Company: VGM Group
Year Founded: 1986
Headquarters: Waterloo, Iowa
Category: Professional and Financial Services
What It Does: National buying group for independent home medical equipment providers, high-tech rehab and respiratory providers, orthotic and prosthetic practitioners, and restaurant chains.
Van Miller was fired in 1986 from Miller Medical Service, a company he founded. But though it came at a challenging time—his wife was pregnant with the couple’s first child—he didn’t let it get him down. Instead, he started another business, which he called the VGM Group, and made it bigger than the first one.
“I had exactly $10,000,” Miller recalls. “Two friends lent me the money to start the VGM Group. One lent me $50,000 and the other $25,000.” A few years later, he parlayed what he calls a low-ball buyout price of $550,000 for his stock in Miller Medical Service to expand. “Three years after I started the company, I was finally able to pay myself a salary,” Miller says.
The VGM Group is modeled after the franchise business that Miller built between 1978 and 1986 for the home medical services sector. “The industry was growing at such a rapid pace,” he says. “I started a franchise program and offered group buying under a membership program.” In 1986, when Miller left the firm, the 16 franchisees that Miller Medical Service worked with bought out of their contracts; 15 became the first members of the VGM Group. VGM members pay monthly and aren’t locked into long-term membership contracts.
At the time of the company’s launch, no other firm offered the breadth of buying opportunities or services to the health care industry that VGM did. And according to Miller, no other company offers such a wide range of services to as many industries, which now include restaurants, golf courses and specialties aligned with health care. VGM added insurance products through its own insurance company and online continuing education courses for health care professionals. Besides contract negotiation and member prices on equipment, the VGM Group offers members advice on insurance, computer software, Medicare audit, and dealing with the changes brought about by the Affordable Care Act.
John Deery Jr., owner of John Deery Motors, a car dealership with several locations in Iowa, was one of VGM Group’s original investors. “I knew he was good for it,” Deery says. “And he knew what he was doing in that field.”
In return for the loan, Miller gave Deery and Jim Walsh, the other original investor and now VGM’s corporate attorney, part ownership in the company. “I told Van that he didn’t need to take me along, and that if he ever wanted to take me out, he could,” Deery says. “He said, ‘No, you are along for the ride.’ And I’ve had a big payout ever since.” The VGM Group has logged 15 to 20 percent annual revenue growth in recent years.
One of Miller’s biggest challenges has been attracting both top-quality help and the right people to fill positions. “It’s an ongoing challenge when you are growing like we are,” he says. “It can be a challenge to get people to move to Waterloo, Iowa, from Texas, Arizona, New York, or the east coast of Florida. We don’t buy people; we get people because they have worked with us or through our customers. They know our culture and see how the company is growing.”