Executive Comes Full Circle in Deal for Lab : Acquisitions: The former marketing director of McGaw Laboratories heads a group that is acquiring his old employer, now known as Kendall McGaw Laboratories.

IRVINE — In 1978, James M. Sweeney was marketing director of McGaw Laboratories, then owned by American Hospital Supply Corp., when he suggested that the firm consider entering the home health care field.

“But the management of the company at the time didn’t feel it made sense . . . so I left,” he said.

The following year, Sweeney formed Caremark Inc., a company that provided intravenous treatments, such as chemotherapy and nutrition, in the home. Caremark grew rapidly, went public in 1982 and was sold to Baxter International in 1987 for $586 million.

Sweeney became a multimillionaire but had no desire to retire young. Now he has returned to head a group that has agreed to acquire his former employer, now known as Kendall McGaw Laboratories Inc., for $210 million from Kendall Co. of Boston.

“I have been making investments in small health-care companies and looking for something like McGaw,” Sweeney said Tuesday.

For Sweeney, who is regarded by some as the father of home health care, the purchase of Irvine-based McGaw with three investment partners, announced Friday, is a return to one of his great loves.

Sweeney, who has a business degree from San Diego State University and lives in La Jolla, said the investor group he headed beat out several competitors, including two German companies, that were interested in acquiring the company that generates more than $225 million a year in revenue by selling IV fluids, tubes and pumps.

Privately held Kendall decided to sell McGaw as part of a plan to restructure its business and pay down its corporate debt.

Sweeney will be chairman of McGaw pending completion of the sale, which is targeted for September. He said he was attracted to McGaw in large part because of its focus on developing sales to the home health care market, a trend he hopes to accelerate.

Within the IV technology industry, Sweeney said, the growth of home health care sales is far outpacing the growth of hospital sales.

McGaw began to develop its home health care clientele, Sweeney said, as a way to survive an era of “murderous price wars” among IV product companies trying to compete for hospital business.

He said that despite this stiff competition, McGaw has maintained its profitability.

Sweeney knows his way around the home health field. When he founded Caremark in Newport Beach in 1979, there was no other company that would provide IV treatments in the home.

“I believed that if we could create a cost-effective alternative to hospitalization, it would be rewarded,” he said.

At first, he said, he had to persuade the insurance industry, company by company, to reimburse the cost of Caremark’s services. “There was not a nickel of reimbursement for the service when I started,” he said.

Then soaring medical costs and cost containment policies, promulgated by Medicare and followed by the private insurance industry, encouraged shortened hospital stays and threw an increasing amount of business Caremark’s way.

Soon Caremark had a lot of competition. “I had the first company in the field, and 10 years later there were 5,000,” he said.

He added that high-tech home health care now is a $2-billion-a-year business in the United States that is growing by 30% a year.

In the sale of Caremark, Sweeney received about $16 million in Baxter stock, as calculated from information provided in a prospectus that Baxter presented to its shareholders before the July 31, 1987, meeting to vote on the merger.

But while Sweeney will not describe the exact size of the fortune he derived from Caremark, he contends that it was “more than twice that amount,” after adding up the money he got from earlier sales of other Caremark stock.

He resigned as chief executive of Caremark in March, 1989, and formed Add Value Partners, a company used to make his personal investments. One start-up venture in which he has been active is called CarePartners Inc. The firm, based in San Diego, provides home health monitoring for underweight infants and senior citizens.

Sweeney said he has had his eye on McGaw since 1988, when Colgate wanted to sell Kendall. Fredrick Bryant, managing director for Alex. Brown & Sons, said that was when he began consulting with Sweeney.

“But it didn’t go anywhere,” Bryant said, because Colgate decided to sell all of Kendall, including McGaw, to a Kendall management team.

Alex. Brown & Sons has an even longer relationship with Sweeney, Bryant said, dating to when the Baltimore-based investment banking firm underwrote Caremark’s first public stock offering. Alex. Brown also represented Sweeney when Baxter bought Caremark, Bryant said.