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Mobility Products downshifts business

Mobility Products downshifts business

SOUTH DAYTONA, Fla. - Mobility Products Unlimited, one of the larger providers of standard power wheelchairs in the United States, is in "wind-down mode," a company official told HME News recently. "We're down to 17 employees and we've stopped advertising," said Michael Lops, general counsel for Mobility Products. "We're processing the orders we already have in the hopper, and then we'll decide what to do with the business entity. I think it will take about a year." In its hey-day, Mobility Products employed several hundred people and billed Medicare for $19.6 million worth of K0011 wheelchairs, according to "The State of the Industry 2007" published by HME News. Industry sources say the provider tried to mimic The Scooter Store's business model, spending big bucks on direct-to-consumer advertising, mostly on TV. Mobility Products blames its struggles on recent documentation and reimbursement changes. In late 2006, CMS began requiring prescriptions and physician notes for power mobility devices instead of CMNs. It also cut reimbursement by 27% on average. "That was really traumatic," Lops said. "When you do a lot of TV advertising and the profitability goes away, you're left with an expensive business model. That puts pressure on cash flow." The delay of national competitive bidding in exchange for a 9.5% cut didn't help, Lops said. "Even with the program going away, it's still a 10% cut," he said. "That's enough of a cut right there." Other large providers of standard power wheelchairs like The Scooter Store and Hoveround haven't been without difficulties. Since the 2006 changes, each has reported reduced revenues and implemented major layoffs (See HME News, May 2008). But The Scooter Store and Hoveround have been continually retooling their businesses to stay afloat, company officials say. The Scooter Store, for example, has tried to diversify into other product categories, including complex power wheelchairs, and gotten more "thorough and vigorous" about documentation. "If we were still the same company today that we were five years ago, we'd probably be in dire straights, too," said Doug Harrison, CEO of The Scooter Store. "We've had to change everything about our business." Hoveround, both a manufacturer and provider of standard power wheelchairs, has tried to get more bang for its buck. "We have a distinct advantage in being able to control everything we do, from design to service after the sale," said Tom Kruse, president and CEO of Hoveround. "In pushing some of our sub-assembly processes overseas, we've saved money on the product." Still, the possible downfall of Mobility Products "puts all of us on notice," Kruse said. "I can't sit here and say, 'The future is bright,' because it's not," he said. "But the fact of the matter is there will be opportunities in the future, because the growth of this industry can't be stopped. Everyone knows the demographics. We just have to comply with the rules and make the most and best of it going forward."

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