As far as Gary Corless is concerned, a major obstacle to business growth is resistance to change.
“We just let things go on,” said the president and CEO of Jacksonville-based PSS World Medical Inc. at the company’s annual shareholders meeting Thursday.
PSS management realized that the medical supply distribution company had to find new ways to deal with the changing U.S. health care system, so in May it launched a major realignment of its business that it calls “Healthcare 2.0.”
“This Healthcare 2.0 is about acknowledging that change,” Corless said.
“If you’re in love with what you do, fall out of love with it,” he said.
The crowd of shareholders who gathered at a PSS office in the Enterprise Park Building in Jacksonville’s Southpoint area consisted largely of PSS employees who also own stock. Corless took advantage of the meeting to give a presentation outlining the company’s new strategy and why it took these steps.
Under the realignment, PSS reorganized into four main business lines.
One is delivering supplies and services to physician offices, which was PSS’
original business when it was founded in Jacksonville nearly three decades ago.
PSS says it has a 15 percent share of that market, which produces $7 billion to $9 billion annually in total revenue. PSS hopes to increase its market share to 25 percent in the next five years.
PSS says it has a 6 to 8 percent share of a $6 billion to $9 billion market in its second business line, supplying medical laboratories. The company wants to increase its share in the laboratory market to 15 percent.
The other two business lines are smaller, but PSS sees an opportunity for growth. One is dispensing, in which physicians fill their patients’ prescriptions at their offices. PSS says it has a 6 to 8 percent share of a $1 billion to $2 billion market, but it hopes to increase that to 20 to 25 percent.
PSS does not have plans to expand its prescription business beyond supplying physicians’ offices, Corless said.
“We’re not trying to compete with Walgreens and CVS, not even close,” he said.
The fourth business line is home care and hospice. PSS says it has a 10 percent share of a $1 billion to $5 billion market, and it wants to have a 10 to 15 percent share.
“We believe there is going to be significant growth in this area,” Corless said, helped by government support for an aging population.
“One thing we truly believe is when the government says it’s going to spend money, it does,” he said.
PSS has a target of doubling its annual revenue in five years from $1.7 billion now to $3.5 billion.
In focusing on these four areas, PSS chose business lines that are preferred by both patients and payers and have potential for higher growth and profitability, Corless said.
It also chose businesses in which PSS already has experience and has “demonstrated core competency.”
“We didn’t pick one space we’re not in,” Corless said after the meeting.
PSS didn’t want to wait for the outcome of the November elections to begin its realignment. Corless said after the meeting that whatever changes are coming from the federal government, the root issues in the health care system will remain the same.
“Health care reform is a reaction to the root,” he said.
As part of its plan to focus on four areas, PSS put its skilled nursing and specialty dental businesses up for sale. When asked by a shareholder about the progress of those divestitures, Corless said “everything is on track” and likened the process to selling a home. It takes several months from the time you decide to sell your house before you actually do sell it, he said.
Corless closed his presentation by encouraging everyone to embrace the changes that are going on.
“You can resist if you want. Good luck with that,” he said.
356-2466