The $1,000 power wheelchair
NEW BRAUNFELS, Texas – If Medicare power wheelchair pricing continues to go downhill, and he suspects it will, Doug Harrison’s strategy is to go the way of Dell, not IBM.
In a recent HME News TV interview, Harrison, CEO and president of The Scooter Store, explained how, several years ago, PC companies like Dell raced to make $1,000 computers, while other companies like IBM stood behind their $3,000 computers. Dell came out on top.
“At some point, Medicare’s not going to pay $4,000 for a power wheelchair,” he said. “They’re going to pay $2,000. And as soon as they get that, they’re going to want to pay $1,000. My prediction over the next five years is that everything Medicare pays for is going to be way less than it is today.”
Harrison argues that, as long as The Scooter Store “builds up for that race,” it, too, will come out on top.
“As an industry and as a business, we have to start thinking that way,” he said. “We have to start thinking, ‘Medicare’s buying us this product—it’s one of the world’s largest consumers—and we should be able to give them a better and better price each year.’”
To do that, Harrison must find a way to answer this question: “How do we get to where we can sell a power wheelchair and be profitable at $1,000?” he asked.
Harrison is getting plenty of practice. He and other power wheelchair providers absorbed a 27% cut in October 2006 and a 9.5% cut in January 2009.
“We’ve gone through every part of our cost structure for things that we can cut,” he said. “Our business is 18 years old, and we had the luxury of operating our first 14 years without ever having to do cost management. There wasn’t any problem we couldn’t grow out of.”
Not anymore—and probably not ever again. To learn how Harrison continues to tighten The Scooter Store’s belt, without affecting its company culture, go to: http://www.hmenews.com/video.php?cat_id=2&v_id=135.