Mike Ballard's prediction: PWC utilization will drop
FRANKLIN, Tenn. - Mike Ballard, president of National Seating & Mobility (NSM), doesn't have a problem with the competitive bid amount for a standard power wheelchair: $2,554, about 30% below the current Medicare allowable. But he still didn't accept the contracts he was offered for that product category in four of the nine competitive bidding areas. Here's what Ballard had to say about why he didn't accept the contracts and why he sees a less-than-bright future for standard power wheelchairs.
HME News: I didn't even know NSM did standard power wheelchairs.
Mike Ballard: The majority of our patients are spinal injuries, birth defects, neuromuscular disorders--things like that. We don't do many granny chairs so to speak. I'd say the maximum is about 10%.
hme: Then why submit bids?
Ballard: I wanted to submit bids to show CMS what an honest price was. For a standard power wheelchair., $2,200 is a fair price compared to the cost of goods. In fact, that leaves a higher gross margin and a lot less labor than your average complex rehab chair.
HME: So why didn't you accept the contracts?
Ballard: The primary reason was because that, particularly after Round 2, utilization will drop substantially. Marketing and advertising drives utilization and it drives demand, and reimbursement isn't going to allow for $800 to $1,000 per chair for marketing and advertising anymore. So I suspect that that model goes away.
HME: Do you think it should go away?
Ballard: If you want to knock on doors and run ads to find patients--that's just not us. It just creates more cost.
HME: So you don't have any interest in diversifying your product mix with standard power wheelchairs?
Ballard: There's been some pressure from manufacturers that have a dog in this hunt to get into that business. They're saying, "Hey, this is good; it's great cash flow." That has diminished somewhat, but as some providers are squeezed, they're looking for different product lines. I really don't think the two co-mingle. Rehab is long term and very involved. Consumer power is not. We don't want to expand business lines just to make more money. You have to make money; that's like breathing. But that's not our mission. hme