Ortho-Kinetics files for receivership

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Ortho-Kinetics files for receivership

By Charles Rathmann, of SBT

A Waukesha-based manufacturer and marketer of mobility tools for the disabled has filed for receivership in Waukesha County Circuit Court.
Orthokinetics Inc., markets scooters, trunk lifts, recliners that raise to help elderly persons stand from a sitting position and other devices under the Lark of America and Ortho-Kinetics brand names.
Last year, the company launched a golf cart specifically designed to make golf courses accessible for the disabled.
The company filed for receivership Jan. 24. Michael Polsky, an attorney at the Milwaukee law firm of Beck Chaet & Bamberger, was appointed as the receiver by court order Jan. 27.
Ortho-Kinetics president Anne La Marche did not return calls regarding the debt action.
"The company continues in all of their operations," Polsky said. "We are negotiating with a number of buyers to accomplish the sale of the business as an operating business."
Ortho-Kinetics employs about 25 people, according to Polsky, who indicated he hoped to conclude the case within the next 45 days.
According to Lark of America dealers, the market for the company’s products has become increasingly price-sensitive as health insurance companies negotiate low prices on devices covered by commercial insurance.
In February of last year, changes to Medicare reimbursement policies, which generally influence reimbursement practices of private insurance companies, have tightened eligibility for mobility aids.
These factors in turn have forced manufacturers to cut their prices to dealers, and resulted in the sale of more low-cost units, rather than higher-end mobility devices that may be more profitable.
"The margin is quickly disappearing from this business," said one Lark of America dealer.
The lower prices do not, as would be the case in most market situations, encourage more disabled persons to buy the products, because the decision to buy is based on triggering events like a change in physical condition or the mechanical failure of a scooter, wheelchair or other device, according to Collin Tam, an industry analyst with the consultancy firm Frost & Sullivan.
Tam told SBT that the durable medical products industry is also being adversely affected by "a decline in the homecare and nursing home sectors.
The firm, which has US offices in San Antonio and San Jose and New York, follows the medical device industry.
"Dealers will price most wheelchairs within the maximum allowable limit in order to qualify for reimbursement from the funding agency," Tam wrote in an industry advisory.
"This puts pressure on manufacturers to keep prices down so that dealers can sell their wheelchairs to customers," Tam said. "Since lower prices are not likely to attract many new buyers to the market, revenue growth is likely to be negatively affected by pricing restraints."
But according to Tam, not every player in the market is being as adversely affected by the forces buffeting Otho-Kinetics. One market leader, Elyria, Ohio-based Invacare Corporation, is posting modest market gains.
"Invacare is actually not doing too bad.," Tam said. "The company is still experiencing growth in its mobility aids products, but only about 1-2 percent annually. Invacare continuously modifies and expands its product lines to meet changing market demands. They are aggressively penetrating the custom wheelchair market, producing products that meet an individual’s specific needs and requirements."

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March 7, 2003 Small Business Times, Milwaukee

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