Power mobility: Get support, sell the 'a-ha'

Friday, July 27, 2012

With capped rentals, audits and competitive bidding severely curtailing cash flow and sales opportunities, HME providers need help to withstand the challenging power mobility market. In response, the vendor community has developed a series of programs to serve as a financial lifeline for those impacted by industry changes.

By working more closely with their provider customers, vendors say that together they can forge new strategies to ease the cash pinch and increase the viability of the business.

For instance, Port Washington, N.Y.-based Drive Medical is offering multiple initiatives, such as  low-interest leasing, a refurbishing program that returns chairs to the rental market, special service contracts and a power mobility call center staffed with experts to answer any provider questions.

“Manufacturers have initiated leasing programs that mirror the 13-month rental program to help providers with cash flow, and new programs have been created to reduce the providers’ after-sales service costs,” said Steve Neese, Drive’s president of power mobility. 

Still, its difficult with the K0823 market size shrinking for a number of reasons, he said.

“Providers are getting between 5% and 15% of the chairs back during the 13-month rental period before the chair converts to beneficiary ownership,” he said. “Some providers have exited the power business while others have de-emphasized Medicare power chairs due to the onerous claim requirements.”

Joe Chesna, sales director for Exeter, Pa.-based Pride Mobility, adds that providers are seeing their operating costs increase because of the logistics involved with checking on patients and picking up the equipment.

“The way providers can offset this is by providing a quality product and prudently putting out used or old equipment,” he said. “Manufacturers that are looking to partner with providers in the capped rental landscape are making products that are able to withstand a reasonable amount of use and can be easily refurbished and serviced.”

Nineteen months along, the capped rental requirement has put a severe crimp in provider cash flows, agreed Jason Davis, vice president of sales for Old Forge, Pa.-based Golden Technologies.

“This has required them to change their business models and make the appropriate adjustments,” he said, adding that “Golden has several financing plans available to help them with their needs.”

Bidding impact

One of the biggest challenges providers in the competitive bidding areas are facing is the fact that patients do not know where to get the medical equipment they require, said Paul Komishock, Pride’s general manager of government affairs.

“Many providers who won the bid thought they would automatically get the business and that patients would know who the winners are—that is not the case,” he said. 

Whether or not providers are exiting the power wheelchair business depends on who you ask, Komishock said.

“CMS has gone on record stating that the process is just about problem-free,” he said. “However, it is well documented there have been providers that have gone out of business in competitive bid areas. It is important to note the removal of the first-month purchase option started concurrently with the first round of competitive bidding and has likely had a much more profound impact on the market to date.”

Cash solution

Some non-bid winners are actually faring well by moving into cash mobility with scooters and personal transportation chairs, Davis said.

For the mobility market, Chesna recommends that providers make a major move into cash sales.

“Providers should offer a ramp or lift with every power wheelchair they sell,” he said. “These are cash sales items and a great way to improve profitability while enhancing the client’s overall lifestyle.”

Davis contends that providers can easily branch out and add other lines, but they must also commit to selling retail mobility products for cash.

“If they sell retail, then they do not have to offer the cheapest unit,” he said. “They can sell the more expensive, luxury units by selling the ‘a-ha’ features that come standard on these more luxurious products. Let’s face it—people want luxury when they can get it.”