Repertoire Magazine – August 2021
IMCO is 40 years old, but its ambitions are still young
Forty years have seen plenty of changes in medical distribution sales and marketing. But since its founding in 1981, IMCO’s core mission has remained the same – to help its distributor members drive their businesses into the future with relevance and profitability. “We believe the independent distributor is a vital link in the healthcare supply chain and we are committed to their success,” says Bill McLaughlin, president and CEO of the Daytona Beach, Florida-based organization.
IMCO was founded when 38 distributors formed a buying group called A&B Medical Manufacturing Company. It was purchased by McLaughlin’s father, Bill McLaughlin Sr., in 1992, and acquired by McLaughlin in 2015. Through mergers and consolidations, along with the addition of new members, IMCO today has 174 distributor members, 185 vendors, 50 business resource partners, and a combined sales volume exceeding $4.3 billion.
Staying relevant is what IMCO is all about, says McLaughlin. “We work hard every day to create robust and usable programs; find new products; and offer competitive pricing, growth incentives, powerful marketing tools, and trusted support to help independent distributors succeed. We have been very fortunate that our vendor partners understand and believe in our mission.”
Like all members of the healthcare supply chain, IMCO and its members met a formidable challenger in COVID-19, but they emerged stronger than ever. “During the absence of in-person meetings, we were committed to increasing and improving communication through multiple mediums, from Zoom-type meetings, weekly webinars and digital marketing; to ‘old-fashioned phone calls’ to ensure that opportunities were not missed by members,” he says.
“The ‘old’ way of doing business isn’t completely gone. We still stand firmly in our commitment to our members and vendors and their success, but we have learned to be more nimble, listening to what they really need and want, and quickly changing course when necessary. Independent distributors have the ability to pivot, change and move forward faster than large companies.
“The overall power of our group is that our commonalities bind us together, yet we have individual needs and strengths. IMCO is here to fill this gap by supporting and helping navigate opportunities for our member and vendor partners.”
On the occasion of IMCO’s 40th anniversary, Repertoire asked McLaughlin to talk about IMCO as it is today and will be tomorrow.
Long-term care
Repertoire: In 1996, IMCO decided to put more emphasis on the long-term-care market. How significant is that market to your members today?
McLaughlin: Under the direction of Jay Butler the long-term-care market remains a significant focus for many IMCO members, and we anticipate this will continue to be a driving force of our business. The blending of home care and long-term care has led members who had once focused solely on long-term care to branch out into the home care market. The delivery of long-term care services outside the various facilities has helped fill the gap of the census decline.
Sales for this segment have grown over the past couple of years as providers adjust and adapt to the COVID environment with additional PPE, cleaning protocols, and standards of care, all of which are contributing to the already high cost of taking care of our loved ones.
Repertoire: COVID-19 was tough on many long-term-care facilities. How has that affected IMCO members focused primarily on long-term care?
McLaughlin: The pandemic definitely impacted the extended care market. Census is down, which hurts revenue, and Medicaid continues to struggle with reimbursement. Our members are working to supply all of their customers with the best equipment and supplies they need to keep the facilities safe for residents and staff. In fact, many of our members have seen a boost in equipment/lab sales, as these are key areas where government dollars have been allocated. In turn, this helps strengthen the message to the public that these are safe places for your loved ones. We believe the market will gradually build back up, but it may take more time. Visitation has been a big part of this as well.
Throughout the pandemic, our extended-care members have worked with customers to address their need for PPE. Many gained new customers as the volume of product required by their customers far exceeded the supply available from larger national companies. IMCO helped coordinate the efforts of our vendors and our members to secure legitimate and quality PPE products from reliable sources for extended care, physician and acute-care customers. Those efforts continue today as all classes of trade see more value than before in having more than one source for products.
Home care
Repertoire: IMCO introduced IMCO Homecare in 2013 to offer independent home care providers competitive pricing, products and services. How significant is this market to IMCO members today?
McLaughlin: IMCO Homecare has operated as a sister company of IMCO for the last 10 years, and is a national GPO, servicing the home care market, including DME companies, independent pharmacies and hospice providers. Its mission is to provide buying power and profitability to members through its vendor and service partners.
IHC member product formularies are supplied by IMCO member distributors, increasing our vendor market share and driving compliance, while ultimately helping to improve patient outcomes. The current number of rostered end-users to the IHC GPO exceeds 1,100 sites.
We believe the trend of caring for our loved ones in the home will continue, but the requirements to do so will increase for caregivers and family. More products will be needed, telehealth utilization will increase, and home care providers will expand their networks and capabilities.
The physician market
Repertoire: Recent AMA statistics show that fewer than 50% of physicians are independent. How is that affecting IMCO members who primarily serve the physician market? What challenges/opportunities does IMCO offer its members who serve this market?
McLaughlin: Approximately 35% of our members focus primarily on the physician/primary care markets. Independent physicians and independent distributors are a perfect match because both value the benefits of being independent. But many IMCO physician distributors also enjoy a sizeable chunk of physician business that is owned, leased or managed by health systems. The most important consideration for a health system after they purchase a physician practice is whether the distributor can provide the same competitive pricing the health system has enjoyed based on its GPO affiliation.
IMCO has agreements with the family of Vizient GPO companies and channel partners, which include Provista, UHC, NACHC, Intalere and CHC, along with their well-known progenitors – Novation, VHA, Amerinet and MedAssets. Vizient is the largest GPO in the country with more than $106 billion in spend. This relationship, managed by Bob McCart, VP National Accounts, allows our distributors to become authorized GPO distributors under the IMCO umbrella, giving them access to the GPO membership and manufacturer contract portfolio.
IMCO’s proprietary technology compiles all applicable sales from participating members into a single compliance report. Our members gain access to specific training and GPO support services to assist in learning the GPO process. IMCO assists our members with the paperwork requirements of the GPO process, and offers education on what health systems require in terms of reporting, so the health system can feel confident that buying from an independent distributor does not negatively affect their bottom line.
Acute care
Repertoire: What is the status of IMCO and its members in the acute-care market?
McLaughlin: With the exception of a few of our larger distributors, our focus in acute care has shifted as this market has grown and moved toward the larger distributors, who can handle the $20-$30 million volume from customers that process GPO rebates on almost every product sold and for very low margins. Unless distributors have tremendous volume, this is not a sustainable distribution model. As a result, our members have adapted and concentrated their efforts on specialty areas of acute care, where they can provide complex products and tremendous service levels that customers won’t get elsewhere.
Pharmacy, lab
Repertoire: What challenges and opportunities do your members face insofar as sales of pharmaceuticals is concerned? How can IMCO help them further penetrate this market?
McLaughlin: IMCO has a long history in the Rx business, with a larger percentage of IMCO members selling Rx today. We have multiple partners to help facilitate this, including InSource, which is a great partner for pharmaceuticals as well as other products.
The last 20 years have brought regulatory changes such as pedigree controls and multistate licensing, making drug sales quite challenging. In addition, the pharmaceutical manufacturers’ tight rein on product distribution has restricted growth in this category for many independents. IMCO uses a network of members who continue to have direct pharmaceutical contracts to assist, where they are able.
Repertoire: How about lab?
McLaughlin: The lab market continues to be a focus for many of our members in the primary care and acute care markets. Our partner, Fisher Healthcare, services our members with many lab items, including Roche and other premier brands, to help members compete. We also work directly with key vendors for point-of-care testing, a market that continues to grow. During the height of COVID, we saw a huge increase in the sale of antibody and antigen COVID tests. Although sales of such tests have slowed in recent months, they will remain relevant for the foreseeable future, as COVID doesn’t appear to be going away.
Equipment selling
Repertoire: In 2006, the late Phil Childrey joined IMCO as director of equipment development. The “Focus Vendor Program” and “Sales Training for Success” program were created to increase members’ ability to sell equipment and related supplies. How would you describe the status of equipment sales among IMCO members today?
McLaughlin: Phil made an incredible impact on our Members and vendor partners and will always be missed.
We have continued to enhance our equipment focus and sales development programs for all the markets our members service. Our EPIC (Equipment Performance Incentive Contest) program allows members to partner with key equipment vendors and incentivize their sales teams to earn points for selling products along with providing engagement activities for prizes and recognition. Our goal with the program is to drive education, interaction, stronger partnerships, and sales. It has been a huge success over the last four years, with participating vendors seeing an average 10+% increase in their IMCO distributor sales volume.
IMCO’s Sales Training for Success program continues to provide professional development skills, vendor knowledge and a chance to collaborate with industry peers. Our last pre-pandemic, in-person sales training program was held in November 2019 with both member and vendor participation at max capacity.
In 2018, Angie Euston, Director of Member Relations, designed a sales-representative-focused webinar series called Pathway to Profit, with each webinar spotlighting a specific IMCO vendor, to share ways to enhance our members’ ability to serve as a resource to their customers and grow their business. This series has brought our vendors and members closer together to showcase opportunities. We have developed another virtual series called Sales Insights, which provides a deeper dive into refining all types of selling skills in different product categories. This series has been a great success and resource to members, especially during the pandemic.
Our members continue to discover opportunities to grow in the equipment space. All markets are still recovering from the pandemic, but we are seeing an upward trend of dollars being spent on updating facilities and furnishing new offices/buildings. We believe this trend will continue as more people get back out and see their physician or take loved ones back to nursing homes, schools, rehab facilities, etc.
Emerging markets
Repertoire: Can you comment on any emerging markets that spell opportunity for IMCO and its members?
McLaughlin: Home care, telemedicine, government facilities, urgent care centers, many primary care specialties and outpatient surgery centers are all areas of growth due to the shift in care settings because of the pandemic as well as shifts in reimbursement. We continue to monitor these areas and help our members target these settings with new vendor partners and services.
Private label
Repertoire: Please describe IMCO’s involvement in private-label products.
McLaughlin: IMCO Brand products continue to be a key line of high-volume, low-cost products designed to give our members a competitive advantage in the field. Exclusive to IMCO members, the portfolio of IMCO Brand products continues to grow and shift as the market dictates. It was no surprise that sales far exceeded all expectations last year on PPE, and we are still working to replenish inventory. Sales today of IMCO Brand are a small percentage of our total sales, but the value and importance of these particular product categories are significant.
What’s ahead
Repertoire: What are the greatest opportunities for IMCO and its members?
McLaughlin: Keeping our members competitive with national distributors remains our No. 1 objective. As national competitors make changes in how they service their customers, we believe independent distributors have a tremendous opportunity to solidify and gain market share. In addition to growing their top line revenue, we are also committed to providing more opportunities for our members to save on expenses through our business resource programs for insurance, shipping, credit card processing and other day-to-day operational costs.
We are working to further expand their market share through our Vital Link resources, which includes helping them develop and execute a digital marketing strategy, including e-commerce, and a complete databank for our portfolio of products.
One of the biggest benefits of IMCO is the shared experience and knowledge of our member and vendor partners. We work hard to foster relationships and build a community that will provide a strong future for all in the medical industry. IMCO is founded on the belief that the independent medical distributor is a vital link in the healthcare supply chain, and we are committed to their success.
Sidebar:
Made in Asia
For years, IMCO has provided its members a sourcing program enabling the purchase of products directly from manufacturers in Asia. IMCO distributors relied on the program during the pandemic, with some members even collaborating on container buys. But now, like all U.S.-based distributors and providers, they are questioning the wisdom of relying so heavily on foreign-made products.
“During the pandemic, member usage of this program increased,” says IMCO President and CEO Bill McLaughlin. “But backorders for gloves, masks, gowns and many other critical items were estimated to take months, which was unacceptable.
“We are finding a higher level of interest in domestic production, but price remains paramount. The industry’s move to import dominance for cost savings to improve competitive position has left us all too dependent on imported products. It will take some time for expectations to reset to allow more domestic product.”
Meanwhile, import product costs have dropped to nearly pre-pandemic levels on some items, creating new inventory issues for distributors who still hold large quantities of products purchased at much higher costs, he says. “We have been focusing efforts on helping to solve these situations.”