Medicare contracts could further boost Reno's Alere

The Medicare bill approved by Congress this year the one that's known mostly for its prescription drug benefit contained some powerful medicine as well for Renobased Alere Medical Inc.

In a little-noticed provision of the bill, Congress told Medicare administrators to undertake 10 demonstration projects with disease- management companies such as Alere.

For the Reno company, which already ranks No.

64 on the Inc.Magazine list of America's fastest growing private companies, the possibility of Medicare contracts holds promise to further accelerate an already powerful growth rate.

The company posted revenues of $17.6 million in 2003 with a compound annual growth rate of 411 percent.Among health-care companies tracked by Inc., its growth ranked sixth.

Alere's business is straightforward: Heart patients referred to Alere most them advanced patients, most of them referred by health maintenance organizations are provided with equipment that provides daily monitoring of their condition in their home.

The information is reported to Alere centers staffed by cardiac nurses who analyze trends, keep in touch with doctors and educate patients about the steps they need to take.

"Everybody loves what we do," says Ronald Geraty, a physician who serves as Alere's chief executive officer."Patients love it because it keeps them out of the hospital.

Family members love it because they know there's a nurse in regular contact.

Doctors love it because they know the patient is seen every day.

And payers love it, too."

One academic study in 2003 found that seriously ill heart patients involved in the Alere monitoring program live longer than those who aren't signed up.

While Alere has a 25 percent to 35 percent share of the potential market of heart patients served by HMOs, the Medicare market remains unfulfilled.

And the numbers are big.

Each of the demonstration projects to be awarded by Medicare will number 20,000 participants.

By comparison,Alere today serves about 12,000 patients, a number it's reached during the last four years by what Geraty calls "steadily slogging it out." But that kind of growth would present some challenges as well.

For starters, each new patient requires about $1,000 worth of equipment in his home.

Alere pays for that equipment up front, then recoups its investment a month at a time.

A Medicare contract would require an investment of $20 million more than the company's 2003 revenues to serve 20,000 new patients.

But Geraty says the company's investors including Renobased Nevada Ventures have been willing to step up to provide more capital for growth.

A bigger issue for the company is the availability of registered nurses to staff its centers.

Alere employs about 40 nurses at its Reno diagnostic center its staff totals 120 in northern Nevada but it's tapped out the available labor supply in the region.

It opened a second center at San Antonio.

It employs about 20 cardiac nurses, but Alere executives think they're close to tapping the available labor supply in the Texas city as well.

That's sent Alere on a curious hunt for new sites.

It's looking for communities with a good pool of available registered nurses a rarity in today's nurse-short environment and it's looking for places that are easily accessible by air from Reno.

The combination is difficult to find.

Although the possibility of Medicare contracts brightens faces around Alere's South Meadows offices, the company continues to focus its sales efforts on health maintenance organizations.

It posted a big victory this summer when Humana signed on to provide Alere services to Humana Medicare Advantage members in nine markets.

Humana joined a client list that includes organizations such as PacifiCare Health Systems, the Tufts Health Plan and Blue Cross Blue Shield of Texas.

Another initiative by Alere expands its services beyond patients with advanced heart failure.

A program launched this year addresses the needs of patients who recently have been diagnosed with heart failure as well as patients who are reluctant to accept their illness.