Invacare’s Will: What’s in Your Wallet?

ELYRIA, Ohio—If you’re cash-rich, that’s
great. But if you’re not sure where your next funding dollar
is coming from, that’s going to hurt, according to Carl Will,
senior vice president of Invacare Homecare.

Speaking at a media briefing Aug. 31, Will said in the face of
reimbursement cuts, audits and competitive bidding, providers must
add financing to the worry list. “If you don’t have
money, you’re out of business,” he said.

But with an economy that won’t recover, nosediving
payments and industry fraud on bankers’ minds, it’s
tough for HME providers to make a case.

“It’s going to take a change in your thinking to be
able to survive,” said Will, adding that solid funding
“will be as important as any other factor to be
successful.”

As one of the industry’s biggest backers, Will noted
Invacare will be lending its money only to providers who have a
plan that can work to withstand the market’s tightening
conditions. The thing is, he said, many providers still don’t
have a plan at all.

Most don’t know their “burn rate” (the amount
of cash it takes to get through a month), he said.
“That’s not common language in our industry,” he
said, but predicting cash flow is an obvious must-know when
you’re thinking about retooling your business.

While the giant manufacturer can help providers put a plan
together, he said, it will be up to those businesses to
“grind through the execution.” Providers need to know
“how they are going to get from Point A to Point B, and that
can be treacherous,” Will said. But those who are willing to
confront the industry’s new realities, seek good
advice—and follow it through—will be more likely to
survive.

It’s time to do a little “clean-paper type of
thinking,” said Will, advising providers to start from
scratch in figuring out their next moves. For one thing, he said,
the service component of most HME companies will have to
change.

“We all know you can’t survive at a 5 percent profit
and take a 30 percent cut unless your infrastructure
changes,” he said.

Even so, as providers transition from a low-volume, high-margin
business to a high-volume, low-margin model under competitive
bidding, there will be opportunities. Will pointed to complex
rehab, which has been carved out of the bidding program, and retail
sales as growth sectors that deserve a look.

In other news from Invacare’s annual Media Day:

• Dr. Steven Landers, a geriatrician and director of the
Center for Home Care at The Cleveland Clinic, pointed out that
“seniors fear nursing homes more than death.” Landers,
who makes house calls for his patients, said he knows how much
seniors want to stay in their homes to receive continuing care. But
the government doesn’t, and its current policies aren’t
favorable to care in the home. Landers is intent on changing that
mindset. Visiting one of his first elderly patients, he said,
“made me realize how integral somebody’s home can be to
their health and well-being.”

• Invacare is working to bring consumers up to speed and
get them involved in the fight for home care, said Daniel Lee, the
company’s vice president of marketing. With seniors actively
seeking information about health care choices on the Internet, he
said, “as needs increase, consumers will speak up more about
access issues.” In one intriguing point, Lee said that among
seniors—who now spend an average 45 minutes a day
online—Bing is gaining on Google and Yahoo; it’s now
the default search engine on Microsoft computers, and many among
consumer “matures” don’t know how to change
it.
• Collections are no longer an option, stated Lynda Bell of
Invacare’s HCS billing practices segment. “It’s
beginning to represent the provider’s margin,” said
Bell, noting that HME companies are typically leaving 40 percent of
their patient receivables on the table. “Most don’t
know what their recovery rate is,” she said.

• “The reach that CMS and its contractors have been
given under the new [health reform] law is really tremendous, and
providers across the country are going to start feeling it sooner
rather than later,” said Cara Bachenheimer, Invacare senior
vice president of government relations, referring to the vast
authority the agency now has in the area of fraud and abuse. Among
the law’s provisions, for example:
–The HHS Secretary has authority to increase the amount of a
provider’s surety bond commensurate with its volume of
billing, up to $500,000. HHS can also impose moratoria on the
enrollment of certain groups of new providers or suppliers to
prevent fraud. In other words, Bachenheimer said, CMS has
“unfettered discretion to stop giving out supplier
numbers.”
–For every single item of prescribed DME, there must be a
physician face-to-face exam. “There is no indication from CMS
about how they’re going to implement this for DME or how
quickly,” Bachenheimer said. “This could be a very big
deal. There’s not just the face-to-face exam but also the
accompanying documentation.”

• On the technology front, home monitoring hasn’t
moved as fast as it might have, said Invacare’s J.B. Richey,
but “that’s because there’s no one to pay for it
right now.” When monitoring does become more commonplace in
the home, he said, “that’s going to change things
dramatically.” Home patients will also see more medication
tracking systems and better lifts, said Richey, one of the original
investors in Invacare and the inventor of its HomeFill oxygen
system. Throughout the industry there’s also “a lot of
work” going on in development of such technologies as
non-invasive glucose monitors, brain control for wheelchairs and
“exoskeletons that can make you stand and walk …
That’s going to become a reality,” Richey said.

• Invacare Chairman Mal Mixon made a surprise appearance
at the day’s end. Recovering from a mild stroke in
April—“I’ve been wounded,” Mixon
said—he hopes to return to CEO duties but isn’t sure
when, or if, that will happen. During his rehab, Mixon said, he
used one of his company’s walkers and had the handgrips
refitted to be more comfortable. You’ll see the same new
grips on an Invacare walker to be introduced at Medtrade.