WILLMAR -- The Rice Memorial Hospital Board has approved the purchase by Rice Home Medical of the Douglas County Hospital home medical equipment business. The purchase price is $120,000.
The board approved the purchase during a telephone conference on Wednesday.
The hospital board's approval upholds the previous action of the Rice Home Medical management committee to buy the Douglas County business.
Rice Home Medical is structured as a limited liability company that's owned 99 percent by the hospital and 1 percent by the hospital foundation. Under the limited liability company agreement, any purchase of assets over $100,000 must be approved by the hospital board in addition to the management committee of Rice Home Medical, explained Lorry Massa, Rice Hospital chief executive office.
Rice Home Medical, which Rice Hospital has owned since 1988, is a nearly $6 million regional business offering rehab and other home medical products at stores in Willmar, Madison, Glenwood and Redwood Falls. The business has about 57 or 58 employees.
ADVERTISEMENT
The Douglas County Hospital home medical business is located in the hospital in Alexandria. The company sells primarily respiratory-type products and has 5 employees.
Rice board members thought the move was good and felt comfortable with the decision by the Rice Home Medical management committee, which includes three hospital board members and two community members at-large.
Rice board members asked why Douglas County wanted to sell.
Rice Home Medical was approached by Douglas County last summer about buying the Alexandria business, Massa said. He cited two reasons.
He said Douglas County had some key employees who were retiring that Douglas County was looking at replacing.
Also, many federal changes have taken place over the last decade, which have made the home medical business more difficult to be in, especially for smaller organizations, said Massa.
"There's a requirement out there, for example, that everyone must be accredited in the next couple of years,'' he said. "Most small home medical companies don't want to spend the money to do that. We've been accredited for the past six or seven years, so we're already ahead of that.''
The Douglas County home medical equipment business is a small operation and the company saw future growth as limited, Massa said.
ADVERTISEMENT
Eventually, Rice will consolidate its operations from Glenwood with the Alexandria store, said Massa. Rice Home Medical will be spending $290,000 to add inventory and will move the business out of the hospital to a separate location sometime in the near future.
"We think this gives us a better platform in that market to be in Alexandria itself,'' he said.
Carol Laumer, Rice Home Medical executive director, said in a memo to the board that Alexandria and surrounding areas are growing, as evidenced by the 14 percent census increase from 1990 to 2000 and the 7 percent increase from 2000 to 2005.
Revenue projections for three months in 2007 are around $300,000 to just over $1 million in 2008. Laumer said the sale is anticipated to close Sept. 4 and Rice will begin operation on Sept. 10.
