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As a brief follow - up to the post on this subject this week, we can now confirm that Invacare, Meyra and Handicare will not be attending this years Rehacare.

This is the first time in the history of this show that Invacare and Meyra have not attended.

No doubt the empty space will be used by others - most notably Asia manufacturers.

The reshaping of the industry continues…

Following shortly on the heels of Sunrise CEO Mike Hammes statement that Sunrise was focusing resources elsewhere in terms of the traditional Medtrade “Spring” show, significant rumor abounds in Europe this week that some “big” companies are seriously considering their options to exhibit at Rehacare - traditionally the largest rehab exhibition outside of the US.

Last year (2006) especially, as far as I can see, was the year where industry heavyweights invested heavily in Medtrade hoping to gain a competitive advantage in the looming reimbursement and NCB challenged marketplace. An additional observation however is that most of the companies chose to address the typical “new improved product” strategy instead of addressing the needs of the new order marketplace. There were of course some notable exceptions.

Then came RehaCare - same thing, except US companies flocked to the show either for the first time or with bigger exhibition booths, hoping for geographic sales (and profits..) expansion - not understanding that the rules of engagement in Europe have also changed. In fact the biggest market outside the US, Germany has announced changes that make the new order US look like a Sunday school picnic.

There are still great opportunities for the homecare / mobility /rehab industry - just don’t look at what has always worked in the past.

Three great end user customer driven companies have now formed an alliance (First Alliance) to better serve customers and to make sure they stay focused on end user needs in time of reimbursement cuts and a scramble by the industry in general to focus most of their activities on operational efficiency.

Both are clearly needed, but readers here will note that we have been long term advocates on close end user programs - why - because we have watched them pay off bothin the US and Europe for the last year or so - despite pricing pressure.

“Manufacturing Trio Forms Users First Alliance
ATLANTA–Three rehabilitation industry heavyweights have banded together to form an alliance aimed at ensuring that end-users get quality rehab products suited to their needs and not just the government’s pocketbook.

Permobil of Lebanon, Tenn., The Roho Group of Belleville, Ill., and TiLite of Kennewick, Wash., have formed the Users First Alliance.

“With so much focus on declining reimbursement and the resulting financial implications to providers and manufacturers, the industry seems to be losing sight of the most important component of our business–the consumer,” said Tom Borcherding, Roho executive vice president. “The founding members of the Users First Alliance believe that consumers and clinicians should expect more than the equipment that is considered just ‘good enough.’”

“Push for More” is the group’s motto, and that is what Users First will attempt to do through education of clinicians, providers and end-users, the manufacturers said.

Noting that only a handful of wheelchair users currently have access to state-of-the-art technology that offers not only expanded freedom, but health benefits, David Lippes, chairman and CEO of TiLite, noted: “During the equipment selection process, wheelchair users should not sacrifice equipment performance or medical outcomes based upon apparent reimbursement limitations. We can help.”

The alliance aims to do that through educating users, clinicians and providers about the selection process for rehab equipment; emphasizing the direct relationship of equipment quality and performance to long-term medical outcomes; providing information about insurance coding and reimbursement solutions; and guiding users, clinicians and providers through the reimbursement process to “help ensure accessibility of and appropriate reimbursement for this equipment,” the companies said.

The three companies also will offer continuing education opportunities in their individual areas of expertise”.

Source Homecaremag.

Invacare, struggling, like several of its competitors with reimbursement, Asian sourcing pressure and cost issues has just announced that it has appointed General James L. Jones, United States Marine Corps (ret.) to its board. General Jones has recently retired as Supreme Allied Commander of NATO (North Atlantic Treaty Organization) and Commander of the United States European Command.

This should raise the profile of the company and perhaps the industry as it goes about restructuring and aligning with the new order healthcare environment.

Mal Mixon, CEO at Invacare, also served as an officer in the US Marines.

Press Release

Hundreds of millions of dollars (euros) are about to be shaved off the homecare market as new government heathcare restructuring is implemented in arguably the worlds largest and most profitable homecare countries - the United States and Germany. Several other countries also have programs to restructure (read save money) largely at the expense of industry.

Having come shortly in the heals of power chair cuts and the respiratory quagmire - most readers here are aware of the confusion surrounding the implementation of National Competitive Bidding (NCB) in the US. What is not confusing is that it is going to happen - starting in the next several months. Don’t fool yourself NCB means just what it says. Your bid is going to have to be a lot more competitive - and that means prices down and in some cases - service up - or more simply put, margin squeeze. Here is todays update from HME NewsWire.

The following is the view of a homecare company executive in Germany, who comments on the hot off the press heathcare reforms in his country.

News from the German Healthcare -System…

Last weekend the new healthcare laws passed the “Bundesrat”, which means that the changes will be valid from April 1, 2007.

What does it mean?

• Homecare Dealers No Longer Require Accreditation

From the dealers point of view there will be a higher level of competition than it is even today, because everybody (who wants) can go and make contracts with Health-Insurances. There is no longer permission needed that approves a dealer as “Sanitätshaus”.
This opens the door for any company in the distribution and logistics business. They are perfectly in place to work all over Germany and provide the health insurance customers with e.g. all standard Patient aids, which are simple to use.

• Tenders For All Standard Patient Aids

Another fact is that the health insurance industry is forced to have tenders for all standard patient aids. So if this comes true, it will be very difficult for any dealer with a small location (stock) to stay in business. It is not yet clear if the insurance companies will have German wide or regional tenders. However a dealer has to have a huge stock when he wants to provide the insurance with products and service - and the price better be right.

• What Does This Mean For All The Buying Groups?

The winners are… Ergoh, Ortheg, Nowecor, TOP and all the others which have stock and members in their region or all over Germany. These buying groups can make offers for the tenders and they have, as members, a very good service and logistics structure.
Also winners are the two or three bigger independent dealers, that work already German wide.

So then -

What about Reha Team and Reha Vital? These are the biggest and most influent buying groups in Germany. In the moment it seems that they loose the game, but they have Germanys biggest dealers as members and they are well accepted by the insurance industry. So they will probably have one or more logistic centres in Germany and will also take part in tender business. But only if they understand what the new healthcare system means.

• Small Dealer In Trouble

Fact is that every small, local, independent dealer will be in trouble latest in 2008, when the “old” status of all dealers from today is not longer valid.

• What Does It mean For The Industry?

Lucky are all companies that do not deal with standard products (Congratulations to the Specialists etc.).

For all the others it means even faster price decreases, less market for every company that is not a good friend of the buying group or dealer that wins tenders.

Maybe some of the big companies will try to get more in special businesses which would mean that also in these segments the prices will decrease (Sorry to the Specialists.)

• Who Is The Customer?

The others will do what they always tried: be aggressive and manage their customer relation in a way they think it´s right. But who is the most important customer in future?

Will it be the dealer, the health insurance or the end user?

In the end it´s an open race, that’s been already started, which can only be won by the fastest – not the biggest…
…. To be continued

Oh - I nearly forgot to mention - the same Asian companies that have been supplying manufacturers and distributors in Germany are now making their own contracts with the health insurance companies - even by passing the dealer.

New RAMP report and Invacare, Respironics and Apria announce latest quarter earnings:

A new RAMP report has just been issued by the Power Wheelchair Industry:

Here’s the headline:

Government Data Refutes CMS Claims that Utilization of Mobility Benefit Is on the Rise - Utilization Sharply Declined Since 2003; No Support for CMS Claims of Increases.

Basically the industry is saying that CMS (Medicare) has got the numbers all wrong in terms of the growth in numbers of powered products over the years. Industry contends that the increases were in the years leading up to 2003 due to technology advances while also admitting that there were some provider organizations that had been involved in some fraudulent activity.

Full report here

Invacare announced their earnings today and while EPS had grown sequentially from prior quarter (excluding one time events), profits were down from prior year and the firm was guiding lower largely due to reimbursement insecurities (see above). The stock closed 5.3% down at 22.53. Full release here.

Respironics saw profits rise based on domestic sleep products and international revenues however they missed analysts expectations. They also guided revenues lower. The stocked took a hit and closed more than 7% down at 35.69. Full release here:

Apria said today that its earnings were flat (beating analyst estimates), and Q3 revenues were up 4%. Apria affirmed guidance but acknowledged that Medicare reimbursement cuts would affect margins. The stock closed up over 5% at 22.04.

Did you notice that both Invacare and Respironics reported positively on International?

Reha has now come and gone again and I have decided to choose a winner.

Handicare is the winner, and this is the reason.

Less than a year after acquiring

Movingpeople , Handicare has done a great job of presenting one face to their European customer. Their booth was simple and clearly branded. In addition and probably most important was that their employees represented their newly merged company with passion.

Besides the people, Scandinavian and Dutch companies have a strong commitment to closely match product with “real” customer needs and add value.  Handicare is no exception. Customer (consumer, dealer, reimbursement agency etc) needs first - the China gold rush second - if you get what I mean.

I first wrote about this in November last year.

Here is also a related editorial

The Return Of The Homecare Vikings

Oh, I also wanted to mention Otto Bock who did a noteworthy job of presenting mobility and lifestyle enhancing products.

With all the reimbursement issues going on notably in the US right now, you cannot help wonder if these issues would have been at least partially mitigated if the manufacturers had focused (like Otto Bock) more on what these products really mean to consumers as opposed to the usual manufacturer/ dealer rhetoric.