THE PAST TWO years have not been easy for Graham-Field Health Products - but things appear to be looking up, according to president and chief executive officer David Hilton. After filing for Chapter 11 bankruptcy protection in December 1999, the Bay Shore, N.Y.-based company made Hilton its fifth CEO and president since August 1998. In an interview, Hilton shared his thoughts about the HME industry and gave an update about what is happening at Graham-Field.

What is the current status at Graham-Field?

Graham-Field filed for Chapter 11 on Dec. 27, 1999. It was never the intention to go out of business. The intention was to reorganize the company under the protection of the bankruptcy law. We've been working very diligently for the last eight months to do that, and we think we have a very positive story to tell about the company. We are extremely gratified by the wide range of support we've received from customers and distributors, and we feel very positive that the changes that we've made to bring Graham-Field back into line as a healthier company are moving at the right pace.

What has to continue to happen at Graham-Field for it to get back on its feet?

Graham-Field has been, on a department-by-department, division-by-division basis, examining all of its business practices in order to start to provide the service levels [that] customers require.

One of the key obstacles to the success of Graham-Field had been historically the lack of integration between the various operating areas. Graham-Field has spent a great deal of time over the last eight months unifying the company into a single entity so that each of the manufacturing facilities and the distribution organization operated as a team rather than individual aspects of a large company.

It's quite important for customers and obviously very important for the company, not only to create efficiencies but also to create a positive customer service experience. We hope over the next month that the fruits of those labors begin to become apparent to the people that are long-term clients of ours. We think that the emergence of Graham-Field as a single entity, as a distributor of its manufactured products and a manufacturer of quality products, will be a very positive influence on the marketplace.

Does Graham-Field expect more internal changes, i.e., layoffs, restructuring, cutting product lines?

We certainly have rationalized the product line over the last eight months, and we'll be publishing a new catalog as well as a new price list that will reflect all that. In terms of what other actions will take place going forward, I can say with a certainty of anyone who's in this business that our goal is to be profitable on a regular basis with predictability both for our owners and our customers so that they have a dependable supplier and a competitive choice for them. That's an important point that Graham-Field supplies to the market, that a healthy Graham-Field in the market will provide competitive products and competitive choice, which I think many people are looking for.

How would you compare the HME industry with other industries?

I'm not sure there's a direct analogy to other industries that I've been involved with. It's relatively clear that the distribution side of this business is the key element in being able to service both the industry and the ultimate consumer. As a neophyte, I would speculate that the largest changes in this industry are probably going to take place on the distribution side of the business. Certainly the types of accountability that families are going to seek for products are going to relate right back to the distribution channel, and I think that's something that all of the companies involved in this industry are probably taking a long, hard look at.

When does Graham-Field expect to get out of Chapter 11?

That's both a legal and a financial matter that's part of the bankruptcy court process, and I don't have a prediction at present as to when we'll emerge from the protection of the bankruptcy laws.