Much bigger than The Scooter Store

Friday, April 26, 2013

I always check my email once or twice over the weekend knowing that that, while the trade press like HME News pretty much takes Saturday and Sunday off, the mainstream press does not.

So I wasn’t surprised when I checked my email on a recent Saturday and saw a note from one of our readers with a link to a story published that day by the San Antonio Express about The Scooter Store furloughing most of its employees.

That’s a big deal.

The Scooter Store had about 1,800 employees in all, with 1,200 working at its corporate headquarters in New Braunfels, Texas, and the remainder working at distribution centers across the country. The only hint at how many employees still had a job at the time: Local news outlets reported there were about 50 cars in the parking lot at its headquarters that week. We now know the company is working with a skeleton crew of about 300 employees (see related story on page 21).

Everyone from HME providers to lawmakers has been following the company’s every move for going on several months. When the industry hit Capitol Hill for a fly-in in February to discuss the negative impact of competitive bidding, The VGM Group’s Jim Walsh said The Scooter Store was the “talk of the town”—and not in a good way— following news that the company had been raided by the FBI and other state and federal agencies, and had laid off another 150 employees. (It laid off 220 last year.)

Now this.

So many people have so many questions:

Will The Scooter Store file for bankruptcy? Will it cease to exist?

What happens to the 39 contracts it’s serving under Round 1 of competitive bidding?

What will happen to its complex rehab division, Alliance Seating & Mobility?

Will it need to return additional overpayments to CMS?

How much money does it owe Sun Capital Partners, its senior secured lender?

Does it have any money to pay anyone back?

We’re working on piecing together the answers. We’re calling The Scooter Store, Sun Capital, CMS—you name it.

But beyond the interest surrounding The Scooter Store’s fate lie larger questions that could send shock waves throughout the entire industry.

One of those questions: Depending on that fate, will The Scooter Store be able to pay manufacturers for equipment purchased?

Industry watchers tell me that the company is on the hook for multiple millions of dollars to various manufacturers—manufacturers that, like providers, are already struggling due to changes in Medicare policy and reimbursement (see related story on page 1).

How will they absorb this kind of hit? Will they be able to?

Unfortunately, this is much bigger than The Scooter Store.