Business Solutions

Reinventing Standard Mobility

As reimbursement for standard power mobility has declined, mobility providers are learning that they must not only broaden and diversify their offerings to those patients, but possibly rethink their entire business models.

• By David Kopf
• May 01, 2016

The business of providing standard power mobility has seen a considerable amount of change over time. Whether we’re talking about competitive bidding, or the removal of the first month purchase option and the conversion to a rental business, various funding factors have coalesced into sweeping changes that have forced standard power mobility providers to redefine themselves and how they run their businesses.

Pennsylvania and Maryland HME provider Laurel Medical Supplies Inc. finds itself in a unique position in that it has a location that was in initial rounds of competitive bidding, and a location that was not impacted by competitive bidding (that is, before CMS implemented national expansion this year), according to the company’s President John Letizia, ATP, CAPS, CEAC.

“We bid for contracts where we thought we could make money and still provide quality products and service to the patients, while taking into consideration all the things that go into truly providing the right equipment to the patient,” he says. “I was not offered a contract.

“At first, I had the bidders remorse,” he continues. “I thought, ‘What did I do wrong?’ And now, looking at the rates, I can tell you I’m pretty happy that I did not win a contract.”

And providing power mobility will get worse as certain repair items for power mobility devices (PMDs) convert to a rental model, a business model Letizia says is not right for Laurel Medical Supplies, and he’ll be able to avoid it since his business is not participating in bidding. But for contracted providers that must provide service, renting out components such as joysticks and motors could open a can of worms.

“I can tell you: I’m not renting a joystick or a motor,” he says. “There are so many problems in that scenario … I can foresee there are going to be a lot of problems with service.”

Switching gears to the Laurel Medical Supply location that’s in the non-bid area, and that portion of Letizia’s business is starting to see additional cuts due to this year’s rollout of national expansion. Those cuts will grow larger if the industry cannot delay additional cuts that Medicare has slated for July 1. (Read, “Bidding Relief Bill Launched in Senate,” on page 8 to learn more about the industry’s legislative efforts to reform the current national expansion of competitive bidding.)

Suffice it to say that the revenue prospects of providing Group 2 standard power mobility to Medicare patients are not all that tantalizing.

A Full-Scale Shift

So with a Medicare model that offers attenuated funding and increasing barriers, many standard power mobility providers are looking to pursue other business models that can drive additional revenue. At first retail seemed like a helpful supplement. Now it’s seeming like the end game.

“I almost look to the Group 2 business as becoming a cash market as opposed to a Medicare market,” Letizia says. “Medicare’s kind of forcing us in this direction.”

This is especially true when the time required to provide a Group 2 chair is factored into the equation. The steps required to assess a patient’s needs, document necessity, and ensure that every aspect of provisioning the chair has followed the right policies and procedures further negate the profitability under competitive bidding’s rock-bottom rates. As things now stand with competitive bidding, Letizia notes with a bit of gallows humor that it’s easier for patients to obtain legitimately prescribed OxyContin than it is to a get a walker — let alone a Group 2 power wheelchair.

So for a patient who has the means to get what he or she wants by paying for it, as opposed to relying on a funding source, such as Medicare, to deliver a more basic chair with few features via a more time-consuming process, the prospect of purchasing the right standard power wheelchair with the desired features on a cash basis doesn’t seem out of order. In fact, it often makes a heck of a lot more sense for everyone involved.

“As seniors get older, they want better technology,” Letizia adds. “And you’re not getting that in an $1,800, Group 2 powerchair that’s rented. … It’s really going to come down to product, what the patient wants, and the service that they want.”

So are providers ready for retail? Are they in a position where they can migrate their businesses to a cash sales model? Letizia says they’re getting there. As it stands, providers are already looking for retail items that can pair with funded items as an upsell. So that willingness to engage and embrace retail models can help them move in that direction.

“You have to be retail ready,” he advises. “When someone comes into the store, we’re so conditioned to say ‘What insurance do you have?’ Instead, we need to say, ‘What’s your diagnosis? What do you need?’”

If providers start to engage patients in a more consultative fashion, they can leverage their care and product knowledge to ensure that a patient gets the right mobility solution, as well as other DME items, by providing them with options and information.

“In this industry, we’re educators,” Letizia says. “No one plans on buying a bath bench, but when you do, you don’t know anything about it. Our staffs need to be educators, and say, ‘These are what your options are. This is what is going to work best for you,’ not ‘This is what Medicare will pay for.’ We are consultants and we need to make people aware of what their options are.”

Growing Acceptance

Of course, what standard power mobility providers are experiencing is not occurring in a bubble. Manufacturers are starting to respond to this drive toward feature-rich retail offerings. For example, Pride Mobility Products Corp. recently made a big splash at the Feb. 29-March 1 Medtrade Spring event in Las Vegas with the unveiling of its Jazzy Air, a non-coded power wheelchair that offers a variety of enticing features for cash-paying customers.

Taking a cue from the Quantum Rehab side of the Pennsylvania mobility maker, Pride set its sights on improved social interaction. Last year, Quantum used Medtrade Spring as the venue to debut its Q6 Edge with iLevel, which not only raised users 10 inches in order to improve their engagement with others, but let them continue operating the chair at 3.5 mph, which is more than sufficient for a walking pace.

That same capability is now available to retail customers for standard mobility products. The Jazzy Air features 10 in. of seat elevation while driving to provide enhanced environmental access and interaction that Pride has dubbed “social mobility.” A one-touch, “Air” button, enables driving up to 3.5 mph while fully elevated, with added stability technology. When not raised, the scooter also offers additional features that would appeal to retail customers, such as a top speed of 4.1 mph, Active-Trac suspension, integrated LED lighting, and “ultracomfort” seating. And in terms of looks, the chair features a retail-oriented design and color palette.

If anything, the new Jazzy Air indicates that just like providers, mobility equipment manufacturers are seeing the same retail trend develop for standard power mobility. The product makers are responding to providers’ growing acceptance of retail mobility as patients demonstrate that they’re willing to pay cash.

“What is new is that, when I’m out there talking to dealers, I see a belief that they can make that transition,” says Randy Walsh, vice president of Retail for Pride Mobility. “… There is a general feeling that out there that, as the dealer, ‘I believe in myself, and I can make this move.’

“… There’s a new dynamic in the marketplace where our consumer-inspired research is telling us that consumers don’t necessarily want what they need,” he adds. “I might need a power mobility device, but what I really want is greater social interaction, greater environmental access, or what we’re calling ‘social mobility.’ Because of that, if the funding source isn’t going to allow me that then I’m willing to pay for what I want, and not just what I need.”

What can be said for certain is that the business of providing standard mobility is undergoing a rapid and definitive shift. While the story might be unfolding, it’s clear that the marketplace is heading in a retail direction. For dealers that embrace this opportunity, they will find a market of ready and willing standard power mobility users to purchase mobility offerings that deliver far more than what Medicare is willing to fund.

“They [customers] want what they want,” Letizia concludes. “…You’re going to have more flexibility when you’re purchasing something than when you’re waiting for CMS to pay for it. And we’re getting there. More and more people are willing to pay for these items.”

This article originally appeared in the May 2016 issue of HME Business.