From: Crain’s Detroit Business

By Jay Greene

Wright & Filippis Inc., a Rochester Hills-based medical supply company, has signed an agreement to sell its diabetic supply subsidiary by July 1 to Doral, Fla.-based US Med for an undisclosed price.

The sale, which will result in the layoffs of about 30 employees over the next 60 days, was expected after Wright & Filippis failed to receive a contract from the Centers for Medicare and Medicaid Services under Medicare’s new competitive bidding procedure.

“Wright & Filippis was not selected as one of Medicare’s approved contract suppliers for diabetic supplies,” said A.J. Filippis, the company’s president. “Because of this change, we decided it was an appropriate time to sell our diabetic supply business to US Med.”

Medicare’s competitive bidding system for home medical equipment, designed to save the program more than $1 billion annually, could force as many as 90 percent of the 500 Michigan home health suppliers out of business, costing the state hundreds of jobs, said the Lansing-based Michigan Independent Providers Association.

Association officials predicted last year that large national companies like US Med would begin to acquire smaller companies.

Home medical equipment vendors provide supplies such as hospital beds, portable oxygen systems, diabetic products, knee braces, commodes, walkers and blood pressure monitors.

Filippis said Wright & Filippis could not sustain its business model without the Medicare contract.

“This was a necessary decision brought about by unfortunate market changes that were entirely out of our control,” said Filippis, adding that the pending sale of the diabetic supply business does not affect the company’s other products and services.

Wright & Filippis, founded in 1944, specializes in prosthetics, orthotics, respiratory care services, home medical equipment and supplies. It operates 37 offices in Michigan with 930 employees.

US Med is a national mail order provider of medical supplies and prescription medications for patients with chronic health care needs.