Unsustainable Medicare reimbursement rates and competition from e-commerce have prompted Knueppel Healthcare Services, Inc, a West Allis-based home medical equipment provider and third-generation family business, to close.
Knueppel Healthcare Services, located at 1444 S. 113th St., will lay off its 44 employees when the company closes on April 30, according to a notice filed with the state.
The company was founded in 1955 as a pharmacy on North 84th Street and West Lisbon Avenue in Milwaukee by William’s grandparents, Hilbert and Lillian Knueppel. Their son Richard Knueppel took over ownership of the business in 1972. In the early 1980s, California-based Shield HealthCare bought the business, transitioning it from a pharmacy to a provider of medical equipment. Shield HealthCare sold the company back to Richard Knueppel about three years after acquiring it, his son and current owner William Knueppel said.
“It was a great thing because, had they not come in and bought him out, we probably wouldn't have made that transition,” William Knueppel said.
William Knueppel and Cindy Ciardo bought the business in 2004, and moved it to the current West Allis location. Its products include lift chairs, power mobility and adaptive equipment, daily living aids and orthopedic braces, among others.
William Knueppel said the business was doing well when he bought it, but industry headwinds have forced mid-sized medical equipment providers, like his, out of business in recent years. One factor is the government’s competitive bidding process for medical equipment contracts, which tends to award larger suppliers that offer products at lower prices.
Meanwhile, low Medicare reimbursement rates have driven prices down, and the amount of resources devoted to negotiating with insurance companies has made the business unsustainable, William Knueppel said.
“If someone comes in for a cane or wrist brace, six people have to touch (that transaction) before we get paid for anything,” he said. “... Out front in the retail store, we have six to seven or eight people who work with customers, but on the back end we have 30 to 40 people working so we get paid by insurance.”
The result in some cases, he said, is not making any money on a product.
As businesses like his shutter their doors, it reduces access for customers, primarily seniors in need of medical equipment, Knueppel said.
“We feel terrible about that, but we can’t continue losing money just to provide people with a product,” he said.
The rise of online retailers, like Amazon, has also hurt business, he said.
“We have people coming in and taking pictures of the product they’re looking at and likely then going on Amazon to buy it,” he said. “Which, we can’t blame them, because we’re all guilty of it.”
Knueppel Healthcare Services intends to fulfill all of its open orders before shutting down at the end of April, he said.
He said he feels the weight of having to make the difficult call as a third-generation family business owner.
“I’ve been doing it for close to 20 years now; I gave it my best,” he said. “...On a personal level, I feel I let my father down (who passed in 2008). I feel bad that I can’t continue the family business, but I know he would understand.”