Author Archive | Frank Barlin

To all Homecare CEO’s – What RONA and IRR Don’t Tell You In Outsourcing Decisions

Don’t forget to include the following in your next calculation:

The cost of the knowledge that is being lost, possibly forever.

The cost of being unable to innovate in future, because critical knowledge has been lost.

The consequent cost of its current business being destroyed by competitors emerging who can make a better product at lower cost.

From the excellent Clayton Christensen: How Pursuit of Profits Kills Innovation and the U.S. Economy


It’s November 14 And It’s World Diabetes Day

Frederick Banting and Charles Best, were instrumental in the discovery of insulin in 1922, and have saved millions of lives since then.

So while there is cause to celebrate there is also the realization that there is no cure for this life altering disease which often attacks the young with type 1 and catches others at a later stage with type 2.

As usual lower income countries have the highest death rate by far – 80%.

In fact it is so big that it has it’s own market segment in homecare.

Time to get focused and get rid of it.


The Emerging Private Homecare Market – People Pay For Design

Healthcare is often a forced lifestyle choice – if that makes sense. Patients often have a choice on what level of healthcare and certainly what healthcare products they they use. Of course some people unfortunately have none.

If however you do have a choice then the choices are getting better as manufacturers start to produce products that are more consumer friendly. While most products rely on functionality rather than design and aesthetics, there are those that recognize that you really can have both, mostly at a higher price.

Here are recent examples from the Wall Street Journal (where else) of a redesigned walker and nebulizer.

The full story is from the Wall Street Journal


Who Said It Can’t Be Done – Vilgo French Homecare Company Grows With 100% France Production

Despite the rush to Asian outsourcing trend and the “stereotype” of expensive French manufacturing, HMS-Vilgo a French based manufacturer makes “100% made in France” medical / homecare beds.

Not only that, CEO Patrick Jude has grown the business from about 1000 beds to 24000 beds per year from 1997 and remarks that they have used robots to avoid having to outsource their production to Asia. This despite fairly recent reimbursement reorganization in France.

Their main market is France with overall revenues of 26 million Euro (about 35 million US Dollars at today’s rate) with export revenues accounting for up to 12% of sales.

More in LesEchos (in French) – thanks FG.


Sign Of The Times In The Homecare Industry (Gentle Downsizing)

In this latest news, Invacare has released 50 employees, most from their Elyria headquarters. They are not the only company in the homecare / mobility industry to do so recently.

Invacare maintains that dismissed staff are “office workers” and spokesperson Lara Mahoney is quoted as saying that they are “just ensuring that we’re running as efficiently as possible”. She went on to say that they were “hiring in some positions and having to make tough decisions in others.”

Perhaps not directly related, my take is that while companies continue to cite reimbursement as a major issue (it is), often neglected is the shift to, and opportunity in, the “private” retail market which has tremendous upsides both in the US and Europe.

To make that happen though retail is going to have to become more mainstream and it seems that looking around there is a lot that remains to be done in creating a really professional and consumer friendly retail proposition.

More here


China v USA


Smoot and Hawley 1929

Update – The US Senate passes the bill.

If it does not happen now, then it is just a question of time?

China has threatened the US with a trade war if the US law-makers pass a bill currently under discussion that will force the value of the Chinese RMB to rise against the US dollar, thus increasing the price of imports to the US. This follows a long fight in Washington to get the Chinese to allow the RMB to float unrestricted.

This is yet one more reason why we continue to advise our clients (disclosure – Sibaya both advises and provides services in off/near shore locations) to be cautious about unfettered outsourcing to a single location like China in this case, as opposed to taking a portfolio approach to outsourcing and dividing the economic and political risk over several locations – and more than anything, always make that critical “total cost” calculation.

As an interesting anecdote the US passed similar legislation (protectionist tariffs in this case) in 1930 – know as the Smoot–Hawley Tariff Act. There was wide retaliation and negative impacts on unemployment and the economy.

The other negative effect was that both Smoot and Hawley lost their seats in the 1932 re-election. Perhaps that should serve as a warning to current US incumbents, especially with the elections around the corner.

Update: Obama ups the pressure … Obama hits China on trade as currency bill advances

China warns of trade war if U.S. currency bill passes | Reuters.


Invacare Q2 2011 Results And The Outlook

Invacare announced their Q2 2011 results yesterday and the stock dropped in the region of 5%, why?

What didn’t the market like, especially in view of the fact that:

  • Organic net sales growth was up 3.8% vs Q2 last year.
  • Adjusted EPS improved 15% vs Q2 last year to $0.45.
  • Invacare generated free cash flow of $21.3 million.
Looking at the international markets, Europe sales were up 15,2% to $141.9 million (organically up 5,1%) despite a tough market and competitive environment. EBIT was at $9,9 million (excluding restructuring $ 0,4 million).

In Asia while sales grew 8,4%, organic sales decreased 7,3% due largely to the New Zealand businesses.

So despite this the question remains what longer term effect will the higher sales of low end products to lower end customers continue to effect margins.

The answer probably lies partially somewhere in the area of which competitors are able to manage their global supply chain more efficiently, linked with the continuing competitive reimbursement agencies around the world driving lower cost as well as driving the mix toward lower end products.

Maybe that’s what spooked investors.

Invacare Corporation Reports Improved Earnings and Continued Organic Net Sales Growth for the Second Quarter of 2011 | Business Wire.


Automatic Gears For Manual Wheelchair – A Breakthrough…

A manual wheelchair system that automatically senses current usage and shifts gears automatically has been developed. Use on any wheelchair.

Enter Scott Daigle, together with the team at IntelliWheels, has developed a product that automatically shifts gears according to speed and force, allowing the driver, for example to climb slopes easier, without changing gears manually.

Up until now several enhanced mobility (or assist) systems have been tried and the one that has been most successful is in the form of the electronic assist device. While motorized versions definitely have their place in certain wheelchair driver categories, the automatic manual gearing approach may well suit those looking for a more active product.

The manual gear wheel will be a lot lighter (only 6 pounds or 2.72 kg) and hopefully a lot less expensive.

Look forward to seeing this product on the market one day soon.

Check out these links.

Hat tip Futurity – Smart Wheelchair Can Shift Gears