In brief: Drive crosses the border, Invacare gets ratings boost

Sunday, November 30, 2008

PORT WASHINGTON, N.Y. - Drive Medical announced last week that it has acquired Achieve Medical Canada, a distributor of mobility products, patient aids and bathroom safety products in Toronto. "The acquisition of Achieve's business will position Drive Medical as a major manufacturer and distributor of durable medical products in the Canadian market, and will provide Drive Medical with a substantial platform in Canada from which to launch new products and implement new growth initiatives," stated CEO and Chairman of the Board Harvey Diamond. Eric Paul and Mark Stern will serve as CEO and president of Drive Medical Canada, a wholly owned subsidiary of Drive Medical.

Invacare gets ratings boost
ELYRIA, Ohio - Standard & Poor's raised all of its ratings for Invacare on Nov. 21, including its corporate credit rating to "B+" from "B." "The outlook remains stable," stated Michael Berrian in his report. The upgrade reflects an improvement in both the manufacturer's business and financial performance. Since Standard & Poor's first rated Invacare in 2007, the manufacturer has restructured its largest business (the North American/Home Medical Equipment division), streamlined operations and significantly reduced costs, according to the report. Invacare restructured by closing plants and consolidating operations worldwide in 2006 and 2007. It also built two plants in China. Over the past 18 months, the manufacturer has realized the benefits of that restructuring through higher revenues (about a 16% increase from March 31, 2007, through Sept. 30, 2008), according to the report. Invacare's ratings also reflect its exposure to Medicare reimbursement reductions, concentration in one product category (wheelchairs), nonpayment from customers (providers) and high debt ratio, according to the report. Standard & Poor's also raised Invacare's subordinated debt rating to B- from CCC+. The triple-C rating means a debt may not be repaid.
Obama continues focus on health care
WASHINGTON - President-elect Barack Obama last week named Peter Orszag director of the Office of Management and Budget (OMB). Obama envisions Orszag doing more than just crunching numbers at the OMB; he will ask the former director of the Congressional Budget Office (CBO) to help shape new approaches on health care, according to news reports. Recently, Orszag identified rising healthcare costs as the "central fiscal challenge facing the country." Orszag helped to produce a two-volume tome that the CBO will release in mid-December that examines ways to expand healthcare coverage, modernize the system and increase efficiencies.

Firm pulls plug on infusion deal
CONSHOHOCKEN, Pa. - A $420 million dollar deal between MBF Healthcare Acquisitions and home infusion provider Critical Homecare Solutions fell victim to the slumping economy, according to news reports in early November. MBF had announced in February 2008 that it planned to purchase the two-year old company funded by former Air Products exec Bob Cucuel. The deal was originally expected to close in June or July but the original letter of intent expired July 31, 2008. The deal was restructured in September but "it's just not the time to launch a road show" to get financing, Cucuel told a newspaper.

CMS announces next forum
BALTIMORE - The next Open Door Forum for home health, hospice and DME will be Dec. 9 at 2 p.m. EST. To participate in the forum, call 800-837-1935 at least 15 minutes prior to the start time. When prompted, provide the conference ID 58378451. If you miss the forum, listen to an audio recording by calling 800-642-1687 and providing the same conference ID. The recording expires after three business days.

Studies criticize Medicare Advantage
WASHINGTON - Private Medicare plans have increased the cost and complexity of the program without improving care, according to studies published last week. Ever since the government revamped Medicare Advantage plans in 2003, they have become widely available nationwide, but 48% of the additional enrollment comes from a type of plan similar to traditional Medicare, according to a study published in the journal Health Affairs. The result: There hasn't been much improvement in coordinated care. Enrollment in these "private fee-for-service plans" has reached 2.3 million today from 26,000 in 2003. Additionally, growth in private plans has driven up costs, because the government pays 13% more on average for beneficiaries in private plans than for those in traditional Medicare, according to another study from the Medicare Payment Advisory Commission. Under a formula adopted in the 1980s, Medicare began paying private plans 95% of the project cost for each beneficiary in traditional Medicare, on the theory that private plans would save money by coordinating care and being more efficient.