Vancouver’s RS Medical braces for layoffs

Unknown number of billing positions will be outsourced

By Gordon Oliver, Columbian business editor

Published:

Updated: February 24, 2012, 1:56 PM

 

RS Medical has spent two years building a platform for growth in an increasingly challenging medical equipment industry. But to get there, the chief executive of the Vancouver-based, 400-employee company says it must go through a difficult “transformational change” that includes outsourcing of potentially dozens of local billing jobs.

John Konsin, company president and chief executive officer, says he doesn’t yet know how many jobs will be eliminated, but some billing department employees are learning this week that their jobs could be cut as early as April. The company is in late stages of contract discussions with Genpact, a major provider of outsourced business and technology management services worldwide, and Genpact employees this week are meeting with RS Medical workers at the company’s east Vancouver campus to learn about their jobs.

The Columbia River Economic Development Council, working with RS Medical to help workers who will lose their jobs, is preparing for a possible 10 to 15 percent cut in the company’s local 200-person workforce, said Bonnie Moore, the organization’s director of business services. A rampant rumor mill among employees indicates that many workers fear much deeper cuts.

While most of the visiting Genpact employees are from India, Konsin said Genpact does maintain some operations in the United States.

“We don’t know where the jobs will go,” he said.

Konsin said he’s awaiting Genpact’s analysis and recommendations before making a final decision on job cuts. RS Medical needs to lower its billing costs for government-reimbursed medical equipment, he said, and outsourcing avoids the cost of buying a new computer system that will be needed to meet upcoming government record-keeping mandates.

More broadly, he said he’s leading the company in a new direction, with a sharper focus on the sub-specialty of pain management that he believes will take off in the same way that sports medicine has blossomed as its own specialty.

“There is no rougher road ahead than transformational change,” said Konsin, who has forged a new path for the company since replacing co-founder Rick Terrell in 2010 as chief executive. “Things are not crystal clear to everyone involved.”

That change comes as the 22-year-old company expands beyond its base products of electrotherapy devices and eyes pain management as an area to build a niche for a wider array of products of its own or in collaboration with other companies. Even as his company eliminates jobs to cut its administrative costs, Konsin envisions RS Medical producing high-wage, high-skilled jobs creating products. Those positions would be less likely to become victims of cuts in government reimbursements.

A Feb. 16 memo to billing department employees from department head Gay Ann Henderson, obtained by The Columbian, says supervisors will meet with department employees over the next several weeks to discuss their futures with the company. RS Medical is offering “Severance and ‘Stay and Perform bonuses to encourage individuals to stay on and continue to work hard through their transition date,” Henderson wrote.

Konsin, a veteran medical equipment executive, had predicted in an October 2010 article in The Columbian that the company would double its workforce in two to three years, including adding 200 employees at its Vancouver site. He remains more bullish than ever as his company narrows its focus to the expanding field of pain management and admits impatience with those he sees as unwilling to embrace change.

“I personally struggle with people who take a difficult situation and make it more difficult,” Konsin said in a two-hour interview with The Columbian. “We have a very exciting future … We have an opportunity to be really special here.”

“This is about moving fast and being positive in spite of difficult change,” he said.

Terrell, now board chairman with 73 percent ownership in RS Medical, said the company has been hit in recent years by increasingly restrictive government reimbursements for its bread-and-butter pain products. The board has embraced Konsin’s strategy of expanding products and building collaborative sales relationships with other companies,

Terrell says Konsin’s aim is in three years to return RS Medical to its peak sales year of 2008. The company does not disclose earnings, but Konsin said revenues are less than $100 million annually.

“You reduce costs or you go out of business,” Terrell said. “It’s still a viable company and we think John has a good strategy.”

Editor's note: An earlier version of this story included an incorrect company name for Genpact. The story has been corrected.