2016 Dynamic Dozen No. 1: Phoenix Home Care Inc.

SBJ: What has the company’s growth enabled you to do?
Phil Melugin: Back in May of 2011, we were in one office in one community. We’re now in four states with eight core operational branches and an additional seven satellite offices, which puts us in over 15 communities and much of the geography between. We are roughly providing 38,000 hours or visits on a weekly basis. It takes a lot of employees to feed that machine and care for that many people.

SBJ: What are your top issues when it comes to managing growth?
Melugin: I would say that it’s people and financial resources. You’ve got to be careful when you’re growing like that with that many people. You have a payroll that’s averaging $650,000-$700,000 a week. It takes a lot of financial resources to keep up with that. Running out of cash is something we’ve got to pay very close attention to. We can keep growing, but we can grow ourselves right out of business. What consumes a great deal of the cash but yet is critically important for growth is our people. We have to find the right people, we have to be able to train the right people, and we have to assimilate the right people into the culture of Phoenix.

SBJ: Is there such a thing as growing too fast?
Melugin: There is. Growing this fast, you can run yourself out of cash. The other thing that happens with growing this fast is you minimize the power of your brand. You grow too fast and you’re not able to achieve the outcomes that strengthen the brand. That will result in a poor reputation and undermine your ability to continue to grow.

SBJ: Where is the tipping point?
Melugin: I don’t see it probably for the next five years. The tipping point for our revenue would be if health care reform moves away the priority of cost-effective alternative care. If that happens from a public resources basis, then there could be a slowing down of our growth. If the structure within health care favors only a health system-based provider, then our growth could slow down. As long as the general structure of cost-effective care by an independent provider as it is substantially today remains, then there will be no tipping point. The need is too great.  

SBJ: Have your goals changed as business has taken off?
Melugin: I really don’t think it has. We set out to be the premiere independent provider in each of the markets that we served. The only goals that have change along the way are one market versus another market. There might have been another market that we thought we would be in next, but then an opportunity presented itself and we pivoted and went into that market.

SBJ: What is the worst business advice you’ve received?
Melugin: We’ve had a lot of advice to purchase very expensive software to serve as the foundation of our operations. That advice has been oftentimes based on the reputation of the software and who’s currently using it and kind of a “Keep up with the Joneses” type of mentality if you’re going to play in the big leagues, if you will. We’ve watched it play out, and we’ve taken a conservative approach to making our software decisions. I think we’ve made, fortunately, better decisions.