Complex rehab in 2012: A year for consolidation

Friday, December 14, 2012

Editor’s note: This is the first in a three-part series.

YARMOUTH, Maine – The national players in complex rehab have made a steady stream of acquisitions of well-known providers like Glass Seating and Mobility, Care Medical and Chesapeake Rehab—a development that leaves stakeholders to speculate over the implications.

"The reality is, there is some consolidation going on," said Don Clayback, executive director of NCART. "You have companies looking to expand their presence and smaller companies that are looking to be acquired."

The industry

As far as the industry’s efforts to create a separate benefit for complex rehab, consolidation hasn’t made a difference so far, member organizations say. They’re still getting donations of time and money toward the cause.

That’s largely because, as part of many of the acquisitions that have taken place, the employees and oftentimes the owners stay on board under the new company’s umbrella. Those employees are what make the company valuable, says Simon Margolis, executive director of NRRTS.

“These companies aren’t worth anything—their inventory is minimal,” he said. “Their assets are the individuals out there providing products.”

The service

As far as patient care is concerned, fewer companies in the field, combined with reduced reimbursement, could mean fewer new techniques for piecing together complex rehab equipment, says industry advocate Gerry Dickerson. Still, it’s not all bad, he says.

“This may stifle innovation and consumer choice, but at least there will still be someone there to provide service,” said Dickerson, director of rehab for College Point, N.Y.-based Medstar.

That’s because national providers have better buying power and will be better able to weather Medicare’s reimbursement cuts, he says.

The future

Stakeholders expect to see more consolidation in 2013. With the nationals flush with private equity funding and ready to make buys, there are a lot of factors convincing providers to hand over the reins. Among them: decreased reimbursement combined with increased documentation requirements, and audits, stakeholders say.

“There are different reasons people are exiting the marketplace,” says Greg Packer, vice president of The VGM Group’s U.S. Rehab. “But a lot of people are tired of the forcefulness of Medicare and Medicaid audits.”

And stakeholders agree those aren’t going anywhere anytime soon.

Next week: ATG stays small even as it grows.