Power wheelchairs continue to 'take hit'
The one-two punch of reduced reimbursement and more complicated documentation requirements has depressed revenues throughout the rehab industry, and managers still can't make sense of the changes.
With reimbursement reductions plummeting by 27% in 2007, two of the nation's leading suppliers of senior mobility witnessed sharp declines last year. Hoveround's power mobility sales fell from $100 million in 2006 to $76 million in 2007. The Scooter Store also felt the brunt of "huge reductions" in its sales, according to CEO Doug Harrison.
Elsewhere, the pain is evident. While Invacare states that its complex power rehab business has remained strong, its consumer power business "did take a hit" in 2007, partly because Invacare stopped doing business with the Scooter Store and partly because rehab suppliers had trouble getting paid, said Invacare's Mark Sullivan, vice president of rehab.
"The No. 1 issue by far is getting proper documentation from physicians," he said. "Many small providers have simply given up trying to do consumer power because of the headaches."
Golden Technologies and Pride Mobility Products declined to talk about reductions in their consumer rehab business, though Golden noted that they are hiring sales people, not laying people off.
At Hoveround, they've whittled their sales force from a peak of 630 to 411. Like Mark Sullivan, Hoveround's CEO Tom Kruse said that documentation requirements deserve a good deal of the blame.
"With CMNs, it took a physician 14 minutes to prescribe a chair," said Kruse. "Now it should take just 12 minutes. It's just not true. We believe it takes an hour."
As a result, said Kruse, doctors are less likely to take on new patients, and thus fewer qualified people are likely to get chairs. Harrison agrees, calling the problem "huge."
"CMS estimates appropriate utilization to be approximately 240,000 units per year," he said. "Actual utilization for 2007 (based on trying to read the SADMERC graphs on the back page of HME News) looks like about 180,000. If my math is correct, that means we are running almost 30% below CMS's own estimate of appropriate utilization."
Invacare believes the same thing-that some consumers aren't getting the chairs they need.
"I do believe some consumers who need power will not get it mostly because the awareness and availability is decreasing," said Sullivan.
At Hoveround, Kruse has retooled the business as a coping measure. Beyond the layoffs, he's implemented a hub-and-spoke distribution model instead of maintaining facilities in a number of different towns. He's limited his service in rural areas and begun to look at more overseas assemblies, as far afield as China. But the declines, he said, are likely to continue throughout the industry.
"The onus is on every one of us to do the best we can and sharpen our swords to become more competitive," he said. "We have to deal with cards we are dealt." HME