CompHealth Inc. History

Address:

4021 South 700 East, Suite 300
Salt Lake City, Utah 84107-2184
U.S.A.

Telephone: (801) 264-6400
Fax: (801) 264-6464

Website: www.comphealth.com

Wholly Owned Subsidiary of HealthSouth Corporation
Incorporated: 1979
Employees: 350+
SICs: 7361 Employment Agencies; 7363 Medical Help Service

Company History:

CompHealth was the nation's first and is the nation's largest firm providing temporary staffing of medical doctors and other health care professionals. Although conceived to serve rural areas of the Intermountain West, CompHealth now serves a wide variety of clients in both rural and urban areas, ranging from large metropolitan medical centers to small clinics and individual practices. Its clients are found in all 50 states. Although such firms as Kelly Services, Inc. and Manpower, Inc. had pioneered the temporary staffing concept, CompHealth was the first to apply that concept in the medical staffing industry. Given the tremendous growth in America's health care field, CompHealth and its numerous competitors play an important role in keeping the nation healthy.

1970s Origins

Although the United States leads the world in many areas of modern medicine, it has struggled with an overconcentration of physicians in cities and not enough working in rural areas. To help remedy this persistent problem, in the early 1970s the University of Utah College of Medicine started new programs to help rural areas gain the services of medical doctors. With the help of a federal grant, the medical school's Department of Family and Community Medicine attempted to recruit and train doctors through its Rural Outreach Physician Education (ROPE) program. Rural doctors considering leaving their practices were brought to the university for specially designed continuing education courses lasting from three weeks to three months. At the same time, the medical school provided temporary physicians to cover those rural practices left vacant.

A network resulted of doctors willing to relocate temporarily while physicians took time to upgrade their knowledge and training or simply take a vacation from the heavy burdens of often single-handedly serving small towns and rural clinics. The University of Utah's pilot program worked so well that hospital administrators around the nation started asking for help.

The key person in these developments was Dr. Therus C. Kolff, who was born in Holland in 1949. In 1950 his father Dr. Willem J. Kolff moved with his family to work at the Cleveland Clinic. Then in 1967 the Kolff family moved to Salt Lake City, where Willem Kolff became famous for his work on artificial organs. Not only Therus Kolff's father, but also his grandfather, an uncle, and two brothers became doctors. While still a medical student at the University of Utah, Therus participated in the federally funded temporary staffing grant. In 1974 he received his degree and then worked for Intermountain Health Care (IHC) as part of the Health System Research Institute, which was developing programs to improve rural health care. Kolff in 1977 first personally covered for another doctor in locum tenens, or temporary physician staffing. After leaving IHC, he went to Boston for his masters in public health, a joint program between the Harvard Business School and Harvard's School of Public Health. After graduating in June 1979 with his MPH degree, Kolff returned to Utah and later in the year started his new firm called CompHealth.

Temporary work offered by CompHealth proved attractive to physicians for several reasons. Some doctors liked to work in different geographical areas before deciding on a permanent place to practice. Others liked to sample hospitals, HMOs, or other types of medical practices before making a long-term commitment. Physicians just out of residency programs were attracted to locum tenens before settling down. Military doctors moving into civilian life appreciated the opportunity to try different options. Older MDs who wanted to combine both travel and part-time work found CompHealth's programs beneficial. Of course, the travel advantages appealed to many doctors of any age. The bottom line was that many doctors liked the freedom to choose where, when, and how much they would work, a flexibility which gave them time to balance work with family responsibilities, hobbies, and civic activities.

Kolff originally knew most if not all his employees, clients, and temporary doctors. At first, CompHealth provided temps for general or family practitioners, but soon the company was working for numerous specialists. In any case, CompHealth screened its doctors carefully so that its clients felt comfortable accepting them.

Expansion in the 1980s

Initially CompHealth provided temporary coverage for just a short period of time, an average of two weeks, and it supplied physicians in Utah, Wyoming, Nevada, Montana, and Colorado. However, by the mid-1980s the firm had taken responsibility for providing different medical specialists in much longer assignments in other parts of the nation. For example, in 1985 CompHealth took over staffing for Duke University's Radiation Oncology Department, a 36-month contract.

Around 1982 CompHealth started its first branch office in Atlanta, Georgia. There, the company had become involved with Health Corp., which was developing freestanding cancer centers. Health Corp. had additional space available, so CompHealth took this opportunity to start an office in the Southeast.

Since its temporaries depended on CompHealth's medical malpractice insurance, the company became quite concerned in 1983 when its carrier, a Montana firm called Glacier, went broke. Kolff later remarked that it was very difficult to get such insurance in the early 1980s since few carriers were in business. His company replaced its Glacier coverage with a two-year policy from St. Paul Insurance, one of the few large medical malpractice firms, but eventually CompHealth ended up with Chicago's MMI as its insurance carrier.

One of the company's vice-presidents created CompHealth's first subsidiary called Group One Anesthesia and started a branch office in Grand Rapids, Michigan, where he had grown up. Group One provided certified registered nurse anesthetists (CRNAs) to hospitals and clinics.

In 1985, CompHealth's employees purchased the company. In the process, however, they were inheriting a debt of $800,000. To improve the firm's finances, the new owners acquired a new computer database system, expected to improve operating efficiencies. These changes fueled CompHealth's expansion in the late 1980s. Revenues increased 350 percent from about $10 million in 1985 to $45 million in 1989. In 1989 the firm provided over 57,000 days of temporary doctor staffing for clients in every state. In the late 1980s CompHealth added physical therapists, registered nurses, and certified nurse anesthetists to its list of temporaries.

Growth in the 1990s

CompHealth started the 1990s by moving its Salt Lake City headquarters from 155 South 300 West to the new Woodlands Tower II building located at 700 East 4021 South. The company leased 28,000 square feet for its 100 employees who worked to place approximately 1,200 doctors and other healers in temporary positions around the nation. Those physicians represented 14 medical specialties.

One of CompHealth's orthopedic physicians made media headlines in February 1990 after he helped save the life of a Utah man named Randy Lewis. While fishing near Ketchikan, Alaska, Lewis seriously injured his leg and then fell into the cold water. At the same time, Dr. Ben Gilson, a substitute for the only practicing orthopedic physician between Seattle and Juneau, Alaska, flew overhead in his float plane. Gilson flew Lewis to the Ketchikan hospital, where he worked on the leg wound and prepared Lewis to transfer to a Salt Lake City hospital. After returning to work, Lewis praised CompHealth's ability to make sure its temporaries like Gilson were qualified to handle such emergencies.

By 1990 CompHealth had spent about $220,000 per month on malpractice insurance, which relieved its physicians of this growing burden. The firm's monthly expenses also included $50,000 for licensing physicians in new states, $120,000 for air travel, and $48,000 for rental cars.

In the early 1990s the nation prepared to enter the Gulf War, and many U.S. doctors and nurses were called on to leave their regular jobs as their reserve units were mobilized. Meanwhile, hospitals juggled schedules of their remaining staff and cut back on elective surgery and other routine procedures. During this time, CompHealth helped by providing at least 100 physicians to the hospitals by December 1990.

Although CompHealth started the temporary physician staffing industry, other firms entered the fray, including one that was started by former employees. In March 1990 three CompHealth middle managers, Mark Brouse, Kathryn Hoffman Abby, and Clark Shaw, left CompHealth to found Vista Staffing Solutions in Salt Lake City. In a telephone interview, Vista's president and CEO Mark Brouse said leaving CompHealth was a difficult decision. "CompHealth was a good place to work," he remarked, adding "we owed a lot to Dr. Therus Kolff for starting this industry." Brouse believed that the fact that only one firm had spun off from CompHealth bespoke the generally good relations CompHealth maintained with its work force. While Vista Staffing continued to focus on locum tenens for physicians, CompHealth diversified into staffing other health care professions.

In 1991 CompHealth was the Utah winner in the Blue Chip Enterprise Initiative Competition, an effort sponsored by the U.S. Chamber of Commerce, the Connecticut Mutual Insurance Company, and Nation's Business magazine to recognize the nation's best small businesses.

That year CompHealth management worked with Alex Brown, a Baltimore investment banking group, to find a purchaser. Working with his attorney, Daniel Littlefield of Salt Lake City, Kolff met with the first company on the Alex Brown list, Continental Medical Systems (CMS). Based in Pennsylvania, CMS was one of the nation's two largest providers of rehabilitation services, a rapidly growing field due to the increasing number of senior citizens. In November 1991 CMS acquired CompHealth, which continued to operate independently under Kolff, its chief executive officer.

Continental Medical Systems in February 1993 acquired Kron Medical Corporation, a North Carolina-based rival of CompHealth, and merged the two temporary medical staffing firms to meet the growing demands for such services. Kolff reported that CompHealth/Kron in its first year together brought in about $100 million in annual revenues.

Dr. Kolff left the company in January 1994, going on to start another firm called Cancer Carve Out, a disease management company, which he later sold to Value Health. In May 1994 Jeffrey F. Poore, DDS, became CompHealth's new president and chief operating officer. Poore previously had worked on mergers and development as FHP International's CEO. Poore's stay at CompHealth, however, lasted just one year. In 1995 Christopher Slayter became CompHealth's interim president, until he was chosen as the firm's president in June 1997.

In Kolff's last months at CompHealth, the firm began looking at a general credentialing service for other organizations. CompHealth had to verify the credentials of its own personnel, so Kolff reasoned that this service could be expanded as a way to save others the bother. Eventually credentialing expanded to become a complete CompHealth division.

In 1996 CompHealth's credentialing service was certified by the National Committee for Quality Assurance (NCQA), an independent nonprofit organization. Renewed in 1997 for three more years, CompHealth's certified credentialing included verification of medical school graduation, license to practice, hospital privileges, Drug Enforcement Agency certification, residency completion, specialty board certification, malpractice claims history, National Practitioner Data Bank, state licensing sanctions, and Medicare/Medicaid sanctions.

The importance of this detailed process of background checking was emphasized when The Wall Street Journal on June 2, 1994 reported that half of all large United States employers refused to sign HMO (health maintenance organization) contracts unless the HMO had verified its providers credentials according to NCQA or JCAHO (Joint Commission on the Accreditation of Healthcare Organizations) standards.

In November 1997 HealthSouth Corporation acquired CompHealth from Horizon/CMS Healthcare Corporation, the parent of Continental Medical Systems. Based in Birmingham, Alabama, HealthSouth was Continental's main competitor in the 1990s. HealthSouth had acquired several other firms, such as National Medical Enterprises in 1993 and ReLife in 1994. After purchasing Caremark International's rehabilitation services in 1995, HealthSouth had about 440 outpatient facilities and 40 percent of the rapidly growing rehabilitation market. Under the leadership of HealthSouth's CEO and chairperson Richard M. Scrushy, the firm provided not only outpatient and inpatient rehabilitation, but also home health care and outpatient surgery. Since CompHealth provided temporary physical and occupational therapists, it was a logical target for HealthSouth, a rapidly growing public corporation with $3 billion in annual revenues in 1997.

By late 1997 CompHealth was staffing some 5,000 physicians, therapists, and other health care providers for temporary assignments with its 1,700 clients in all 50 states. CompHealth had exclusive contracts to provide temporary physician staffing for Walter Reed Hospital in Washington, D.C.; Kaiser Permanente in California; and Las Vegas' Veterans Administration Hospital.

To promote its services, CompHealth sent representatives to national conferences in every major medical specialty and included notices of its services in over 100 medical journals. The company annually made educational/recruiting presentations at over 200 residency programs around the nation. It contacted 500,000 doctors and other health care professionals by direct mail and maintained a database with information on about 140,000 physicians and other healers.

In 1997 and 1998 CompHealth consolidated some of its operations, closing small offices in Dallas and Phoenix in March 1998 and in June shuttering its Atlanta office. Offices in Seattle and Denver had been closed earlier. CompHealth decided the Salt Lake City office could more effectively handle needs of those various areas.

CompHealth also consolidated its therapy staffing operations. In October 1997 it closed its Pro Therapy office in Detroit, moving it to Grand Rapids, Michigan, where Group One was based. Group One provided physical and occupational therapists and assistants, as well as speech and language pathologists, for traveling positions around the country. It also supplied some therapists who preferred to work temporary assignments in their local areas. Pro Therapy also provided the services of physical and occupational therapists. However, Pro Therapy accepted therapists with or without experience who had been trained in other countries. Those therapists were willing to take just about any assignment to gain experience, while Group One therapists, who had at least two years experience, usually expected better positions. CompHealth in 1998 was also working to integrate the services of Health Providers Inc., another therapy provider, already under the parentage of HealthSouth before it acquired CompHealth in late 1997.

Although the largest firm in its industry, CompHealth faced plenty of competitors in an unconsolidated new field. A consulting study by Bernstein-Rein, CompHealth's advertising agency, found 108 other companies doing similar temporary medical staffing. CompHealth accounted for approximately 22 percent of that market, while the next top ten firms provided 49 percent and other firms handled the remaining 29 percent.

CompHealth's major competitors in the late 1980s included Atlanta's Medical Doctor Associates; Jackson & Coker, also of Atlanta; Daniel & Yeager; Cross Country Staffing; Therapists Unlimited, a division of CareerStaff Unlimited; TravCorps-Clinical Staffing Solutions; ATC Healthcare Services, a division of Staff Builders; Olsten Health Services, part of Olsten Corporation; and Interim HealthCare. Although temporary medical staffing accounted for less than ten percent of the total staffing industry revenues in 1998, that figure was growing rapidly. The locum tenens industry was estimated at about $1 billion annually.

CompHealth's leadership in the health care temporaries industry allowed it to do some things its smaller competitors could not. For example, in March 1998 CompHealth announced it had hired Christopherson Business Travel to establish an on-site office at its Salt Lake City headquarters. CompHealth typically provided travel tickets to and from a temporary assignment and also paid for a rental car and housing.

In April 1998 CompHealth gained the leadership of Michael R. Weinholtz, who had worked 13 years in the temporary medical staffing industry. He left his position as president and CEO of CareerStaff Unlimited, a CompHealth competitor in Houston, Texas, to become the president of CompHealth's Locum Tenens Division, and in June 1998 he was promoted to become the president of the entire firm.

Weinholtz's firm enjoyed continual growth as the new millennium approached, partly because of its own abilities and track record, but also due to overall trends in the American economy. A Bureau of Labor Statistics study released in 1998 found that Americans in their 30s had held an average of nearly nine jobs between the ages of 18 and 32. Moreover, some experts have suggested that the concept of lifetime career placement is obsolete, part of an industrial revolution now superseded in America by the post-industrial era or Information Age. According to a 1996 article in The Futurist, "about 20% of all professionals now work as temps, including lawyers, doctors, and even executives." With that trend expected to continue, CompHealth's future indeed looked promising as a new century approached.

CompHealth Inc. History

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