing expertise and innovation.
Returning to Financial Stability: 2000 and Beyond
As a result of the decision to shift its operational focus, Amedisys entered a new restructuring phase and began divesting its non-home health care nursing divisions. Between September 1999 and December 2000, it sold five of its six surgery centers and the three infusion centers making up its infusion division. In August 2000, the company sold its infusion pharmacy operations in Dallas and San Antonio in Texas and in St. Petersburg in Florida. These, which combined generated $6.5 million in revenues in 1999, were acquired by Park Pharmacy Corp. That company planned to make them part of its wholly owned Park Infusion Services L.P. subsidiary. Terms of the sale were not made public.
With its new strategy firmly in place, Amedisys set out to achieve market dominance in the South and Southeast through expanding its referral base, using a highly trained sales force, as well as by making additional acquisitions and offering an array of specialized services, such as wound care, for example. In July 2001, for an undisclosed sum, the company bought HealthCalls from East Cooper Regional Medical Center, a Tenet Healthcare hospital. At the time of the acquisition, HealthCalls was servicing three counties in South Carolina. Meanwhile, to tighten its focus yet further, Amedisys continued to sell off some of its other holdings. In September 2001, for about $ 1 million, Amedisys sold off its controlling interest in the Hammond Surgical Care Center to the Surgery Center of Hammond.
Amedisys still faced major problems, however. Although it had benefited from a new Medicare reimbursement system, which had sent its stock climbing in 2000, in June 2001 the company disclosed that it had overstated its revenue through a six-month period through clerical errors on its Medicare paper work. That temporarily sent its stock value plummeting, right at a time when the company was trying to get reinstated with NASDAQ. Amedisys reimbursed Medicare and was not charged with any wrongdoing, and subsequent earnings sent its stock back up. By March 2002, it had reached a sufficient level to get relisted with NASDAQ. Perhaps to buffer itself against any hint of shadiness, Amedisys fired its accounting firm, Arthur Anderson, a company that was then reeling from its role in the infamous Enron scandal.
According to a statement on its Web site, Amedisys perceived 2002 as a year that would bring new changes. The health care industry would become outcome driven, with a focus on “defining and accomplishing specific patient outcomes in the most cost efficient manner.” The company was convinced that it was positioning itself appropriately by focusing on home health nursing services, “strategically separating itself from other competitors in the industry,” most of which continued to offer services in categories that Amedisys had been jettisoning, including infusion therapy and home medical equipment provision services. The company was confident that its more narrow focus would allow it “to emerge as a leader in home health nursing.”
Amedisys Physician SVC; Amedisys Specialized Med SVC.
- Analytical Nursing Management Corporation (ANMC) is founded in Baton Rouge, Louisiana.
- ANMC is reorganized.
- M & N Capital Corp. (M & N), established as a blind pool, completes reverse acquisition of ANMC, and goes public.
- M & N changes its name to Amedisys, Inc and acquires Surgical Care Services of Texas.
- A proposed merged with Complete Management Inc. falls through.
- Amedysis divests its supplemental staffing, home care management, and primary care services; the company acquires Columbia/HCA Healthcare Corp.’s facilities in Alabama, Georgia, Louisiana, North Carolina, Oklahoma, and Tennessee.
- The company shifts its primary focus to home health care nursing.
- Amedisys completes its divestment of five ambulatory surgery centers and its infusion therapy division; the company sells it infusion pharmacy operations in Dallas and San Antonio, Texas and St. Petersburg, Florida.
- The company sells a controlling interest in Hammond Surgical Care Center.
Almost Family, Inc.; Apria Healthcare Group Inc.; Coram Healthcare Corporation; Gentiva Health Services, Inc.; Home Health Corporation of America, Inc.; National HealthCare Corporation; Option Care, Inc.
Griggs, Ted, “Amedisys Inc. Sells Division on Staffing to Nursefinders,” Advocate (Baton Rouge), September 24, 1998, p. 1D.
McClain, Randy, “Amedisys Ends Merger Plans Over Price Tag,” Advocate (Baton Rouge), March 22, 1997, p. 1C.
Ngeo, Christine, “Columbia in Four Home-Care Deals,” Modern Healthcare, June 8, 1998, p. 21.
Shinkle, Peter, “Amedisys Secures Credit Line,” Advocate (Baton Rouge), December 31, 1998, p. 1D.
Smith, William, “Investor Makes Offer for Ailing Amedisys,” Advocate (Baton Rouge), September 18, 1998, p. 8C.
—John W. Fiero