A medical supply company that had touted its growth potential

because of rising wave of Americans diagnosed with diabetes

  has instead cut its work force here.

AmMed Direct, a Nashville-based mail-order company with $150 million a year in sales of drugs and medical equipment for diabetes patients, has cut staff by 17 percent, a move officials said reflects uncertainty about the industry and the national economy.

The layoffs follow the departure of Tom Milam, AmMed’s chief operating officer, under whose watch annual sales of insulin, diabetes kits and other medical necessities had grown.

“The board decided they want the company to go in a different direction,” said Milam, whom AmMed said left to “pursue other interests.” The plan now is for slower growth in customers while executives wait on a resolution of reimbursement levels in the federal Medicare program and a move toward competitive bidding by vendors.

Layoffs affected about 80 people, leaving AmMed with 385 employees, said Richard Knight, its chief administrative officer. Jim Smith, chief executive of AmMed parent Tennessee Health Management Inc., has assumed Milam’s duties.

At one point last year, Milam had projected AmMed would expand to 600 employees here.

Knight said the recent changes had nothing to do with an internal audit of AmMed’s billing processes that found certain refunds weren’t distributed in a timely manner to Medicare and insurance payers.

“We’re not under investigation by Medicare or any other agency right now,” Knight said. “We assure everybody that the company is working diligently to review and to pay any appropriate amounts due as quickly as possible.”

Last year, the industry took a 9.5 percent cut in reimbursements. And Medicare’s competitive bidding program should reach 100 more cities, including Nashville, next year. That represents a movement under which the government hopes to streamline the number of vendors that it deals with for supplies from wheelchairs to diabetes supplies.

Milam joined AmMed’s predecessor as an adviser in 2001, helped get the privately held company in order at the time, and later took over as a top executive. He’s still a member of a committee that’s advising Medicare’s overseer on competitive bidding issues.

“I hope my work with the committee will help CMS (Centers for Medicare and Medicaid Services) to have a sound and rational process,” Milam said.

Simplex Healthcare Inc., a Franklin-based diabetic supply company, still plans to double its work force from 300 over the next two years, said Chief Executive Doug Hudson.

By Getahn Ward • THE TENNESSEAN • February 13, 2010

Getahn Ward covers the business of health care. He can be reached at 615-726-5968 or gward@tennessean.com.