ATC Healthcare Inc.

International Directory of Company Histories, Volume 64 (1993) by Gerald Brennan

ATC Healthcare Inc.

1983 Marcus Avenue, Suite E122 Lake Success, New York 11042 U.S.A. Telephone: (516) 750-1600 Fax: (516) 750-1750 Web site: http://www.atchealthcare.com

Public Company Incorporated: 1971 as Staff Builders Inc. Employees: 194 Sales: $148.7 million (2003) Stock Exchanges: American Ticker Symbol: AHN NAIC: 621610 Home Health Care Services; 561329 Temporary Help Services

ATC Healthcare Inc. provides temporary staff to health care facilities and private patients throughout the United States. Its 67 offices are located in 26 states and supply a wide variety of medical personnel not only to hospitals, clinics, mental health facilities, and nursing homes but also to physician practice management groups, managed health care facilities, insurance companies, schools, community health centers, and in-home patients. Among ATC's pool of health care professionals are registered nurses, licensed practical nurses, and certified nursing assistants, as well as nurses in various specialty areas such as critical care, neonatal care, and mental health care. Clients also have access to allied health professionals such as speech therapists, occupational therapists, physical therapists, and radiology technicians. ATC also provides a broad range of administrative staff such as administrative assistants, medical records clerks, collection, and personnel claims processors. ATC Travelers, the company's travel nurse program, provides long-term care givers across the nation.

A Medical Temp Service in the 1970s–80s

ATC Healthcare Inc. descended from Staff Builders, a New York City firm that specialized in providing temporary help in the medical field. Staff Builders began franchising its agencies in 1971. By the time it finally incorporated in 1978, it had 72 offices located through the United States. Staff Builders offices in New York and other large cities provided mainly in-home care for the sick and elderly. In rural areas, the company's temps were frequently used to staff hospitals, particularly where unions had not made inroads. By the mid-1980s, Staff Builders workers were also caring for growing numbers of AIDS patients.

In August 1986, it agreed to be acquired by a competitor, Tender Loving Care Health Care Services Inc. (TLC) of the New York City suburb Lake Success. The deal called for TLC to take over Staff Builders in exchange for approximately $44 million in TLC common stock.

Tender Loving Care had been founded in 1977 and went public in 1983. Staff Builders had lost $2.2 million the previous year, but its value at the time, strategically at least, was evident from the bidding war that erupted when the TLC takeover was announced. A month later, Hospital Capital Corporation, a U.K. developer of hospitals and health care facilities, made an offer estimated at $42.4 million, including over $10 million in cash. Staff Builders rejected the offer, concluding that ownership by Tender Loving Care would be better for shareholders. No sooner had the firm declined the British offer than another temporary help firm, the Norrell Corporation, attempted to purchase the company for about $33.6 million. When Staff Builders rejected the offer, Norrell launched a hostile takeover attempt, purchasing 610,000 Staff Builder shares, almost 20 percent of the company's outstanding stock. It announced that when stockholders met to vote on the TLC merger, Norrell would vote against it. Despite Norrell's opposition, however, the acquisition by Tender Loving Care was approved in January 1987.

The combined company, then known as Tender Loving Care Services, Inc., acquired another temp business, Professional Care Inc. in September 1987. The price for the 11-branch firm was approximately $3 million in cash and notes, some $9 million less than CarePlus, Inc. had been willing to spend for it—until CarePlus learned that Professional Care was under indictment for Medicare fraud in New York state. Tender Loving Care's president, Ephraim Koschitzki, was not concerned about the legal problems. His eye was on the $14 million he believed the new offices—located in Florida, New Hampshire, Texas, Michigan, Ohio, and Wisconsin—would add to TLC's annual revenues. Meanwhile, Tender Loving Care had been expanding its temp offerings into non-medical areas. To reflect the new focus, the company changed its name from Tender Loving Care Health Care Services to Staff Builders Inc. in November 1987. By that time, the company employed some 20,000 nurses in nearly 150 offices in 28 states. It had annual sales of $95 million, more than three times what it had reported in 1986.

However, rather than doubling its revenues by 1988, as the firm's leadership predicted, sales dropped nearly 20 percent. Staff Builders experienced new setbacks the following year as it attempted to expand its medical services division, an arm that accounted for less than 40 percent of the firm's annual sales. The downturn was exacerbated by the costs incurred by the closing of a number of offices and the settlement of a lawsuit with a former franchisee. In December 1989, the company reported a fourth quarter loss of $30.4 million. Until then, profits had been running on a shoestring. The year-end figures showed a total loss of $29.6 million.