Complex rehab undergoing an evolution

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Tuesday, January 23, 2018

As the complex rehab category experiences a consolidation movement, the impact of company mergers and acquisitions has yet to be felt. Within the mobility manufacturing sector, there is some concern about patient access being curtailed, along with the acceptance that consolidation at both the manufacturing and provider levels is a natural progression within a market that is maturing.

How will it shake out? It may take some time to feel the full effects, market observers say.

“As happens with all mature markets, suppliers consolidate to try to achieve economies of scale,” said Patrick Chelf, vice president of US Sales for PDG Product Design Group in Vancouver, BC. “This has certainly happened on both sides of the ‘maker-seller’ spectrum in DME.  It’s an understandable and almost inevitable process, but one of the parallel effects that always follows industry consolidation is the narrowing of choice available to the ultimate customer.”

Large-scale providers, attempting to standardize internal costs and processes are moving to smaller portfolios of purchased products so that they can leverage volume for better pricing, Chelf said.

“The result is that the effort to enter or remain in the complex rehab space is greater for any new or smaller company,” he said. “This will inevitably lead to fewer manufacturing participants in the market space, more manufacturers leaving the space or going under, and slower new technology adoption.”

Mike McGill, director of media relations and marketing for Waterloo, Iowa-based VGM, contends that while consolidation’s full impact has not yet been felt, “what we see is fewer businesses in the market, so the service areas in each state will shrink.”

In general, McGill believes that rural areas will feel the impact the most, and that residents in less populated areas will have to travel to cities to get complex rehab services in the future.

“If you live in a rural state, you are not going to be able to have the same comforts that a person who lives in a high population city or state,” McGill said. “You will get service on a less frequent time frame and will also have to wait longer for any equipment evaluations and delivery. The moral to this story is the entire market is getting less convenient to the client for care and service.”

To be sure, “as the market consolidates, access to care for families has reduced while the demand continues to grow,” agreed Brittany Commodore, brand manager of digital media and marketing for Inspired By Drive in Port Washington, NY. And because providers are focusing on higher reimbursement items to stay competitive, she said ancillary items are no longer emphasized, creating a retail demand for them.

“In response, we’re creating a program called Inspired Touch to ensure families are choosing the right products from retail sites, and receiving the clinical guidance needed for proper set-up,” Commodore said.

John Storie, vice president of sales for Eastern America at Exeter, Pa.-based Quantum Rehab, says it is up to all players in the supply chain to adjust to the changing dynamics within the mobility industry.

“The complex rehab market has always been one of evolution,” he said. “We’ve likewise always focused on delivering to all our providers, clinicians and consumers the products and services that evolve with the market’s wishes.”

Remaining competitive

If there is one aspect of consolidation where all market observers agree, it’s with the belief that small providers and manufacturers can continue to be competitive in the new landscape. In Commodore’s view, “no matter the provider size, there are large opportunities in rehab, like focusing on retail. The market is the same, the only difference is the area of focus.”

Smaller players have an advantage in being more nimble within the marketplace and therefore can adapt to change faster, McGill said.

“We have seen consistent moves to reduce costs and items not required by payer sources,” he said. “They are not going to clients’ homes as often and are asking clients to bring their chairs to the facility for repairs. We are seeing drop shipments of standard equipment instead of delivery. Some are charging for warranty work. None of this is great for the client, but it does push costs out of the system.”

For Chelf, the only option for small companies to compete is to be recognized as the best in a specific business segment.

“On the provider side, that might be the ultimate expert in pediatrics, in gerontology treatment or hospice care,” he said. “On the manufacturing side it could be the world’s finest supplier of products for pediatrics, geriatrics or bariatrics. Otherwise, without differentiation, small companies will be overwhelmed by the mass economies of scale of the consolidated players.”

Storie concludes by saying the best strategy is to realize that complex rehab, by nature, is individualized, so “take a very individualized approach to serving each client’s specific needs.”

 

CATEGORY: Complex Rehab

 

CONSOLIDATION CRAZE

·       Evolving market: While the full effect of industry consolidation has yet to be felt, expectations are that clients will face more challenges in getting the products and services they need, whether it’s traveling farther, waiting longer or having less access than in the past.

 

NEW NORMAL

·       Staying viable: Small companies – both providers and manufacturers – need to focus on their strengths to remain competitive in the changing landscape. That means positioning themselves as experts in submarkets, such as pediatrics, geriatrics and bariatrics.

 

TECH ADOPTION

·       Future glimpse: Complex rehab technologies have the potential to adapt to a wide variety of communications devices available to monitor, control, drive or document activities in the rehab market. However, the rate of adoption will be commensurate with the acceptance of these technologies by the payer community.

 

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