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Invacare to Cut 230 Jobs in Cost-Reduction Plan
ELYRIA, Ohio--After posting a 28 percent drop in second-quarter profit, Invacare Corp. announced plans last week to cut 230 jobs and close four facilities as part of a cost-reduction plan aimed at improving earnings.

While net sales for the second quarter, ended June 30, increased 17 percent to $396.3 million, the DME manufacturing giant reported net earnings of $12.9 million versus $18 million for the same period last year, blaming increased freight costs and continued reimbursement pressures in the North American market.

To improve earnings, the company announced additional cost-cutting measures including outsourcing improvements utilizing its China manufacturing capability and third parties; shifting substantial resources from product development to manufacturing cost reduction activities and product rationalization; reducing freight exposure through freight auctions and changing the freight policy; and general expense reductions. The measures are expected to total $9 million in 2005's second half and should result in annualized savings of $20 million.

The company also said it has begun review of its global manufacturing and distribution strategy and is evaluating a multi-year plan "to exit a number of manufacturing and distribution locations" that would yield annualized savings of up to $21 million.

"With the cost reduction actions ... along with the benefits from Chinese manufacturing and further penetration of the ambulatory oxygen market with sales of the HomeFill oxygen system, Invacare is committed to returning to positive earnings growth in the fourth quarter. With the facility closures over the next few years, Invacare is further committed to additional actions to make sure its cost base can support solid earnings growth into 2006 and beyond," said Invacare Chairman and CEO Mal Mixon.

Invacare employs 6,250 and sells products in 80 countries.

Hoover Leaves DMERC D to Join Sunrise
CARLSBAD, Calif.--Former DMERC Region D Medical Director Dr. Robert Hoover takes on a new role today as senior vice president of global clinical services with Sunrise Medical. He will report directly to Sunrise Chairman and CEO Michael Hammes.

According to a press release from the company, Hoover "will utilize his extensive experience, knowledge and relationships with medical professionals to help further establish Sunrise Medical as a true partner within the health care community."

"This gives me the opportunity to do something I like to do--research and education," said Hoover, who has spent the last seven years at CIGNA. With a medical degree from the University of South Alabama, Hoover remains on the faculty as an assistant clinical professor at Vanderbilt University Medical Center where he did his residency, specializing in internal medicine. He also holds a Master's Degree in public health from the Medical College of Wisconsin.

Over his years at the DMERC, explained Hoover, "one of the things I've noticed is the amount of clinical literature [that is needed] to support why we do what we do. There are so many gaps. It is a difficult decision to decide what should be covered or not." Hoover said he views his new job as a "unique opportunity" to help develop products "that meet the clinical needs of patients based upon sound scientific research and outcomes measures.

"I'm going to work with Sunrise and the industry to raise the bar as far as clinical outcomes, and have payers view this industry as health care partners," he concluded.

Sunrise Medical products are manufactured in North America, Europe and Asia and are distributed in more than 100 countries.

Dr. Donald Norris, Part B director for Idaho, will serve as interim medical director for Region D.

To revisit this news any time during the week, go to http://www.homecaremonday.com.

Provider News
Lincare Announces Fall in Q2 Earnings
CLEARWATER, Fla.--Lincare Holdings has announced a net income drop to $50.1 million for the second quarter ending June 30 from $67.4 million for the same period last year.

Revenues for the quarter were $315.2 million, about the same as those for the period in 2004.

The respiratory provider cited reductions in Medicare reimbursement for oxygen, respiratory medications and other DME for the decline, estimating that Q2 revenues were reduced by $49.6 million because of the pricing changes. According to the company, these changes offset the positive effect on revenues in the second quarter attributable to its 11 percent internal growth and 5 percent acquisition growth compared to the same period last year. The company estimated that the Medicare reimbursement cuts reduced revenues in the first half of 2005 by $83.4 million.

"We are pleased with Lincare's operating and financial performance in the first half of 2005," said CEO John P. Byrnes. We are experiencing strong customer growth and expanding market share in our core respiratory business. We believe that a number of business efficiencies and cost-cutting programs at Lincare have given the company a competitive advantage in the marketplace."

In the second quarter, Lincare completed the acquisition of three companies in Iowa, Kansas and Nevada with annual revenues of approximately $17 million. During the first half of 2005, the company added 57 operating centers, with 34 of those resulting from the acquisition of nine companies with annual revenues of approximately $42 million.

"Our financial position is strong and we achieved significant operating cash flows during the first half of 2005," said Byrnes.

Lincare provides services and equipment to more than 580,000 customers in 47 states.

In Brief
With a Sept. 1 deadline approaching for its first report to Congress, the Medicaid Commission held its first meeting last week on how the program can save $10 billion over the next five years. The advisory panel also must submit a second report, due Dec. 31, that would address long-term sustainability for the massive federal/state program. During public comments at the meeting, several beneficiary advocacy groups urged the panel to seek cuts that would not eliminate benefits but instead would focus on fraud and abuse in the system, and on provider reimbursements. The commission is expected to vote on the recommendations it will send to Congress at a two-day meeting beginning Aug 17.

The world market for products to treat burn wounds stands at more than $1.5 billion and will surpass the $2 billion mark in the next few years, according to a new study from Kalorama Information. Silver dressings and portions of the biological dressings sector both will see annual growth in excess of 20 percent through the end of the decade, according to the report. The research firm also estimates that the market for skin ulcer treatment products will grow at nearly 10 percent and surpass $5 billion by 2009.

CMS has launched the second phase of a demonstration project set for 2006 to convince people over 50 to plan ahead for long-term care needs. On Tuesday, the agency announced that it will award $2.5 million in grants to as many as 10 states that agree to mail letters encouraging individuals to plan for the costs of nursing home care. In a release about the grants, CMS Administrator Mark McClellan said there are more options available for long-term care than ever before, "and more Americans will need it at some point in their lives than ever before ... Medicare doesn't cover long-term care, and Medicaid cannot afford to be the nation's primary source of payment for its nursing home bills."

On Wednesday, the Senate Finance Committee, which oversees Medicare, held a hearing on Medicare pay-for-performance. According to Sen. Charles Grassley, R-Iowa, committee chair, "What we have is a systemic failure of Medicare payment systems to reward quality, and to provide incentives to invest more in health care information technology. Until we pay providers more for providing better quality care, we are not going to see the improvements we want." For additional information, visit http://finance.senate.gov.

New York City is considering a plan to monitor people with diabetes, according to an Associated Press report. The plan would require medical labs to report test results showing how well individual patients are controlling their disease, the report said, with the intent of pinpointing problem patients to improve their care and save treatment costs--estimated at $5 billion a year. Though the proposal has drawn fire from health privacy advocates, "I don't think we can afford not to do anything," Dr. Thomas Frieden, the city's health commissioner, told the news service. The report said at least half a million New Yorkers have diabetes and are at risk for blindness, kidney failure, amputations and heart problems because they are doing a poor job of controlling the illness.

On July 30, Medicare and Medicaid turned 40. The programs were signed into law in 1965 by President Lyndon B. Johnson. The signing ceremony was held at the Truman Library in Independence, Mo., to honor former President Harry Truman for his leadership on health insurance, which he first proposed in 1945. For more information, click here.

Coming Up
The United Ostomy Association will hold its National Conference Aug. 3-6 in Anaheim, Calif. For more information, call (800) 826-0826 or visit www.uoa.org.

VGM Learn will hold a Billing and Reimbursement Roadshow Aug. 9 in Denver. For more information, call (800) 642-6065 or visit www.vgm.com.

The National Registry of Rehabilitation Technology Suppliers (NRRTS) will hold an educational conference Aug. 10-13 in St. Louis. For more information, visit (512) 267-6832 or visit www.nrrts.org.

The Florida International Medical Expo (FIME) will take place Aug. 17-19 in Miami. For more information, call (941) 366-2554 or visit www.fimeshow.com.