Futureproof: Healthcare 21, on expanding into decontamination and recycling

Late last year Cork-based medical equipment distributor, Healthcare 21, spent €1.2 million on a new decontamination and recycling facility in Annacotty, Co Limerick. This was a major investment in diversification by the company established in 2003 by Owen Curtin to supply medical and surgical consumables to the acute care sector.

Healthcare 21 is now run by managing director Tara Kearney and is going through a period of unprecedented growth. It recently entered the German and Austrian markets. Its business in the UK is thriving and its expansion into medical equipment decontamination has seen employment in Ireland rise to 170 people.

Overall the group now employs 208 staff and will have a turnover of around €70 million this year.

Healthcare 21 may be on a roll, but it has not all been plain sailing. Like many others, the company went through challenging times during the recession and was forced to shed jobs and rationalise its operations.

“Healthcare 21 was originally set up to support the Irish distribution needs of one particular company and we doubled their business in five years while growing rapidly ourselves in the process,” Kearney says.

“As a distributor, however, you can’t rely on one supplier so we also developed our business into different market segments and with other agencies. We first moved into supplying the primary care sector in Ireland and, in 2004, we set up 365 Healthcare in the UK to manufacture surgically-related products such as drapes and gowns.”

All appeared to be going well for the business. But, in 2009, its biggest customer changed to a direct distribution model in Ireland. This left Healthcare 21 with an infrastructure and overheads suited to an operation of twice its size.

“Our sales virtually halved and this coincided with the economic downturn and big spending cuts,” Kearney says.

“If anything we were a bit slow to react as nobody wants to make hard choices. But eventually we had to take steps to ‘right size’ and did so by centralising our logistics and warehousing in Cork, consolidating our customer service functions in Dublin and reducing the size of our operation in Northern Ireland.

“At the same time, we knew we wanted to rebuild and didn’t want to scale back too much and not be able to manage new business. It was also important to maintain our quality service to existing customers.”

One of the areas it identified with growth potential during its reboot was decontamination and recycling. It began testing the waters in 2010 and today its 45,000sq ft Annacotty facility is being used to recondition thousands of wheelchairs, beds, hoists and mattresses supplied to homes across the State by the Health Service Executive but no longer needed. Once deep cleaned, tested and repackaged, the items are made available to new clients.

“Essentially we have a contract with the HSE to provide patients with the products they need in their homes,” Kearney says. “ We set up the equipment, service it during its life and, when it’s no longer needed, we bring it back to Annacotty. Decontamination is quite a specialised process as different equipment has to be handled in different ways.”

The Annacotty facility works in conjunction with Healthcare 21’s web-based system to ensure that the thousands of pieces of HSE equipment and other medical institution-owned equipment circulating in the system are effectively monitored.

“It’s a well-resourced and sophisticated operation that addresses crucial and complex issues around care in the community and it is growing steadily,” Kearney says. “It now represents about 25 per cent of our turnover and a third of our workforce as it’s labour intensive.”

Expansion

A second area with growth potential identified was the UK market. “We saw an opportunity to mirror what we were doing in Ireland and set up there in 2012,” Kearney says. “We are growing quickly and see opportunities to develop both our portfolio and the segments we’re in. We’re not slow to invest in people if that’s what’s needed and we deliberately divisionalise our portfolios to offer expertise to our customers in fields such as surgical, respiratory and imaging, whether their spend is €500,000 or €5 million. You can’t do that if you try to be all things to all men.”

Earlier this year, the company moved into the German and Austrian markets and it now has a full-time customer service operation based in Germany.

“The opportunity was presented to us and it fitted with our strategic plan,” Kearney says. “I suppose we could have gained a foothold by acquiring an existing distributor. But that only works if the expertise stays in the business after you buy it. This way it’s our operation on our terms. We are only in one segment at the moment – theatre surgical care products – so there is a lot of room to grow. “

The company has decontamination facilities in Ireland alone at present, but it is looking at other markets. Late last year it recruited a new group business development director to spearhead its continuing drive for growth.

“We are always open to new products and new technologies and are prepared to make the necessary investment up-front to educate people in how to use them,” Kearney says. “Over the next five years we would like to become the ‘go-to’ distributor for companies wanting to launch new products across Europe.”