Management Team Key to Founder’s Success : Sherri Medina assembled managers with the right corporate stuff for her Laguna Hills rehabilitation firm, and it has paid off.

LAGUNA HILLS —  Sherri Medina, founder of South Coast Rehabilitation Services, believes that the key to successful rehabilitation generally means finding the right therapist.

And, when it comes to managing a fast-growing company, Medina, a 32-year-old speech therapist, believes the key to success is assembling the right blend of management expertise. So, when South Coast’s revenue began to skyrocket in 1988, Medina quickly brought in managers with the right corporate stuff.

Medina’s brother, Dan Larson, who formerly worked for Bristol-Myers Squibb Co., handles marketing for the young company. Roger Stollenwerk, formerly with BFM Aerospace Inc., a Santa Ana-based defense contractor, handles information systems. Jim Ashby, South Coast’s chief financial officer, previously worked as a finance vice president at a Corona-based paving company.

Growth has been fast at South Coast, which began in 1988 with four employees and $33,000 in contracts. At the end of 1992, South Coast had 130 employees and contracts that generated $3.5 million in revenue. Contracts with two major nursing home operators are expected to boost revenue this year to more than $8.5 million.

Despite that dramatic growth, privately held South Coast’s management team has focused on keeping the company profitable on a quarter-to-quarter basis.

Medina credits her management team--and a $1.2-million line of credit extended by the San Diego County office of the Bank of California--for such success.

Medina’s strategy has remained relatively simple: “What I wanted to do was have a management team that could develop the company and manage its operations. That would free (employees) to do what they want to do, which is be good therapists.”

South Coast hires occupational, physical and speech therapists who help rehabilitate patients at third-party acute and skilled nursing homes.

Demand for therapists is strong, in large part because changes in federal health care reimbursement rules mandate the use of therapy to improve the quality of life of stroke victims and other nursing home patients.

But South Coast remains a small company in a field dominated by a pair of giants.

The two major industry players are Continental Medical Systems in Mechanicsburg, Pa., with $658 million in annual revenue and Valley Forge, Pa.-based NovaCare Inc., with $385.1 million in revenue.

NovaCare and Continental Medical provide therapists to nursing homes and acute hospitals on a contract basis, but they also own and operate their own hospitals and outpatient care centers.

South Coast is grabbing market share from these much larger competitors by providing top-quality therapists, said Kelly Gill, a vice president with Beverly Enterprises, a Fort Smith, Ark.-based nursing home operator. Beverly operates 847 nursing homes nationwide and 82 in California.

But South Coast also is “uniquely positioned because of its support systems,” Gill said.

South Coast has developed a proprietary computer program that allows its therapists to monitor patient progress immediately. The health care industry is clamoring for that kind of cost-benefit data, but, surprisingly, “no other provider has this capability,” Gill said.

“I’ve been replacing the NovaCares of the world with South Coast,” Gill said. “They’re a small company, true, but they’re incredibly sophisticated.”

Unlike many competitors, South Coast also plays an active role in finding patients for nursing homes, said Laura T. Kislowski, marketing vice president for Care Enterprises in Tustin, which operates 50 nursing homes in California and three other states.

Most therapy companies are content to simply provide therapy for patients in nursing homes. But South Coast’s marketing staff solicits business from doctors, health maintenance organizations and acute-care facilities.

South Coast’s proprietary software program that tracks patient progress has proven to be a highly effective marketing tool, Kislowski said.

South Coast also guarantees exclusivity to nursing homes that use its therapists. That’s unusual in an industry where therapists typically sign up with as many nursing homes in an area as possible, Gill said.

Medina is forging stronger partnerships with customers such as Care Enterprises and Beverly because “it benefits both of us if the customer is strong.” Medina holds graduate and undergraduate degrees in communicative disorders from the University of Redlands. All but a handful of South Coast’s employees are therapists with graduate or undergraduate degrees dealing with speech, physical or occupational therapy.