From the April 2000 issue of Entrepreneur

It was early 1996, just months after he and his wife, Jacquelyn, founded their contract rehabilitation company, Achievement Therapy Professionals (ATP) Inc., when Ted Langdon first heard rumblings that times, they were a changin' (in the health-care industry, that is). Hearsay trickling down the grapevine of home-health and rehabilitation providers pointed to the inevitable: President Clinton's Balanced Budget Act of 1997 would cut back on Medicare, not only bringing about a cap on outpatient rehabilitation services, but also lowering per-visit costs to Medicare-based home-health agencies, hospitals and skilled nursing facilities.

Sadly, looming business woes were the least of the Langdons' worries that year. In the summer of 1996, at age three, their son Spencer-twin brother of Tyler-was diagnosed with leukemia, warranting three years of chemotherapy and approximately $1,000 worth of medication each month. Faced with circumstances that would obliterate the future goals of most, the Langdons didn't fold, but instead expanded ATP's services to override the Medicare massacre.

Making ATP a "one-stop shop" by adding outpatient rehab to its services was the ultimate goal, but first the Langdons had to move the company out of their Carrboro, North Carolina, home (situated in a bedroom, no less) and into a Hillsborough, North Carolina, office complex. To Ted, outpatient was ATP's salvation. "I really started seeing the effects [of the Balanced Budget Act] in 1997," says Ted, 33. "Medicare-based agencies were laying off staff, and the first people to go were with contract companies." If they didn't go out of business or merge with other corporations, agencies drastically reduced their pay rates to contract companies, lowering the therapists' wages. Some just didn't pay at all-like House Calls, a statewide home-health agency in North Carolina whose owner was nabbed for allegedly double-billing his way to Medicare/Medicaid fraud in 1997. "I tried everything I could to retrieve [the $14,000 House Calls owed], but they were sued by everyone," says Ted. "They had everything frozen, and I was so far down on the lawsuit list that, basically, I never got paid."

Now when you're a national chain of rehab clinics, a less-than-$10,000 loss might cause a dent in operations. But when the two-year-old business you bootstrapped using savings, a couple credit cards and retirement money is hit with that kind of blow-and you're paying for your son's chemotherapy treatments-believe Ted Langdon, it hurts. "The banks sure wouldn't loan us any money," he remembers. "It's a service company, and the profit margins are too narrow." And don't forget the risk factor amid all the health-care reforms. It may have taken a year to fully recover, but by injecting his own capital-earnings he'd saved from the six-figure salary he made working, sometimes seven days a week, as a licensed physical therapist assistant prior to starting ATP-he dug himself out of the hole.

Gearing Up

By July of 1998, ATP was reaping the fruits of its new home, conveniently located in front of a large sporting facility with an ice rink, swimming pools, spring training equipment and a seminar room. The company had also started providing outpatient rehab and education, as well as consulting services in addition to the professional rehabilitation staffing and management services it already provided for central North Carolina health-care organizations. "That's really what saved us," Ted says. "And I was able to keep a lot of my [prior] contracts just because of my reputation and the people I knew. But the volume wasn't there like it was in 1995 through 1997."

Although the addition of new physical, occupational and speech therapists (paid on a per diem basis to start) helped drum up business, clients that dragged out their payments-sometimes for months-put a damper on growth. That was Ted's clue that monthly billing wasn't cutting it. He quickly switched to weekly.

Hiccups aside, ATP was poised for the expansion Ted sought. But then he and Jacquelyn, ATP's corporate secretary of administration, were dealt another blow just two years after Spencer's diagnosis: Their then-five-month-old son Jack Grier was diagnosed with osteopetrosis, a rare bone disease that, according to Ted, affects only 200 people in the world. "He ended up having to have a bone-marrow transplant, so my wife was with him in the hospital for three months," recalls Ted. "And a bone-marrow transplant's not cheap. It's about a million dollars." But because the Langdons were valued members of the community and their church, friends and strangers pulled together to raise money. They helped the family organize a bone-marrow drive through the local Red Cross, held dances, benefit auctions, barbecues, yard sales-even a lemonade stand that raised $900, courtesy of the children in the community. It only solidified the feeling that anything was possible with teamwork and support.

For The People

Perhaps it's because they selflessly gave time and money to him and his family in their time of need that Ted is so set on making rehabilitation accessible to everyone in the 12 North Carolina counties ATP serves. Not only does the company, with about 30 employees (including contract therapists), offer free therapy screening, it also provides discounts on a sliding scale to patients with no insurance or no, or limited, out-of-network benefits.

Ted admits it may not be the wisest strategy, because ATP, with sales expected to hit $750,000 this year, has yet to go big-time. "The way I look at it is, we're trying to give back to the community. And if I can at least cover my costs and make a very slight profit margin, then we'll do things like that," Ted says. "I write it off as marketing, because, hopefully, they'll refer more patients with insurance who can afford it." Keeping overhead low by having therapists in management work full time, using extra space in health clubs and schools as quasi-clinics, and making employment forms for prospective and present therapists available on ATP's Web site (http://www.atprehab.com) all help his cause.

When you don't have financial backing (at some point, he would love to secure $250,000 to $500,000 worth), the owner also has to make sacrifices. "My salary fluctuates," Ted says. "I'm always the last one to get paid. I pay all my expenses first, then I pay my therapists [therapists' wages have decreased by about 20 percent since 1997], and then I pay myself. If referrals are down, I may need to cut back when I get paid."

But you'll never see the day when ATP gives quickie service to increase profits. "We call them `shake and bake' outpatient facilities," says Ted. "They'll do anything as cheap as possible, so they can pocket the rest. ATP is not about that. We may go out of business as a result of that philosophy, but I think people will start to recognize quality care is more important."

Because the health-care industry is "such a volatile field," Ted has diversified more than his company's services-which earlier this year entered the health and wellness arena with offerings like yoga and therapeutic massage, and may also add T'ai Chi and nutrition counseling. To add another revenue stream, he founded AptBilling LLC, a medical billing practice management company, with ATP's chief financial officer, Lynda Taylor, this past November. And he's partnering with Jacquelyn, 29 (also an independent kitchen consultant with The Pampered Chef), on two new ventures: a therapy-supply e-commerce company and an assisted technology company geared toward the blind and deaf, inspired by their son Jack Grier, who is blind as a result of osteopetrosis.

Expanding statewide is this year's goal, but facilitating independence, be it for himself, his family (Spencer and Jack Grier are doing well), his patients or his therapists, has always been Ted's main goal. A family man who's "just figuring out how to be an entrepreneur in this type of setting" (and who often works 60- to 70-hour weeks to do so), he helps contracted therapists set up home offices and seek autonomy-even though they really work for him. "I try to show them they can take a bedroom or a corner, set up a computer and a fax line, and have a homebased business just like I did," he says. "I'm keeping the entrepreneurial spirit alive."

"I'll Take Those Odds."

No business is a guaranteed success. As entrepreneurs, you face not only financial peril, but also stress that would put most 9-to-5ers out of business-and not all of you make it. Of course, the greater the odds, the greater the payoff, and these are the stories of those of you who prove it.

The Matchup

The Ents: Ted Langdon was on the path to medical school to study sports medicine when someone suggested getting a physical therapist assistant license. The money was so good, he took it to the next level: his own business. But his timing couldn't have been worse.

vs. The Odds: Medicare cuts resulting from the Balanced Budget Act of 1997 not only damaged Ted's contract-rehabilitation business early on-it landed the company in subpoena-land, where it had to try to squeeze payment from near-extinct businesses.

"I'm just trying to ride the wave before we have a wipeout." Ted Langdon

The Outcome

By diversifying his company's services and spreading out to supplementary businesses, Langdon conquered the fate of the fallen health-care agencies around him and will have $750,000 in sales this year to show for it.