200 laid off

Thursday, September 30, 2004

NEW BRAUNFELS, Texas - Reeling under mountains of denied Medicare claims and millions of dollars in lost revenue, The Scooter Store in August laid off 200 employees and revamped its management team as part of a company restructuring project.

August’s layoffs mark the second downsizing for the company this year. Two hundred customer service employees were also released in January. The Scooter Store now employs about 1,000 people.

“While we deeply regret having to part with any of our employee family, the continuing impact of restrictive Medicare policies leaves us no choice,” said the Scooter Store’s founder and CEO Doug Harrison, in a press release.

The Scooter Store’s home territory in Region C has been hard hit by Medicare’s crackdown on K0011 utilization. In the first quarter of 2003, the DMERCs paid for 36,675 K0011 power wheelchairs in Region C. During the first quarter of this year, that volume fell by 51% to 17,958 - frightening numbers for a company that has based its livelihood on the K0011.

As part of its restructuring effort, Harrison also named Mike Pfister the 13-year-old company’s first-ever president. Pfister joined the Scooter Store in 2003 as vice president of information technologies. As president, he will oversee the company’s day-to-day operations, allowing Harrison to play a larger role on Capitol Hill and in developing new lines of business for The Scooter Store.

“Every company matures to a stage where its founder needs the additional expertise of a proven executive,” Harrison said. “The Scooter Store is at the point where my entrepreneurial skills can best be directed toward meeting the challenges of a changing Medicare environment and exploring new ventures to return the company to growth, while Mike can focus on the improvement of our core business.”

Prior to joining The Scooter Store, Pfister spent 25 years in the energy industry, first with Atlantic Richfield (ARCO) and then at Halliburton.

Despite CMS’s efforts to rein in power wheelchair utilization, The Scooter Store remains the undisputed leader in the market with more than 57% of the K0011’s market share, according CMS data.

Uncertainty regarding coverage and coding, however, has forced the company to diversify to counter millions of dollars in lost reimbursement.

In the last year, the company has launched a home oxygen program and opened several retail locations within Wal-Mart shopping centers. Pfister said changes made in this restructuring will support progress in those programs and others.

“We have got some core capabilities within the Scooter Store that we think can apply to additional products and services, and that’s where [Harrison’s] energy and entrepreneurial spirit are going to go to.”

The restructuring also shifted the responsibilities of some top executives. Dan Gibbens is the new executive vice president of marketing, taking over for Margaret McGukin, who was promoted to general manager of business ventures.