ELYRIA, Ohio—While officials at Invacare Corp. previewed a number of new products that will roll out over the next two quarters—including the company’s SOLO2 Transportable Oxygen Concentrator, which launched last week—it’s going to take more than products alone for both large and small providers to survive, according to Carl Will, senior vice president, Invacare HomeCare North America.
“There are a lot of great examples of companies making the tough decisions and refining what it takes to operate,” Will said in an interview at Invacare’s Media Day Aug 5. But there are also “a lot of what we would call ‘dead man walking’—providers that haven’t taken the necessary steps to respond to the massive changes and cuts and don’t know they’re dead yet.
“We’re right on the precipice of major cuts in multiple areas,” Will continued, “and it bothers me when I see that accreditation still isn’t 100 percent adopted … because that’s an indication that there are other areas about changing business models so they can be more sustainable that haven’t been addressed as well.”
For providers to remain viable, he said, their companies must not only be as efficient as possible but they must also be aware of strengths and weaknesses. “It’s about benchmarks, access to data and information,” Will said. “If you can’t figure out what your cash flow is, I don’t know how you can manage it.”
And cash flow is exactly what it’s going to take to come out on the right side of the changes, he pointed out. “If we are going through a period of massive change, what we need is cash. Cash flow is what it takes to run your business, and reducing costs and improving profitability helps cash flow.”
Competitive bidding is a prime example of the tumult providers must manage through, he said, noting that in the first round of the program, “I couldn’t tell you who the winner or loser was. I know who won the bid, and I know the people who didn’t win the bid had a significant chunk of business removed, but was it being a winner to win?” he questioned. ”Could you survive on those levels?”
Instead of trying to predict who will survive, Will said, Invacare has turned to “integration of products and services at the provider level to drive profitability and flexibility for periods of massive change.”
It’s not an altruistic goal, Will said. “We’ve got a lot of money on the table from a financial standpoint, but we think it's necessary.”
The company has beefed up its iPartner program to offer providers help with maintenance, billing and cost reduction, and recently inked a five-year deal with Brightree to add its business management software.
“If you look at what our offering is, it extends way beyond products,” said Will. “The reason is that’s what’s going to be necessary in order for people to transition from where we are to a place where they can survive.”
Call for Unity
Particularly in the face of health care reform, something else Will
believes is necessary is a unified industry.
“We do a deplorable job of having a common voice, and it matters a great deal,” he said, pointing to providers’ division over oxygen reform. “We’re a small percentage of Medicare—2 percent. We act like we’re 50 percent. We’re comfortable thinking that everyone can have a different voice and politicians will be logical about what we tell them and they will apply it consistently to our little sliver of the world … but if we’re divided, our 2 percent could easily be attacked more over time as a part of health care reform.”
The division is hurting the HME industry on Capitol Hill, agreed Invacare’s Cara Bachenheimer, senior vice president of government relations. If oxygen reform doesn’t happen, she said, “the risk is that the payment cuts will be deeper.”
Invacare Chairman and CEO Mal Mixon summed up the situation with a line from the “Pogo” comic strip. “We have met the enemy, and he is us,” Mixon said.
