Invacare and VGM join forces

Sunday, April 29, 2007

LAS VEGAS - The on-again off-again relationship that's marked VGM and Invacare over the years is on again, and this time in a very big way.

The two industry titans--the largest HME manufacturer (Invacare) and largest provider service organization (VGM)--joined forces last week to help providers and themselves maneuver through national competitive bidding.

The companies announced the new relationship at Medtrade Spring in Las Vegas.

"We are in a fight for our lives, and we intend to fight in anyway we can," said Jim Walsh, VGM's general counsel. "This is a big venture for us."

Lou Slangen, Invacare's senior vice president of worldwide market development, described the relationship this way: "One plus one equals three. The sum is stronger than the parts. Prior to national competitive bidding, people could go it alone more, but with competitive bidding you have to build resources and offer more services to the provider."

In addition to giving VGM members preferred pricing to Invacare's products, the two companies will collaborate on a number of fronts, including: government relations; guidance on competitive bidding; lobbying and public relations; education and training; provider financing.

While the arrangement gives VGM members access to preferential pricing, the deal intentionally does not depress Invacare's pricing to a rock bottom level, said VGM President Ron Bendell.

"Pricing has been declining for years and there is a point were it can't go lower," he said. "Providers need a fair price to make a profit and to service and take care of patients, but the manufacturer needs to make a fair profit to continue to provide quality products."

Carl Will, Invacare's group vice president for HME, agreed. The new relationship gives Invacare access to VGM members, and that holds tremendous value for the manufacturer. But as a whole, the arrangement is about much more than product. It's about "allowing the provider to remain viable," he said.