The proposed merger of the Care New England and Lifespan healthcare
networks could be a boon or a debacle for the Claflin Company, with the
East Providence distributor of medical supplies gaining or losing a
major customer.
“The consolidation among hospitals means bigger chunks of business move
in either direction,” said Ted Almon, Claflin’s president and chief
executive officer, reflecting on a growing trend. “If business was
liquid before, it becomes gelatinous.”
It was the melding of individual customers in Kent County Memorial and
Women & Infants hospitals that resulted in the company’s second largest
contract with Care New England, Almon said. Should the state’s two
dominant networks pass regulatory hurdles and merge, “we stand to either
gain a giant customer like Lifespan or lose a major customer like Care
New England.”
Then the plan would be to “capitalize on being the only competitor
that’s local; to pitch (to Lifespan) that we’re competitive and we’re
here,” Almon said.
In the face of so much uncertainty, the company has focused on untapped
revenue sources, Almon said. When the Rhode Island Economic Development
Corporation came knocking over two years ago, the company welcomed the
extra help with open arms.
“We had two original goals,” Almon said. “One was to find a way of
enhancing our position with customers that were local, since there’s an
advantage to everyone to work locally. The second was a sort of larger
competitiveness. Let’s look for as much help as is available to become
as cutting edge as we can.”
Claflin underwent what Almon called a “needs assessment process,” with
the quasi-public agency bringing in “people with expertise in our
business or related businesses.”
What it discovered was that “our marketing was not very effective as it
related to the government,” Almon said. The EDC introduced Claflin to
its government contract specialist. Today, the company receives daily
faxes of bids for state and federal contracts for which they might
qualify.
“Understanding all of the paperwork involved in government contracts
represents another market segment they can attack,” said Bill Ash,
RIEDC’s small business service manager.
The rest was up to Claflin.
“These guys are not going to do it for you,” Almon said. “They’ll teach
you how to fish but they won’t fish for you.”
Claflin has procured contracts with the Veterans Administration Medical
Center in Providence, the Newport Naval Hospital and others as a result,
he said.
RIEDC also helped Claflin locate space for a warehouse in one of
Warwick’s enterprise zones. The arrangement exempted the company from
inventory taxes and also allowed them to apply for investment and job
training tax credits.
The Claflin Company was founded in 1817. The Almon company – a family-
owned holding company – acquired it in 1975. Today, the company
comprises three subsidiaries: The Claflin Company is a distributor of
medical products; Claflin Equipment and Service Company is a biomedical
repair and equipment sales organization; and Claflin Continuing Care is
a home care agency.
The combined businesses are counted among the country’s top regional
independent healthcare distributors. One reason is the hospital
division’s pioneering efforts in “stockless materials management” or
“just-in-time” technology, according to Almon.
The system, in which a distributor takes orders directly from the
medical supply user, eliminates the middleman: a hospital warehouse
chock full of inventory. The company’s programs were included in a 1990
study by Arthur Anderson consulting, “Stockless Materials Management.
How it Fits into the Healthcare Cost Puzzle.”
Today, stockless customers constitute nearly half of the company’s
volume, with the program serving as the cornerstone of its strategic
plan, Almon said. In that respect, managed care which seeks to save
money through improved efficiency “probably has had a favorable impact
on our business because it’s brought awareness of cost consciousness,”
he said.
“We enhance efficiency but there has to be some incentive to want
efficiency.”
As for the other effects of managed care on his business, Almon said he
can only wait and see.
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