The Market for Wheelchairs: Innovations

and Federal Policy

November 1984

NTIS order #PB85-145944
HEALTH TECHNOLOGY CASE STUDY 30

The Market for Wheelchairs

Innovations and Federal Policy

NOVEMBER 1984

Prepared by:

Donald S. Shepard, Ph.D.

Institute for Health Research, Harvard School of Public Health, Boston, MA; and

Health Services Research and Development Unit,

Veterans Administration Medical Center, West Roxbury, MA

and

Sarita L. Karen, M.S.

Institute for Health Research, Harvard School of Public Health, Boston, MA

OTA Case Studies are documents containing information on a specific medical technology or area of application that supplements formal OTA assessments. The material

is not normally of as immediate policy interest as that in an OTA Report, nor does

it present options for Congress to consider.

CONGRESS OF THE UNITED STATES

Office of Technology Assessment

Washington D C 20510
Recommended Citation:

Shepard, Donald S., and Karen, Sarita L., The Market for Wheelchairs: Innovations and

Federal Policy (Health Technology Case Study 30), OTA-HCS-30, Washington, DC: U.S.

Congress, Office of Technology Assessment, November 1984. This case study was performed as part of OTA’s assessment of Federal Policies and the Medical Devices Industry.

Library of Congress Catalog Card Number 84-601140

For sale by the Superintendent of Documents

U.S. Government Printing Office, Washington, DC 20402
Preface

The Market for Wheelchairs: Innovations and

Federal Policy is Case Study 30 in OTA’s Health

Technology Case Study Series. This case study

has been prepared in connection with OTA’s project on Federal Policies and the Medical Devices

Industry, which was requested by the Senate

Committee on Labor and Human Resources and

endorsed by the Senate Committee on Veterans’

Affairs. A listing of other case studies in the series

is included at the end of this preface.

OTA case studies are designed to fulfill two

functions. The primary purpose is to provide

OTA with specific information that can be used

in forming general conclusions regarding broader

policy issues. The first 19 cases in the Health Technology Case Study Series, for example, were conducted in conjunction with OTA’s overall project

on The Implications of Cost-Effectiveness Analysis of Medical Technology. By examining the 19

cases as a group and looking for common problems or strengths in the techniques of cost-effectiveness or cost-benefit analysis, OTA was able

to better analyze the potential contribution that

those techniques might make to the management

of medical technology and health care costs and

quality.

The second function of the case studies is to

provide useful information on the specific technologies covered, The design and the funding levels of most of the case studies are such that they

should be read primarily in the context of the associated overall OTA projects. Nevertheless, in

many instances, the case studies do represent extensive reviews of the literature on the efficacy,

safety, and costs of the specific technologies and

as such can stand on their own as a useful contribution to the field.

Case studies are prepared in some instances because they have been specifically requested by

congressional committees and in others because

they have been selected through an extensive review process involving OTA staff and consultations with the congressional staffs, advisory panel

to the associated overall project, the Health Program Advisory Committee, and other experts in

various fields. Selection criteria were developed

to ensure that case studies provide the following:

● examples of types of technologies by func-

●

●

●

●

●

●

●

tion (preventive, diagnostic, therapeutic, and

rehabilitative);

examples of types of technologies by physical

nature (drugs, devices, and procedures);

examples of technologies in different stages

of development and diffusion (new, emerging, and established);

examples from different areas of medicine

(e.g., general medical practice, pediatrics,

radiology, and surgery);

examples addressing medical problems that

are important because of their high frequency or significant impacts (e. g., cost);

examples of technologies with associated high

costs either because of high volume (for lowcost technologies) or high individual costs;

examples that could provide information material relating to the broader policy and methodological issues being examined in the

particular overall project; and

examples with sufficient scientific literature.

Case studies are either prepared by OTA staff,

commissioned by OTA and performed under contract by experts (generally in academia), or written by OTA staff on the basis of contractors’

papers.

OTA subjects each case study to an extensive

review process. Initial drafts of cases are reviewed

by OTA staff and by members of the advisory

panel to the associated project. For commissioned

cases, comments are provided to authors, along

with OTA’s suggestions for revisions. Subsequent

drafts are sent by OTA to numerous experts for

review and comment. Each case is seen by at least

30 reviewers, and sometimes by 80 or more outside reviewers. These individuals may be from

relevant Government agencies, professional societies, consumer and public interest groups, medical practice, and academic medicine. Academicians such as economists, sociologists, decision

analysts, biologists, and so forth, as appropriate,

also review the cases.

Although cases are not statements of official

OTA position, the review process is designed to

satisfy OTA’s concern with each case study’s

scientific quality and objectivity. During the various stages of the review and revision process,

therefore, OTA encourages, and to the extent

possible requires, authors to present balanced information and recognize divergent points of view.

iii
Health Technology Case Study Seriesa

——

Case Study Case study title; author(s);

Series No. OTA publication numberb

1

2

3

4

5

6

7

8

9

10

11

12

13

14

—aAvailable for sale by the Superintendent of Documents, U.S. Government

Printing Office, Washington, DC, 20402, and by the National Technical

Information Service, 5285 Port Royal Rd., Springfield, VA, 22161. Call

OTA’s Publishing Office (224-8996) for availability and ordering information.

bOriginal publication numbers appear in parentheses.

c

The first 17 cases in the series were 17 separately issued cases in Background

Paper #z: Case Studies of Medical Technologies, prepared in conjunction

with OTA’S August 1980 report The Implications of Cost-Effectiveness Analysis of Medical Technology.

Formal Analysis, Policy Formulation, and End-Stage Renal

Disease;

Richard A. Rettig (OTA-BP-H-9(1))C

The Feasibility of Economic Evaluation of Diagnostic Procedures: The Case of CT Scanning;

Judith L. Wagner (OTA-BP-H-9(2))

Screening for Colon Cancer: A Technology Assessment;

David M. Eddy (OTA-BP-H-9(3))

Cost Effectiveness of Automated Multichannel Chemistry

Analyzers;

Milton C. Weinstein and Laurie A. Pearlman

(OTA-BP-H-9(4))

Periodontal Disease: Assessing the Effectiveness and Costs of

the Keyes Technique;

Richard M. Scheffler and Sheldon Rovin

(O-I-A-BP-H-9(5))

The Cost Effectiveness of Bone Marrow Transplant Therapy

and Its Policy Implications;

Stuart O. Schweitzer and C. C. Scalzi

(OTA-BP-H-9(6))

Allocating Costs and Benefits in Disease Prevention Programs:

An Application to Cervical Cancer Screening;

Bryan R. Luce (Office of Technology Assessment)

(OTA-BP-H-9(7))

The Cost Effectiveness of Upper Gastrointestinal Endoscopy;

Jonathan A. Showstack and Steven A. Schroeder

(OTA-BP-H-9(8))

The Artificial Heart: Cost, Risks, and Benefits;

Deborah P. Lubeck and John P. Bunker

(OTA-BP-H-9(9))

The Costs and Effectiveness of Neonatal Intensive Care;

Peter Budettir Peggy McManus, Nancy Barrand, and

Lu Ann Heinen (OTA-BP-H-9(1O))

Benefit and Cost Analysis of Medical Interventions: The Case

of Cimetidine and Peptic Ulcer Disease;

Harvey V. Fineberg and Laurie A. Pearlman

(OTA-BP-H-9(11))

Assessing Selected Respiratory Therapy Modalities: Trends and

Relative Costs in the Washington, D.C. Area;

Richard M. Scheffler and Morgan Delaney

(OTA-Bp-H-9(12))

Cardiac Radionuclide Imaging and Cost Effectiveness;

William B. Stason and Eric Fortess (OTA-BP-H-9(13))

Cost Benefit/Cost Effectiveness of Medical Technologies: A

Case Study of Orthopedic Joint Implants;

Judith D. Bentkover and Philip G. Drew (OTA-BP-H-9(14))

Case Study Case study title; author(s);

Series No. OTA publication numberb

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Elective Hysterectomy: Costs, Risks, and Benefits;

Carol Korenbrot, Ann B. Flood, Michael Higgins,

Noralou Roos, and John P. Bunker (OTA-BP-H-9(15))

The Costs and Effectiveness of Nurse Practitioners;

Lauren LeRoy and Sharon Solkowitz (OTA-BP-H-9(16))

Surgery for Breast Cancer;

Karen Schachter Weingrod and Duncan Neuhauser

(OTA-BP-H-9(17?))

The Efficacy and Cost Effectiveness of Psychotherapy;

Leonard Saxe (Office of Technology Assessment)

(OTA-BP-H-9(18))d

Assessment of Four Common X-Ray Procedures;

Judith L. Wagner (OTA-BP-H-9(19))e

Mandatory Passive Restraint Systems in Automobiles: Issue:

and Evidence;

Kenneth E. Warner (OTA-BP-H-15(20))f

Selected Telecommunications Devices for Hearing-Impaired

Persons;

Virginia W. Stern and Martha Ross Redden

(OTA-Bp-H-16(21))g

The Effectiveness and Costs of Alcoholism Treatment;

Leonard Saxe, Denise Dougherty, Katharine Esty,

and Michelle Fine (OTA-HCS-22)

The Safety, Efficacy, and Cost Effectiveness of Therapeutic

Apheresis;

John C. Langenbrunner (Office of Technology Assessment

(OTA-HCS-23)

Variation in Length of Hospital Stay: Their Relationship to

Health Outcomes;

Mark R. Chassin (OTA-HCS-24)

Technology and Learning Disabilities;

Candis Cousins and Leonard Duhl (OTA-HCS-25)

Assistive Devices for Severe Speech Impairments;

Judith Randal (Office of Technology Assessment)

(OTA-HCS-26)

Nuclear Magnetic Resonance Imaging Technology: A Clinical,

Industrial, and Policy Analysis;

Earl P. Steinberg and Alan Cohen (OTA-HCS-27)

Intensive Care Units (ICUs): Clinical Outcomes, Costs, and

Decisionmaking;

Robert A. Berenson (OTA-HCS-28)

The Boston Elbow;

Sandra J. Tanenbaum (OTA-HCS-29)

The Market for Wheelchairs: Innovations and Federal Policy;

Donald S. Shepard and Sarita L. Karen

.

(OTA-HCS-30)

dBackground paper #3 t. The Implications of Cost-Effectiveness Analysis of

Medical Technology.

‘Background Paper #5 to The Implications of Cost-Effectiveness Analysis o!

Medical Technology.

fBac&ound paper ?I to OTA’S May 1982 report Technology and ~andicapped People.

gBackground paper #2 to Technology and Handicapped People.

iv
OTA Project Staff for Case Study #30

Roger Herdmanl and H. David Banta,2 Assistant Director, OTA

Health and Life Sciences Division

Clyde J. Behney, Health Program Manager

Jane E. Sisk, Project Director

Cynthia P. King,3 Analyst

John C. Langenbrunner, 4 Analyst

Katherine E. Locke, Research Assistant

H. Christy Bergemann, Editor

Virginia Cwalina, Administrative Assistant

Rebecca I, Erickson, Secretary/Word Processor Specialist

Brenda Miller, Word Processor/P. C. Specialist
Advisory Panel for Federal Policies and

the Medical Devices Industry

Richard R. Nelson, Chair

Institute for Social and Policy Studies, Yale University

New Haven, CT

William F. Ballhaus Robert M. Moliter

International Numatics, Inc. Medical Systems Division

Beverly Hills, CA General Electric Co.

Ruth Farrisey

Washington, DC

Massachusetts General Hospital Louise B. Russell

Boston, MA The Brookings Institution

Peter Barton Hutt

Washington, DC

Covington & Burling Earl J. Saltzgiver

Washington, DC Foremost Contact Lens Service, Inc.

Alan R. Kahn

Salt Lake City, UT

Consultant Rosemary Stevens

Cincinnati, OH Department of History and Sociology of Science

Grace Kraft

Kidney Foundation of the Upper Midwest

Cannon Falls, MN

Joyce Lashof

School of Public Health

University of Pennsylvania

Philadelphia, PA

Allan R. Thieme

Amigo Sales, Inc.

Albuquerque, NM

University of California Eric von Hippel

Berkeley, CA Sloan School

Penn Lupovich

Massachusetts Institute of Technology

Group Health Association

Cambridge, MA

Washington, DC Edwin C. Whitehead

Victor McCoy

Paralyzed Veterans of America

Technicon Corp.

Tarrytown, NY

Washington, DC

vi
Contents

Page

CHAPTER 1: SUMMARY AND POLICY ISSUES.. . . . . . . . . . . . . . . . . . . . . . . . . . 3

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3

The Device and Its Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Federal Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Manufacturer Survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s

Case Studies of Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Monitoring Durability and Computing Annualized Costs of

Different Wheelchairs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Prescribing and Paying for Significantly Valuable Wheelchair Features

Under Government Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Subsidizing Selected R&D Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Encouraging and Expediting the Development of Standards for

Wheelchair Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

CHAPTER 2: DESCRIPTION OF THE DEVICE AND ITS MARKET . . . . . . . . . 13

Technology of Wheelchairs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Safety and Effectiveness. . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Users, Purchasers, and Prescribers of Wheelchairs. . . . . . . . . . . . . . . . . . . . . . . . . . 14

costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Purchase Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Maintenance and Repair Costs, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Private Payment Sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Private Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . 18

Health Maintenance Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Size of the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Market Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . 19

Private Research and Development Initiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CHAPTER 3: ROLES OF THE FEDERAL GOVERNMENT . . . . . . . . . . . . . . . . . . . 23

As a Maker of National Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Accessibility to the Handicapped. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Effects of Government Policies on Wheelchair Design . . . . . . . . . . . . . . . . . . . . 23

As a Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Medicaid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Medicare. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Veterans Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Effects on Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

As a Regulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Classification of Wheelchair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Development of Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Investigation and Resolution of Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

As a Supporter of Research, Development, and Evaluation. . . . . . . . . . . . . . . . . . . 29

National Institute of Handicapped Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

The National Aeronautics and Space Administration ., . . . . . . . . . . . . . . . . . . . . 30

Veterans Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

As a Judge of Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

CHAPTER 4: OVERVIEW OF INNOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Economic Theories of Innovation . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . 35

Management and Government Perspectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Contents—continued

Page

CHAPTER 5: SURVEY OF WHEELCHAIR MANUFACTURERS . . . . . . . . . . . . . . 39

Survey Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Innovations of the Past Decade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Source of Funding for Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Reimbursement by Government Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

R&D Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Targets of Marketing Campaigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Marketing Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Obstacles to Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Role of Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Effects of Other Federal Policies on R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Participation in Obtaining Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

CHAPTER 6: CASE STUDIES OF INNOVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 51

Case 1: Past Innovation: Invacare Corp.’s Power Rolls@ IV . . . . . . . . . . . . . . . . . . 51

Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Commercial Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Diffusion of the Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Case 2: Potential Innovation: Curb-Climbing Wheelchair . . . . . . . . . . . . . . . . . . . . 53

Description of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Obstacles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

APPENDIX A.—ACKNOWLEDGMENTS AND HEALTH PROGRAM

ADVISORY COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

APPENDIX B.–SAMPLING PROCEDURES FOR

SURVEY OF MANUFACTURERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

APPENDIX C.–INTERVIEWER’S SCHEDULE FOR TELEPHONE

INTERVIEW OF WHEELCHAIR MANUFACTURER’S. . . . . . . . . . . . . . . . . . . . . 62

APPENDIX D.–GLOSSARY OF TERMS AND ACRONYMS . . . . . . . . . . . . . . . . 63

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Tables

Table No. Page

1. Illustrative Comparison of Total Annualized Costs of an

“Inexpensive” v. a “Medium-Priced” Wheelchair . . . . . . . . . . . . . . . . . . . . . . . . . 17

2. Comparative Lifetime Repair Data of Selected Medical Equipment . . . . . . . . . 17

3. Market Size and Shares of Wheelchair Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4. Concentration of Manufacturers of Wheelchair Products. . . . . . . . . . . . . . . . . . 19

5. Wheelchair Innovations, 1973-83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

6. Frequency of Features or Advantages in Wheelchair Innovations. . . . . . . . . . . 40

7. Length of the Development Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

8. Source of the Innovative Idea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

9. Eligibility of Innovations for Purchase by the VA. . . . . . . . . . . . . . . . . . . . . . . . 42

10. Location and Size of R&D Departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

11. Types of R&D Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

12. Marketing Procedures: At Whom Is the Marketing Aimed? . . . . . . . . . . . . . . . 44

13. Tools Used to Market a New Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

viii
—

Contents—continued

Page

14. Factors That Are the Largest Impediments to Marketing a New Product . . . . 45

15. Role of Voluntary Standards in Manufacturers’ Design of a New Product 46

16. Presence of Government Policies That Affect R&D . . . . . . . . . . . . . . . . . . 47

17. Active Participation in Getting Product Approved for

Third-Party Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

B-1. Sampling Frame for Survey of Wheelchair Manufacturers . . . . . . . . . . . . . . . 61

Figure

Figure No. Page

1. The Power Rolls% IV’’ Maxtra’’ by Invacare . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
OTA Note

These case studies are authored works commissioned by OTA. Each author

is responsible for the conclusions of specific case studies. These cases are not statements of official OTA position. OTA does not make recommendations or endorse

particular technologies. During the various stages of review and revision, therefore,

OTA encouraged the authors to present balanced information and to recognize

divergent points of view.
1.

Summary and Policy Issues
1.

Summary and Policy Issues

SUMMARY

The Study

Wheelchairs, for many disabled persons, are essential medical devices for work, mobility, and

recreation. The characteristics, prices, and durability of these chairs are critical both to the quality

of life of their users and to the costs incurred by

the users, insurers, and government agencies.

This case study focuses on how Federal Government policies affect innovations] in wheelchair

characteristics. In this chapter, these findings are

summarized. In subsequent chapters, wheelchairs

and their market (ch. 2), the role of the Federal

Government (ch. 3), and relevant economic theories of innovation (ch. 4) are described. Findings

of a telephone survey of wheelchair manufacturers

(ch. 5) are reported, and case studies of innovation based on a field visit (ch. 6) are presented.

The Device and Its Market

One American in 200 (approximately 1.2 million total in 1977) is a wheelchair user (36). Just

under half the users in 1977 were nursing home

residents, and this user population is expected to

grow by an annual rate of 1.5 percent (25). In

1982, an estimated 338,000 wheelchairs of all

types were sold in the United States, for total retail

sales of $126 million. Wheelchairs fall into four

categories: 1) general-purpose manual wheelchairs, 2) power (electric) wheelchairs, 3) sports

wheelchairs, and 4) power alternatives (vehicles

that function as wheelchairs, but often look more

like golf carts than chairs), General-purpose manual chairs are, by far, the largest segment sold.

Manual wheelchairs serving rental or institutional

needs (transport within a health care institution)

represent 250,000 of the total annual number of

chairs sold.

) For th IS report, an ‘‘ innovat ] on is any product or product

modification that substantially ]mproves the qua] ity or decreases

the cost of a product, while introducing a technology, material, or

concept not previously found in any sim]lar product on the market

(see ch. 4).

Until 1978, the market was dominated by one

manufacturer, Everest & Jennings, Inc. (E&J),

which had 90 percent of U.S. sales. However, in

that year, E&J settled an antitrust suit and relocated its plant. This situation slowed deliveries

and weakened E&J’s market position, offering

other manufacturers the opportunity to strengthen

their market shares. As a result, by 1983, there

were approximately 53 manufacturers and importers of wheelchairs in the United States (37). Since

1978, E&J’s sales have slightly declined in absolute terms, but much more in market share. In

1983, Invacare Corp., whose sales have risen rapidly, overtook E&J as the leader in number of industry sales, although E&J remained first in dollar

value of wheelchair sales. (E&J projected its total

1983 sales, including non-wheelchair products,

at $65 million. ) The importance of these and a

few other large firms suggests that the wheelchair

market is oligopolistic. 2 Few details on market

shares by type of wheelchair or manufacturer are

available.

Purchase costs of a wheelchair vary from $200

to $3,000, depending on the type of wheelchair

(manual, power, sports, or power alternative), the

number of accessories and custom features, the

quality of the construction and materials, and the

manufacturer.

Maintenance and repair costs of wheelchairs are

substantial. Over an average 3- to 4-year wheelchair lifetime, cumulative repair costs are sometimes more than initial purchase costs. The most

frequently needed repairs are replacement of tires

and upholstery. Maintenance and repair costs

vary among models, however, and stainless steel

chairs even come with a lifetime warranty on the

frame. Comparison of costs of different wheelchair models is more meaningful if total annualized costs are computed. Total annualized costs

2

In an oligopoly, a few suppliers dominate the market, and competition is limited by the knowledge that an action by one firm will

prompt a reaction by the others.

3
4 ● aHealth Technology Case STudy 30. The Market for Wheelchairs: Innovations and Federal Policy

of a wheelchair are the sum of: 1) the purchase

price divided by a factor based on expected years

of use, and 2) the annual repair and maintenance

costs. For power chairs, this cost amounts to

$1,6000 per year, of which over half is maintenance

and repairs (calculated in ch. 2).

The wheelchair market is dominated by thirdparty reimbursement. The influence of third-party

reimbursement is direct for prescription wheelchairs and indirect for institutional and rental

chairs. About half of all wheelchair purchases are

at least partially funded by government and

another 40 to 45 percent by private insurers. Only

5 to 10 percent are paid for totally by the user.

The largest single purchaser of wheelchairs is the

Veterans Administration (VA), which reportedly

purchased 11 percent of wheelchairs in 1976 (17).

The extensive amount of third-party reimbursement steers innovation to devices that can expect

to receive such funds. The policies of the different

insurers vary; and, although all of them will pay

for a wheelchair that is “medically necessary, ” the

meaning of this term varies. Some payers, such

as the VA and Medicaid in Massachusetts, consider wheelchair alternatives, or accessories that

provide psychological benefit to the user, to be

medically necessary. Others, such as Medicare,

will pay only for the most minimal type of equipment needed to provide mobility and to meet

other physical needs of an individual patient.

Wheelchair repairs are covered (or provided) in

full to eligible users under the VA, Medicaid, and

the health maintenance organization surveyed for

this study. They are also covered by Medicare,

subject to maximums, deductibles, and 20-percent

coinsurance. However, the private insurer interviewed for this study, Blue Cross of Massachusetts, did not pay for repairs. Payers appear to

consider only initial purchase costs, not lifetime

costs, in deciding which wheelchair to supply.

The emphasis on price over performance in the

reimbursement procedures for general manual

wheelchairs has probably discouraged innovation.

As manufacturers have difficulty selling a higher

priced, higher quality, manual wheelchair, they

probably have little reason to produce one.

Federal Policies

Wheelchair users are protected by the Rehabilitation Act of 1973, which generally prohibits discrimination on the basis of physical or mental

handicap and requires that public buildings be accessible to handicapped people. Undoubtedly, the

physical modifications of buildings and grounds,

transportation systems, and many private accommodations and increased public concern have

stimulated demand for wheelchairs.

Government research and development (R&D)

efforts on wheelchairs appear modest in relation

to the number of users. Available data show 1983

R&D expenditures specifically directed at wheelchairs to be $750,000 by the National Institute of

Handicapped Research, $511,000 by the VA, and

$50,000 by the National Aeronautics and Space

Administration.

The Federal Government is a major purchaser

of wheelchairs not only through the VA, but also

through Medicaid (which probably spent nearly

$32 million on wheelchairs nationally in 1982) and

Medicare. Specific data on Medicare expenditures

for wheelchairs are not available.

Wheelchairs themselves are covered under legislation concerning medical devices. The Food and

Drug Administration (FDA) classifies and regulates the marketing of medical devices, including

wheelchairs. Only manual wheelchairs for shortterm indoor use are in Class I. All other currently

marketed wheelchairs fall into Class II, while the

most risky chair, a curb-climber, falls into Class

III. FDA is working on developing performance

standards for wheelchairs in cooperation with

3There are three FDA regulatory classes of medical devices according to the potential risks they pose: Class I, general controls, encompasses devices for which general controls are sufficient to provide reasonable assurances of safety and effectiveness. Class II,

performance standards, contains devices for which general controls

are considered insufficient to assure safety and effectiveness, and

information exists to establish performance standards. Class III, premarket approval, applies to devices for which Class I general controls are insufficient, information does not exist to establish a performance standard, and the device supports life, prevents health

impairment, or presents a potentially unreasonable risk of illness

or injury (35).
. .

the Rehabilitation Engineering Society of North

America. These standards are not expected to be

completed for several more years, however.

FDA investigates claims for unsafe products

that are brought directly to it. When a series of

claims requires action, FDA usually attempts to

have the manufacturer voluntarily correct the

problem, if possible, and recall defective products.

The Federal and State judicial systems serve as

judges of product liability. Manufacturers are generally liable for injuries caused by negligence in

design or manufacture or, in many cases, inadequate performance of their products. Although

most manufacturers subject their products to extensive testing, accidents still happen. Physicians,

therapists, and dealers are also at risk for negligence or failing to inform users properly regarding risks of and alternatives for the products they

prescribe or sell. As a result, users may be hesitant to try substantially new products. The fear

of product liability suits causes manufacturers,

physicians, therapists, and dealers to hesitate to

make, fit, or sell products that are significantly

different from those already established. These

fears of liability retard the innovative process.

Manufacturer Survey

Eleven wheelchair manufacturers were surveyed

by telephone interview regarding their innovations in the last decade, their R&D efforts, their

marketing methods, and the effect of government

policies on their operations. The researchers found

that most innovations have been refinements of

existing products, with an emphasis on usefulness

to active users.

Most respondents called their R&D departments crucial to the success of their companies.

The 15 innovations identified in the survey were

reportedly developed with private R&D. The few

manufacturers that provided quantitative data on

their R&D effort gave a median of 4 percent of

sales. If this share applied to the industry generally, it indicates a total annual private R&D effort of $5 million, several times larger than that

of the Federal Government.

Other findings of the survey involved marketing, reimbursement, and legal issues. Dealers were

the important target for marketing (mentioned by

82 percent of respondents), followed by institutions and users. Trade shows were the most commonly mentioned marketing tool. Marketing

strategies aimed at the end users were most significant for innovative products of small companies. Reimbursement policies were important primarily to manufacturers of innovative products.

Products that are fairly typical of their kind tend

to be assured of third-party coverage. The high

cost of an innovative product, lack of clear-cut

product liability laws, and the vulnerability of the

manufacturer to frequent and successful lawsuits

were cited as major obstacles to innovation.

Case Studies of Innovations

The authors studied the Power Rolls@’ IV, made

by Invacare Corp., as an example of a successful

past innovation. This innovation was pushed

from conception to market in approximately 2

years. The product resulted from market research

that examined products that were currently available and needs that were not being met, as identified by the end users. However, reimbursement

policies and product liability were also considerations and played limiting roles in the design and

production of the product. Although the Power

products, it was designed to be competitively

priced to broaden third-party reimbursement. It

was extensively tested for safety and durability.

A strong sales force successfully gained the interest

of dealers. In the first 3 years that it has been availof the U.S. market for powered wheelchairs.

The second innovation studied was a curbclimbing wheelchair available in parts of Europe,

but not the United States. According to this study,

five significant factors that limited innovation in

this country were: product liability, R&D funding, reimbursement policies, user preference, and

technology transfer between countries. Product

liability, reimbursement policies, and import

duties also discourage the import of this product.
6 ● Health Technology Case Study 30: The Market for Wheelchairs Innovations and Federal Policy

POLICY ISSUES

Monitoring Durability and Computing

Annualized Costs of Different

Wheelchairs

When purchasers of wheelchairs face a choice

among alternative models and manufacturers,

they need to determine which choice provides the

best value for the money. A model with a higher

initial purchase price may save money later

through lower repair costs. In order for government and other purchasers to evaluate different

wheelchairs properly, systematic data are required

on the length of useful life and maintenance costs

of wheelchairs.

The VA and the National Institute of Handicapped Research might undertake such analysis.

VA facilities and certain users could be identified

as “monitoring sources” to maintain careful records of the timing, nature, and cost of repairs and

the type of use for the chair. Costs could be summarized as annualized cost per year of use. This

reporting would be analogous to the annual cost

of electricity indicated on the label of a new refrigerator. VA therapists and statisticians could

select the chairs to be evaluated and choose veterans to serve as a representative sample of users.

Organizing this monitoring effort like a research

study may be desirable. Participants must be informed of the benefits, responsibilities, and risks

(none known) of participation.

Since wheelchairs differ in features and quality,

the one with the lowest annualized cost is not necessarily the appropriate one. But third-party payers could demand some justification before reimbursing for costs considerably above the minimum

for a similar product. If models of wheelchairs

with the lowest annualized cost were reimbursed

most easily and quickly, then the other manufacturers might be encouraged to increase quality so

as to decrease maintenance and thus total annualized costs. If such effects occurred, both quality

and cost-containment goals could be served. The

VA, for example, could also consider basing its

procurement program on similar annualized cost

analyses, rather than only on purchase price and

past impressions.

It maybe argued that a reimbursement system

that encourages high-quality products will also

encourage costly products—a problem for a medical care system that is trying to limit spending.

One way in which the reimbursement systems,

especially Medicare, have attempted to limit their

costs has been to base reimbursement rates on

costs for previous, rather than current, years. If

an innovation raises costs, the increase is not recouped for at least 2 years. Simply basing reimbursement rates on current prices could have a

beneficial effect on innovation. If manufacturers

knew that their products would be reimbursed at

something close to their charge and that better

performance could command a higher price, they

might be encouraged to implement some of the

innovative ideas they currently have. However,

as more costly innovations would be introduced,

the average price on which the reimbursement rate

is based would rise and spending would increase.

A possible approach would be to borrow the

concept of price indexes from payment systems

for hospital care. Payment rates could be adjusted

annually for changes in prices of inputs (labor and

materials), complexity, and productivity. Manufacturers would then have the security of knowing that they could sell their products at a fair

price. But such an approach would require that

payers acquire additional technical expertise and

would still entail continuing increases in prices and

expenditures.

The problem remains of how to pay for higher

quality products while encouraging manufacturers’ efforts to maintain quality. One possibility

would be to categorize products on the basis of

quality, as determined through effectiveness analyses. Products that are more effective could be

reimbursed at a higher rate, or at a greater percentage of the average cost of all wheelchairs.

Manufacturers would then have to make a better product to receive a higher level of reimbursement. This system should be less expensive over

the long run, since repair and replacement costs

(part of the quality evaluation) would be less. A

second possibility would be to reimburse at a

higher rate for products that carried extended war-
Ch. 1—Summary andd Policy 1ssues ● 7

ranties (excluding normal wear and abuse), placing manufacturers at risk for the durability of their

products.

Prescribing and Paying for Significantly

Valuable Wheelchair Features Under

Government Programs

New technology in wheelchairs that maybe significantly valuable to users may not be developed

and diffused. When manufacturers have some assurance of a reasonably sized and predictable market for an innovation, they are usually much more

likely to implement it. A serious impediment to

the diffusion of new technology in wheelchairs is

that many prescriptions are written for a “standard wheelchair, ” which allows reimbursement

only for one of the least expensive models available. Since the Federal Government pays for almost half the wheelchairs purchased, its policies

affect the industry as well as the patients. Medicare’s policies are extremely important, not only

for chairs it pays for directly, but also as a bellwether for the private insurance industry.

Officials of the Medicare and Medicaid programs could consider encouraging physicians and

therapists to prescribe more sophisticated types

of wheelchairs if they substantially improve the

user’s ability to function independently. The Medicare program could communicate this information in a letter to therapists and dealers who currently receive Medicare reimbursement. At the

same time, the Medicare program should be sure

that providers are aware of the kinds of features

for which Medicare or Medicaid would be willing to pay and the kinds of justifications that these

features require. Currently, justification is based

on medical necessity, but guidelines could be

spelled out. If a chair with some special feature,

such as lighter weight or removable armrests, results in significantly better function for its user

but is unaffordable for the user, Medicare could

encourage the therapist to prescribe and justify

it, and the dealer to order it.

Currently, the Medicaid program allows no copayments by a wheelchair user. By contrast, the

Medicare program allows copayments for more

sophisticated wheelchairs, other than the required

20-percent share by the purchaser, only if the purchaser advances the full price of the wheelchair

directly.

Many dealers and manufacturers could offer

more convenience and amenity options as “accesseries, ” such as especially comfortable or durable

upholstery. If improved seating is therapeutic, it

could be so indicated and billed to a third party.

If the accessory was purely an amenity, it could

be written up and billed to the user as a separate

item, but, if ordered at the same time, could be

installed on the wheelchair at the factory. For example, cloth upholstery might be offered as an

accessory in place of the standard vinyl upholstery. This practice would allow users to customize their wheelchairs with features that could not

necessarily be justified on the basis of medical necessity. The cost of a basic wheelchair would still

be billed to the insurer and only the accessory

billed to the user. To prevent overcharging, Medicare and Medicaid might require that they be

notified about the nature and price of such accessories,

For features prescribed by the therapist, the extent of justification required by Government and

private insurers would entail tradeoffs between

maximizing the independence and comfort of the

client and containing cost for the payer. For example, suppose a handicapped person could be

provided either a standard manual wheelchair

costing $400 (retail) or a prescription manual

wheelchair costing $1,000, the 1983 estimated industry average prices for their respective categories. (Based on estimated annual industry sales of

300,000 and 70,000 units respectively (including

rental and institutional chairs), over 75 percent

of manual chairs are standard (1). ) The prescription chair, however, allows a user to have the design, dimensions, weight, type of armrests, etc.,

tailored precisely to his or her requirements. The

$600 difference in initial purchase cost translates

to a differential in annualized cost of about $250

per year. If the prescription wheelchair allowed

even a moderate improvement in function, the

small investment might appear cost effective.

Physicians and therapists should be encouraged

to think carefully about the tradeoffs between cost

and performance. To clarify these issues, payers

25– 342 01 - 84 – 3
and prescribers may wish to establish a joint force

to write prescribing guidelines for cases that are

clear cut; remaining cases would be left to individual judgment.

Subsidizing Selected R&D Activities

Although several manufacturers would like the

Federal Government to award them contracts for

specified R&D projects, this contracting role must

be carefully defined. Appropriate criteria for Government support of R&D might include the following: 1) relatively large social gain, i.e., innovations that substantially improve the user’s ability

to function independently; and 2) relatively large

expected social gain compared to the manufacturer’s gain from this innovation. Examples of the

latter are development efforts that would be difficult to appropriate by patent, or those where

the manufacturing setup cost is modest. Economic

theory suggests that in cases such as these, private companies would be reluctant to innovate

because the innovations could be copied easily.

Government-supported R&D currently focuses

heavily on basic research and on transfer of high

technology to wheelchairs, Since manufacturers

say that they cannot afford such research, funding agencies may wish to continue supporting it.

However, the level of support could be based on

the expected utility of results. Market research

could be undertaken to determine what is most

important to the end users. In addition, it would

be useful for agencies that support research to understand how a new product will be paid for prior

to committing resources to an R&D investment.

Further analysis on the impact of reimbursement

policies on purchasing practices is needed to determine whether the products that are developed

through Government research will ever reach a

significant market.

The general-purpose manual wheelchair seems

to be the object of relatively little research, despite the fact that it constitutes the majority of

the market. Here, R&D costs for manufacturers

and strict price limitations by third-party payers

virtually preclude innovation that enhances quality. This chair would seem to be a prime subject

for Government R&D, particularly ideas not patentable, such as the use of a novel material in an

existing wheelchair design.

Government funding of R&D by manufacturing companies is one way in which new products

could be made more readily available to the public. Transfer of technologies from other industries,

such as high-performance batteries or microprocessors, could be encouraged through Government

funding of R&D in sophisticated wheelchairs.

Manufacturers might then make such innovations

available at a lower cost to the consumer, since

the manufacturer’s costs for R&D would be shared

by the Government, and the Government could

make the process available to competitors. It

would be valuable to make market research a

component of development work funded by the

Government to assure that an adequate market

exists for a proposed innovation.

Encouraging and Expediting

the Development of Standards

for Wheelchair Performance

Although the VA has issued performance standards for its own procurement of manual and power wheelchairs, there are no standards for other

purchasers or for the industry as a whole. In the

absence of performance standards, it is not clear

whether the less expensive wheelchair which is

usually purchased represents a better buy or an

inferior- product. If standards are not forthcoming, better information would be useful. If the results of monitoring data described above were

made available to dealers and therapists, they and

the users would be better able to choose the appropriate chair.

Standards that refer to performance, rather

than design, and that are flexible are less likely

to stifle innovation. Performance standards could

be based on the weight carried, the kinds of stress

tolerated by the wheelchair, the frequency of repairs allowed, and other performance issues. Performance issues include safety, battery longevit y

for power chairs, rolling resistance, and brake design. Penalties for noncompliance by manufacturers could be clearly defined. These penalties

could include guidelines for recompensing the in-
jured party in an accident involving a noncompliant chair, as well as stiff fines, or automatic

disallowance of Medicare or Medicaid reimbursement.

Responsibility for improving wheelchairs and

assuring their safety seems to be shared among

all involved parties: Government and independent associations for setting and enforcing standards, manufacturers for thoroughly testing products before marketing, dealers for selling equipment

with proven safety, third-party payers for evaluating a product’s safety and effectiveness, therapists and physicians for properly assessing and

prescribing the wheelchair appropriate for the

user’s needs and abilities, and consumers for using

the equipment correctly. Appropriate actions by

all of these parties would minimize wheelchair accidents.
2

Description of the Device

and Its Market
2

Description of the Device and Its Market

TECHNOLOGY OF WHEELCHAIRS

Wheelchairs fall into four broad categories:

1) general-purpose manual wheelchairs, 2) power wheelchairs, 3) manual sports wheelchairs,

and 4) power alternatives—other motorized vehicles not shaped like a chair. In this study, the

term “wheelchairs” refers to all four types of

equipment.

Manual wheelchairs, the most commonly used

kind, may be propelled by the user’s hands or feet

or pushed by another person. They are usually

built in a traditional chair shape with two sets of

wheels rather than legs. One set, usually located

in the rear, consists of large bicycle-type wheels,

and the other set is of small casters, usually 5 or

8 inches in diameter.

Power wheelchairs are usually battery powered,

with a power supply of 12, 24, or, more recently,

36 volts. Batteries make power chairs much heavier than manual ones (e.g., 180 pounds for the

Motorized wheelchairs are generally controlled by

a hand-operated joystick, which regulates direction and speed. Some control mechanisms, however, are operated by breath, chin or head position, or other nonmanual means.

Manual sports wheelchairs are lightweight and

are designed to shift the center of gravity to

achieve greater mobility and stability than is possible with general-purpose manual or power

wheelchairs. Some chairs are designed for specific

sports, such as basketball or racing; others are for

general sports use. Features associated with sports

wheelchairs may include larger propelling wheels

than on general-purpose manual wheelchairs,

small handrims, sloping propelling wheels, more

durable and efficient bearings and hubs, movable

axle positions, and steerable casters. Some of these

features are also available as options on nonsports

chairs as well.

Power alternatives, which function like motorized chairs but do not look like typical wheelchairs, offer a variety of advantages over power

wheelchairs. Most of these models have three

wheels and resemble golf carts or motor scooters;

some allow travel over terrain that typical wheelchairs do not, such as shallow water or sand and

other soft, uneven surfaces. Smaller power alternatives permit greater mobility through narrow

doors and aisles. Other models have swivel seats

to allow closer approaches to desks and work surfaces. In addition to the physical advantages,

power alternatives may provide a psychological

advantage because they do not evoke the stereotypical image of a helpless, confined person often

associated with standard wheelchairs. They usually require, however, that the user can hold his

or her trunk upright with minimal support.

Wheelchairs are available in a variety of sizes

to accommodate infants as well as large or tall

adults. Some children’s models can accommodate

growth by changing the legrests and upholstery.

Seat heights can be varied to place children at eye

or table level with their peers. Such variations in

seat height can be helpful for people of all ages

who need to use their feet for propulsion. An alternative to foot propulsion and steering is the

one-arm-drive device on which different handrims

on one wheel control both large wheels independently.

Most wheelchairs have small wheels in casters

in the front and large wheels in the rear—a design which makes the chair stable and easy to get

in and out of. Some wheelchairs are designed with

the large wheels in front and the casters in back.

Although less stable, these indoor chairs may

make maneuvering over door thresholds easier.

Special features can be added to most chairs to

meet the individual’s needs. Armrests may be ei13
Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

ther fixed, to provide support, or detachable, to

allow side transfers (movement in or out of the

wheelchairs accomplished by sliding sideways).

They may be designed to allow close approach

to tables and desks or to increase the seat width.

Legrests are available in a range of styles to allow

close approach to a table or to make it easier to

fold the chair, elevate a leg, or facilitate transfers.

Many manual wheelchairs are lightweight and

fold for transport in a car. Optional safety features

SAFETY AND EFFECTIVENESS

To date, there are no comparative studies of

the safety and effectiveness of different wheelchairs. The only information is from case reports

and impressions by those involved with wheelchairs—primarily consumers and therapists—and

the results of evaluative testing on specific wheelchairs by the Veterans Administration Prosthetics Center.

In general, people with greater mobility are able

to use a wider variety of wheelchairs more safely

and effectively than those with more serious disinclude: heel and toe loops, rear and front antitipping devices, hill-climbing adaptations that prevent back-sliding, and easy-to-grip handrims.

Recent or expected design innovations include:

voice-controlled motorized wheelchairs; stairclimbing chairs that have tanklike belts rather

than wheels; and lighter weight, more durable

chairs.

abilities. One important factor in predicting safe

use of wheelchairs is the person’s trunk stability

and control; without this, an individual may have

difficulty sitting in the chair without special body

support and operating a wheelchair or its locks

when bending or reaching is required. Accessory

supports, such as pommels and straps, are available for those people who have problems with

trunk instability. However, these do not improve

the effectiveness of the wheelchair if the person

needs to lean or bend to operate any part of it.

USERS, PURCHASERS, AND PRESCRIBERS OF WHEELCHAIRS

In its 1982 report, Technology and Handicapped People, the Office of Technology Assessment (OTA) reported that there were about 9 million Americans with lower extremities missing,

paralyzed, or impaired (36). Of those people, approximately 1,168,000 (one American in 200) used

wheelchairs. Users in 1977 included 650,000 noninstitutionalized persons (33) and an additional

518,000 residents of nursing homes. The number

of nursing home users is expected to grow to

584,800 by 1985, an annual growth rate of 1.5

percent (25).

The number of wheelchairs in use exceeds the

number of users. People dependent on wheelchairs

often have more than one chair, either for different uses, such as sports, or, especially, for times

when one is being repaired. A 1982 survey by the

Paralyzed Veterans of America found that 72 percent of the respondents had more than one wheelchair (16). This percentage may be greater than

that for the overall population of users, because

most of the respondents obtained their wheelchairs from the Veterans Administration (VA),

which typically supplies people with two wheelchairs, whereas other agencies generally supply

only one.

The type of wheelchair bought often depends

most on the physical therapist and the dealer. A

physician’s prescription is generally required for

third-party reimbursement for a wheelchair, its

accessories, or its special features, but physicians

are frequently unaware of which special features

and accessories are available and appropriate for

the patient. The therapist usually makes these decisions based on the user’s medical, personal, and

environmental needs. (Most insurance companies,
Ch. 2–Description of the Device and Its Market ● 15

however, will pay only for those accessories that

are medically necessary. )

The therapist or dealer is also usually the one

to measure the user to determine the wheelchair

size needed. Measurements determine the optimal

height of the seat from the floor, the height of the

backrest, the length of the armrests and legrests,

and the width and depth of the seat. Dealers who

have floor models may ask the purchaser to sit

in the chairs to determine which is most comfortable, but accurate measurements are the best guarantee of a proper fit. An improper fit can cause

back problems and pressure sores and can make

safe operation of the wheelchair difficult,

The prescription may or may not specify the

wheelchair brand. If it does not, the therapist or

dealer makes the decision. Most dealers carry only

a few of the larger brands of wheelchairs. The decision to carry a specific brand or model is based

partly on past service and product quality and

partly on the amount of profit. If dealers buy a

high volume of wheelchairs from the manufacturer, they usually receive a discount off the

wholesale price. At any given time, dealers may

have in stock only the models on which they were

given the best price. In addition, lower priced

products carry a greater percentage markup. Most

manual wheelchairs have a 40-percent markup

COSTS

Purchase Costs

General-purpose manual wheelchairs are the

least expensive type. List prices of general-purpose

manual wheelchairs recorded in the ABLEDATA

System generally ranged from $400 to $900. Most

power wheelchairs cost between $2,000 and

$3,000, and power alternatives cost from $950 to

$3,000. Sports wheelchairs vary in price from

$800 for a racing model to $1,200 for a general

sports model, significantly more than most general-purpose manual chairs (37).

One major purchaser, the VA, paid an average of $336 for a manual wheelchair and $2,216

for a power wheelchair in fiscal year 1982 (40).

Costs vary with the type of chair bought, The VA

over dealer’s

wheelchairs a

Most users

wholesale price, and motorized

30-percent markup.

do not special order a wheelchair

model not in stock at the dealer or manufacturer.

Those who are purchasing their first chairs often

are not aware of the options. Even those who are

purchasing replacement wheelchairs may be

aware only of the chairs that they have had in

the past.

The dealer’s comments may be the only evaluation the user ever hears, which makes the dealer’s

personal recommendation and training very important. Most dealers’ recommendations are based

on a combination of what wheelchair they believe

is best for the user, plus the reimbursement and

profit that they will receive on different wheelchairs. Proper recommendations require training

in fitting techniques and knowledge about the consequences of different impairments.

Sales of wheelchairs are expected to increase as

a result of current efforts to control rising hospital costs. Because of decreasing lengths of stay in

hospitals, more patients may need to buy or rent

wheelchairs for use at home. Patients at home obviously require their own wheelchairs, whereas

hospitalized patients can share chairs (4).

Outpatient Clinic in Boston bought chairs primarily for use outside rather than inside the facility.

There, the average manual wheelchair cost $579

(41).

In addition to the manufacturer’s base purchase

price, there may be significant customization

costs. These costs vary according to what is required. The customization needed may be as simple as adding a swing-away legrest or as complex

as adding an entire life-support system complete

with respirator and intravenous drip bottle holder.

Maintenance and Repair Costs

Maintenance of a wheelchair is a substantial

component of the cost of wheelchair use. Data

25-342 0 - 84 - 4
16 . Health Technology Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

from the VA Outpatient Clinic in Boston indicate

the magnitude of maintenance costs. During fiscal

years 1981 through 1983, it performed or authorized an average of 380 wheelchair repairs per year

on all chairs in use. During that same time, it purchased an average of 137 wheelchairs per year

(114 manual or sports and 23 electric) (41).

In this study, the authors assumed that the

overall life expectancy of a VA wheelchair (manual and power combined) is 3.5 years, the midpoint of the generally reported lifetime (2 to 5

years) and a reasonable estimate according to the

VA prosthetics official contacted, The rates of

chairs purchased and repaired were stable over

the fiscal years studied. The average lifetime of

3.5 years per wheelchair was used to calculate that

each wheelchair received 0.8 repairs (380 ÷ [3.5

x 137]) per year. At an average 1982 direct cost

of $190 per repair ($140 for parts and purchased

services, and $50 for technician salary and fringe

benefits), each chair required at least $150 in repairs during a single year, or $525 over its lifetime

(undiscounted). This almost equals the average

purchase price of a manual wheelchair.

Although these VA repair data are not divided

into manual and power chair costs, the actual repair costs were probably lower for manual wheelchairs and higher for power wheelchairs. These

costs do not include repairs paid by sources other

than the VA or the VA’s indirect costs (administration, building upkeep, equipment, etc.), which

together could double the aggregate repair cost.

For example, according to a survey by the Paralyzed Veterans of America, the VA performed

only 42 percent of repairs on respondents’ chairs

(16). (It was not reported, however, whether all

respondents were eligible for repairs by the VA. )

Medsger (17), using data from the Berkeley

Center for Independent Living, found that power

wheelchairs required an average of $900 of maintenance a year. If the average life of a power

wheelchair is 4 years, the $3,600 lifetime cost of

maintenance (4 x $900, undiscounted) is 1.6 times

its purchase price, a relationship similar to the VA

pattern. A 1982 survey by the Paralyzed Veterans

of America showing six or more repairs per year

reported by the top category (16 percent of respondents) (16) also underscores the frequency of

repairs.

Total annualized cost conveniently combines

initial purchase plus maintenance into an expression of the annual overall costs of wheelchair use.

This measure converts the capital cost of initial

purchase of a wheelchair into an annualized capital cost. To effect this conversion, first the cumulative present value (CPV) factor over the expected life of the wheelchair is needed. (This is

also termed the “present value of an annuity.”)

The CPV factor is based on the lifetime of the

wheelchair and the discount rate, an interest rate

that measures the time value of money invested

in the initial wheelchair purchase.

For illustration, using the discount rate of 10

percent per year recommended for some Government cost-benefit analyses (39), the CPV factors

for 3 to 4 years are:1

Lifetime (years) CPV

3.0. . . . ... . . . . .2.487

3.5. ., ,2.828*

4.0, . . . . : 3.170

*Interpolatd

Annualized capital cost is obtained by dividing

the initial purchase price by the CPV. Total annualized cost, then, is annualized capital cost plus

average maintenance costs. To apply these methods to the direct cost data from the VA Outpatient

Clinic (mostly manual wheelchairs), the life expectancy was set at 3.5 years, as described previously, and, therefore, for all chairs:

Annualized capital cost = initial purchase price

CPV

- $579 —

2.828

= $205

and

Total annualized cost = capital + maintenance

= $205 + $150

= $355 per year.

1

If r is the discount rate (as a decimal), and n is the expected lifetime

(as a whole number), then:

(J’V . 1 ,

1 1 +

l+r (1 + rl. ( 1 + r)”

For example, for a discount rate of 10 percent and 3 years (r = 0.10

and n = 3), we have:

(-I\f = 1 , 1 1 + = 2 487

11 ( 1 11> ( 1 1 )’
This figure is 73 percent more than the annu- was estimated for several other types of durable

alized capital cost alone. If the initial cost of the medical equipment (table 2). Wheelchairs ranked

power wheelchairs analyzed by Medsger was second highest, which underscored users’ concern.

$2,216 (the national VA average for power chairs

[40]), then for power chairs:

Annualized capital cost = $2,216

3.170 Table 1 .—illustrative Comparison of Total

Annualized Costs of an “Inexpensive”

= $699

v. a “Medium-Priced” Wheelchair

and

Total annualized cost = $699 + $900 = $1,599

or 129 percent more than the capital component alone.

This annualizing procedure is equivalent to

amortizing a mortgage or a capital asset over its

expected lifetime. The annualized capital cost is

slightly higher than the amount that would be obtained by straight line depreciation. Depreciation

computes the money needed each year to replace

a capital asset; annualized capital cost also includes foregone interest on the money tied up in

a wheelchair that could have been invested.

This technique provides a way of comparing

different models to determine which is lower in

total annualized cost. To illustrate, hypothetical

repair profiles were developed for an “inexpensive” and a “medium-priced” wheelchair (table 1).

On the assumptions that each would have an expected life of 3.5 years and that repairs for the

inexpensive chair would be more frequent, the

total annualized cost of the inexpensive chair

($338) would actually be higher than that for the

medium-priced chair ($309) because of higher annual maintenance and repair costs. In this illustration, the greater initial investment would pay

off .

To place the repair record of wheelchairs in perspective, the lifetime frequency of major repairs

PRIVATE PAYMENT SOURCES

Inexpensive Medium-priced

wheelchair wheelchair

Given data:

Initial purchase cost (new) $320’ $590b

Expected lifetime (years) 3 5 3 5

Average annual maintenance and

repair costsc

$225 $100

Calculated results:

Cumulative present value factor 2828 2.828

Annualized capital cost $113 $209

Total annualized cost $338 $309

a cost for an Inexpensive, all-purpose wheelchair

bcost for a manual wheelchair wtth anti.flutter sealed bearing and flutter adjust

system Magnesium wheels added for $50

c Both models assumed to require annual replacement Of tl reS, biannual rePlace.

ment of seat upholstery, and miscellaneous repa!rs and adjustments The Inex

pensive model IS also assumed to require replacement of axle, casters, and

spokes

SOURCE Inltlal purchase costs are from Invacare price Ilst Repair costs are

hypothetical

Table 2.—Comparative Lifetime Repair Data of

Selected Medical Equipmenta

—

Number of Number of Repairs

Item repairs items supplied per item

Braces, all 36 228 0 1 6

Eyeglasses 176 7,542 0 0 2

Home dialysis equipment 11 5 2 2

Artificial legs, all 604 137 4 4

Wheelchairs, all 383 128 3 0

a

Jumber of repairs and lterns are for fiscal Year 1982 at the VA Outpatient CII n Ic

Repairs per {tern would equal I! fetlme number of repairs in steady state (numbers

of repairs, items supplied, and Items In use were constant)

SOURCE Derived from U S Veterans Administration, AA4/S I?eporl for VA (2u(

patierrt C/Imc for F/sea/ Year 1982, Boston VA Outpatient Cllnlc, Boston,

MA, 1982

An estimated 90 to 95 percent of all wheelchair for by Government sources including Medicaid,

purchases are at least partially funded by third Medicare, and the VA, In particular, in 1976, 11

parties (Government or private insurers); only 5 percent were reportedly paid for by the VA (17).

percent are paid totally by the user (19). Over half (See ch. 3 for a fuller discussion of the Governof wheelchair purchases are at least partially paid ment’s role as a purchaser of wheelchairs. )
18 ● Health Technology Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

Private Insurance

To illustrate private insurance coverage for

wheelchairs, the authors contacted Blue Cross of

Massachusetts, the largest private insurer in the

Commonwealth of Massachusetts. Insurance coverage for rental or purchase of wheelchairs depends on whether the policy covers durable medical equipment. If it does, reimbursement is

usually for 80 percent of the reasonable charge,

using a formula similar to that used by Medicare.

Only those wheelchairs and accessories that are

prescribed by a physician are covered (11).

Blue Cross of Massachusetts, for example, will

pay for rental of a wheelchair up to the allowable

reimbursement for purchase of a similar wheelchair. Repairs of rented chairs are covered as part

of the rental agreement. Blue Cross will not pay,

however, for repairs of purchased wheelchairs.

A Blue Cross benefits representative usually decides whether a wheelchair should be purchased

or rented.

Blue Cross pays for the least costly wheelchair

that meets the user’s physical needs. For a new,

more costly model of a wheelchair to be covered,

it must have a unique feature of medical benefit

not available on a less costly model. Depending

SIZE OF THE MARKET

Aggregate annual sales of wheelchairs in the

United States, including imports and exports, were

estimated to reach $107.5 million in 1983, measured by shipments from the manufacturers. This

is an annual increase of 11.7 percent over the 1980

figure of $77.2 million (25).

A market study done by Invacare Corp. estimated the total market to be $126 million in 1982

(valued at cost to dealers and other major purchasers). Thirty percent, or $37.7 million, was attributed to the home care market. (Home care

wheelchairs tend to be manual, fairly standard

models, for people with limited mobility. )

Another 30 percent was attributed to institutions,

including hospitals, nursing homes, and rehabilon the policy, purchase of electric wheelchairs was

covered in 1983 for up to $2,711; power alternatives are covered up to $2,700.

New products are reviewed for coverage by

Blue Cross of Massachusetts by its Medical Review Board. The Physicians Advisory Panel may

be consulted in cases where the medical benefits

of a new product to an individual subscriber are

unclear,

Health Maintenance Organizations

The Harvard Community Health Plan, which

serves over 100,000 members throughout the Boston area, was studied as an example of a health

maintenance organization. The Health Plan will

pay in full both rental and purchase costs for medically necessary wheelchairs for members. The

user’s physician must complete a form documenting the need. The particular wheelchair and features needed may be decided on by the physician,

physical therapist, or nurse practitioner. The Benefits Coordinator then reviews the need and recommends rental or purchase based on the expected length of use. Wheelchair rentals are

reviewed monthly to verify continuing need.

itation centers. (Institutional wheelchairs are also

standard, manual chairs, used almost exclusively

for transport within the institution. ) The remaining 40 percent ($50 million) was attributed to rehabilitative care, for active and short-term users

who are neither homebound nor institutionalized.

(Rehabilitative chairs may be from any of the four

basic categories and cover a wide range of customization and cost. )

Invacare’s estimate of the total number of units

sold in 1982 was tentative, ranging from 250,000

to 364,000. Market share estimates in terms of

numbers of chairs showed 38 percent for home

care, 35 percent for institutional care, and 27 percent for rehabilitative care, On a price-per-unit
basis, home care chairs are least expensive, and

rehabilitative wheelchairs are most expensive (see

table 3).

Based on an estimate of 338,000 wheelchairs

bought in 1982, another breakdown shows about

125,000 rental chairs, 125,000 institutional chairs,

55,000 manual chairs for active users, 15,000 power wheelchairs, and 18,000 depot chairs for the

VA (see ch. 3) (3).

MARKET STRUCTURE

Reviews of product descriptions in the National

Rehabilitation Information Center’s computer

bank, ABLEDATA, identified 53 manufacturers

of wheelchairs. However, the market appears to

be reasonably concentrated, for one-quarter of the

manufacturers accounted for 71 percent of the

products (see table 4). This measure uses the number of different model lines of wheelchairs or power alternatives listed for each manufacturer in

ABLEDATA as a proxy for a manufacturer’s size.

Seven manufacturers are located outside of the

United States, and six are outside of North America; of these, two have U.S.-based distributors.

This concentration should cause the market to

behave as an oligopoly. ’

Table 3.— Market Size and Shares of Wheelchair Uses

Units ‘

-

Dollars –Price/ unita

Total 330,000-360,000 b $1257 million $349-$381

Home care 380/i 30% 279-305

Institutions 35% 30% 299-326

Rehabilitative 280/c 40% 508-554

a The range ~lven ,s based on the range (n total number Of Units sold All f19ureS

are rounded to the nearest dol I ar

bNumber of wheelchairs of all types sold based on Central estimates t

SOURCE Market study by Invacare Elyna OH 1983

The large manufacturers gain oligopoly power

from their distribution patterns. National distributorships enable consumers to find knowledgeable local dealers and obtain repairs and

replacement parts quickly. In wheelchairs, as with

other equipment, service can be a major factor

in choice of brand.

Prior to 1978, Everest & Jennings, Inc. (E&J)

acted virtually as a large single seller, controlling

90 percent of the prescription wheelchair market

(17). In 1978, settlement of an antitrust suit

brought against E&J by the U.S. Department of

Justice imposed some limits on E&J’s market power. At the same time, E&J relocated its headquarters and plant. The combined effect of these two

events caused E&J severe difficulty in meeting its

orders on time. As a result, smaller companies

were able to gain a greater share of the market,

increasing competition and stimulating innovaTable 4.—Concentration of Manufacturers of Wheelchair Productsa

Number of

Rank group products Cumulativ e Cumulativ e Cumulativ e Cumulativ e

for size listed for Number of number of percent of number of percent of

of manufacture r a manufacturer manufacturers products products manufacturers manufacturers

1 . . . . . . . . . . . 32 1 3 2

- 18.20/o 1-

1 .9 ”/0

2 . . . . . . . . . . . . . . . . 15 1 47 26.7 2 3.8

3 . . . . . . . . . . . . . . . . 14 2 75 42.6 4 7.5

4 . . . 9 1 84 47,7 5 9.4

5 . 8 2 100 56.8 7 13,2

6 . . . . . . . . . 6 1 106 60.2 8 15.1

7 . . . . . . . . . . . . . . . . 5 1 111 63.1 9 17,0

8 . . . . . . . . . . . . . . . . 4 2 119 67.6 11 20.7

9 . . . . . . . . . . . . . . . . 3 2 125 71.0 13 24.5

10 ., ., . . . . 2 11 147 83.5 24 45.3

11 ... . . . . . ... . 1 29 176 100.0 53 100.0

aManufacturers ‘ranked from the one with the most products (32) to the least (1) in ABLE DATA (see app. A)

—

SOURCE Derived from U S Department of Education National Instlfute of Handicapped Research, National Rehabdt[at!on Information Center ABLEDATA System, 1983
20 . Health Technology Case Study 30: The Market for Wheelchairs: lnnovations and Federal Policy

tion. Since 1978, E&J’s sales have declined slightly

in absolute terms, but markedly when adjusted

for inflation. In 1983, Invacare Corp. overtook

E&J in the quantity of wheelchairs sold, although

E&J remained first in dollar volume of wheelchair

sales. Invacare and E&J combined sales accounted

for 70 percent of wheelchair sales dollars in 1983

(l).

Prior to 1978, wheelchair imports were almost

nonexistent, but the antitrust suit the Department

of Justice settled against E&J in that year lifted

the import restrictions E&J had imposed on its foreign subsidiaries. Nevertheless, imports remain a

tiny part of the wheelchairs sold in the United

States. This is evidenced by the lack of a category

number under the Tariff Status of the United

States for wheelchair imports. The director of

wheelchair marketing at Invacare estimated imports to account for 1 percent of 1983 gross sales

measured in dollars ($1.3 million) and more than

1 percent measured in units sold. In his opinion,

this share is rising due to the recent wave of imports from countries with “preferred developing

country” status (23). Products made in these countries can be imported duty-free and are significantly less costly than U.S.-made wheelchair: of similar quality.

Wheelchair exports from the United States are

large enough to merit their own classification

(Schedule B, No. 7270120). Exports of wheelchairs

and wheelchair parts in 1982 were $9.6 million

(34).

PRIVATE RESEARCH AND DEVELOPMENT INITIATIVES

Most wheelchair manufacturers do their own Only one manufacturer surveyed referred to

research and development (R&D), calling it crucial work on process innovations (new manufacturto the success of their companies. R&D reportedly ing techniques) rather than product innovations,

focuses on improving current wheelchair design, but the lack of response about process innovarather than on developing completely new prod- tion probably resulted from the slant of the quesucts. For instance, those companies whose ma- tions toward product innovation.

jor products are lightweight wheelchairs are

interested in developing even lighter weight products (see ch. 5).
3.

Roles of the Federal Government
3

Roles of the Federal Government

AS A MAKER OF NATIONAL POLICY

Accessibility to the Handicapped

Federal laws and regulations to protect wheelchair users are few in number, general in pm-pose,

and weak in enforcement. Most policies have their

legal basis in Section .504 of the Rehabilitation Act

of 1973 (Public Law 93-112), intended to prevent

the exclusion of physically or mentally handicapped people from any program or activity receiving Federal money. One part of this broad act

requires that all publicly owned or federally assisted buildings, both residential and nonresidential, be accessible to people with physical disabilities. ’ Buildings predating these laws need not

be brought up to standards, unless they undergo

alterations that affect accessibility. In that case,

the alterations must make the building accessible.

The Urban Mass Transportation Administration (UMTA) has exhibited a continuing commitment, but ambiguous philosophy, toward assuring the mobility of disabled persons. The UMTA

has not decided whether accessibility means access to all mass transit systems or access to public places via special transportation services. In

May 1979, the UMTA ruled that half of all buses

must be wheelchair-accessible by 1989. That ruling is currently being challenged by local transit

authorities and some persons with disabilities who

believe that special separate transportation services are more effective and cost efficient (24).

Effects of Government Policies

on Wheelchair Design

Federal standards for accessibility to the handicapped have influenced wheelchair design somewhat and apparently also have been shaped by

it. Door width standards, for example, have been

designed to accommodate the average-sized

wheelchair. The Veterans Administration (VA)

recommends a minimum door width of 36 inches,

based on a typical wheelchair width of 27 to 29

inches from the outermost points of the wheels

and handrims (20). The Architectural and Transportation Barriers Compliance Board recommends

basing door widths on an average wheelchair

width of 26 inches,

By making more services and facilities accessible to persons with physical disabilities, the Federal Government may be encouraging handicapped persons to be more active and involved

in public, thereby stimulating the demand for

lighter weight and more esthetically designed

wheelchairs so they can be more active.

State and local policies also have had an effect

on wheelchair design, for manufacturers must

consider the relevant policies of all States and

municipalities in which they sell their product. Fire

codes are most important; they affect the fabric,

foam, and glue used in wheelchair upholstery.

California and Boston city fire codes tend to be

the most stringent. No Federal fire codes exist, but

the Food and Drug Administration (FDA) is expected to establish fire standards within the next

few years (8). National standards will relieve the

manufacturers’ burden to be aware of and compliant with the policies of 50 different States,
AS A PURCHASER

As mentioned above, Federal and State Government funds are involved in over half of all

wheelchair purchases. The policies of the three

main Federal purchasers, Medicare, Medicaid,

and the VA, differ from one another, and among

regions or States within each purchasing program.

Medicaid

Medicaid policies are determined by each State

within Federal laws and regulations. At the Federal level, Medicaid policies are established by the

Health Care Financing Administration (HCFA).

Massachusetts, which has one of the more comprehensive Medicaid programs, is used as an illustration of State policies. In Massachusetts,

Medicaid pays an “adjusted acquisition cost” for

all wheelchairs determined to be medically necessary. This adjusted acquisition cost includes the

dealer’s cost (excluding associated costs such as

shipping and handling) plus a percentage increase,

typically 30 percent (12). As in most other States,

this cost is divided almost equally between the

State and Federal Governments.

To receive reimbursement, a dealer must file

a Prior Authorization Form, completed by both

the prescribing physician and the dealer, documenting the medical need for the wheelchair and

the type of wheelchair recommended. The form

is reviewed and reimbursement is approved, denied, deferred pending receipt of additional information, or approved with modifications. A decision must be made within 15 days of receipt of

the Prior Authorization Form. In cases where a

15-day delay would jeopardize the user’s health

or delay discharge from a hospital, an immediate decision may be requested by telephone, with

written documentation to follow. The more expensive the wheelchair and accessories recommended, the stricter the review.

Medicaid in Massachusetts will rent and repair

wheelchairs for beneficiaries whose needs are temporary; it also covers repairs of purchased wheelchairs and provides a temporary replacement. If

the rental period exceeds 3 months, or if the cost

of the repair will exceed $35, the Prior Authorization Form must be filed. Authorization of repairs

is rarely denied, so the dealer may feel safe in

making the repair before formal authorization is

received.

Federal policy dictates that if a Medicaid reimbursement is obtained, the dealer must accept it

as payment-in-full. This is different from Medicare, in which the patient may pay coinsurance,

a deductible, and possibly the excess over Medicare’s allowed reimbursement. For users covered

under both Medicare and Medicaid, Medicaid

pays the coinsurance and deductible as defined

by Medicare.

In fiscal year 1982, the Massachusetts Medicaid

program bought 1,069 wheelchairs, of which 212

(20 percent) were electric, at a total cost (including

some accessories) of $639,000. Separately purchased wheelchair accessories, such as legrests,

desk tops, and armrests, cost $166,000. Medicaid’s

average cost to purchase, customize, and equip

one wheelchair was $752. This is the sum of purchase costs plus accessory costs divided by the

number of wheelchairs bought. Costs for manual and electric wheelchairs could not be separated.

There were an additional 1,069 months of

wheelchair rentals (the numerical agreement with

purchases is coincidental) at a total cost of

$47,000. Medicaid paid for 8,492 repairs, at a total

cost of $455,000. Repairs figure almost as prominently in these data as in the VA data reviewed

earlier on the assumption that purchase and repair costs remained constant and the lifetime is

3.5 years. On the basis of the method described

earlier, the average annualized cost per chair is

$266 for capital and $122 for maintenance, or $388

total. (Annual amounts were extrapolated from

data for the months of January, March, July, and

October [7].)

Extrapolating from Massachusetts data, national Medicaid expenditures for wheelchair purchases, rentals, and repairs were extrapolated at

about $50 million in 1982. 2

‘This estimate was approximated from the Massachusetts figures

on the assumption that other States’ Medicaid programs purchase

wheelchairs at a similar rate, relative to their 1980 census population, and at similar costs. This figure was computed using the Massachusetts Medicaid expenditures for wheelchairs, a State population of 5.737 million persons, and a national population of 227.7

million (32).
Data from California generate consistent extrapolations. Extrapolations from data for Octobe r

through December 1982 indicate that California’s

Medi-Cal (Medicaid) program paid $190,000 over

1982 for rental of wheelchairs and accessories (an

average of 612 items under rental each month) and

$3.15 million for purchasing 7,192 wheelchair s

and accessories over the same period (2). As the

California population was about 24 million (32),

the national Medicaid expenditure on purchase

and rental (but not repair) of wheelchairs and accessories extrapolates to $32 million. If repair s

were added, the total would probably be similar

to that from Massachusetts. National extrapola -

tions based on both of these States may be overestimates, however, since Massachusetts and California eligibility and reimbursement policies may

be less restrictive than many other States.

A new product is approved for coverage in

Massachusetts at the State level by Medicaid administrators on the advice of a consultant. The

product rarely receives blanket approval for Medicaid payment; most frequently, a product is approved for payment only for a particular patient.

The patient must petition for payment if the device is one that is not usually approved for payment, The decision often rests on the patient’s persistence in pursuing payment (12). The addition

of a product to the list of approved products

comes only after many individuals have sought

and received payment for it.

Medicaid places substantial responsibility on

the wheelchair provider to limit costs. Its Durable

Medical Equipment Manual (sec. 106 CMR 409.432)

states:

(A) The provider is responsible for making

reasonably certain that the durable medical

equipment or medical/surgical supplies furnished

are the most cost effective . . . .

(B) Before purchasing equipment or supplies,

the provider must make a reasonable effort to

purchase the item from the least-costly reliable

source by comparing prices charged by different

suppliers for comparable items.

Careful attention to the cost-effectiveness requirement would consider purchase costs, repair

costs, and performance. Most providers would

probably not be able to conduct cost-effectiveness

studies, and would probably focus on part B of

the regulation, seeking to furnish the wheelchair

with the lowest purchase price.

Medicare

Medicare, like Medicaid, is a program of

HCFA. Medicare is an insurance program for persons aged 65 and over who are eligible for Social

Security or railroad workers’ benefits and for disabled people. Unlike Medicaid, Medicare generally sets coverage policies at the national level.

HCFA contracts with local intermediaries (insurance companies), which are responsible for processing and adjudicating claims based on medical

necessity and reasonableness of cost. Medicare

does not evaluate new equipment itself for coverage decisions but relies on the Office of Health

Technology Assessment in the Public Health Service for coverage evaluations.

Medicare payments for wheelchairs are limited

to 80 percent of the allowable charge,3 which is

determined yearly for each provider by the intermediary, and is the lowest figure among the actual charge for the item, its customary charge in

the previous year, and the prevailing charge for

that type of item the previous year. The actual

charge is the billing for the particular item. The

customary charge is the individual provider’s most

common charge for that item in the previous year.

The prevailing charge, which measures the

charges for a type of item for all providers in a

geographic area, is set at the 75th percentile of

charges submitted to Medicare for that type of

item from the geographic area in the previous

year. Providers whose charges are low and stable

for their area thus receive almost 80 percent of

their charge from Medicare. Providers that charge

higher prices receive from Medicare a lower percentage of their billed charge. One dealer estimated that his allowable charge lagged behind his

actual charge by 5 years, and he indicated that

most accessories are not reimbursable (18). Power

wheelchairs are paid for on an “individual consideration” basis.

‘Medicare beneficiaries are responsible for the remainder of the

price, but dealers may have difficulty collecting their total charges

if the patients’ share is high.
26 ● Health Technology Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

Dealers have two ways of receiving greater payment for products sold to Medicare recipients.

First, they may bill the user instead of Medicare.

In that case, the user must pay the full price, submit a claim to Medicare for 80 percent of the allowable charge, and pay the difference. Second,

dealers can rent the wheelchair to the user on a

long-term basis. Medicare places no time limit on

the length of a rental and will pay for 80 percent

of the rental fee up to the purchase price. This

alternative imposes no added cost on the user. Reimbursement for rental chairs is approximately

$35 per month for manual wheelchairs and $150

per month for electric wheelchairs (18).

Medicare has been trying to reduce rental costs

by stringently reviewing all long-term rentals. So

far, however, regulations have not been completed and promulgated, so they are not legally

binding. Regulating long-term rentals will not necessarily reduce costs, since Medicare will be required to pay for rentals while a determination

is made as to whether the wheelchair should be

bought or rented.

All wheelchairs and accessories reimbursed by

Medicare must be prescribed by a physician and

must be medically necessary. Power wheelchairs

must be prescribed by a specialist in physical

medicine, orthopedic medicine, or neurology who

has determined that “the patient is unable to operate a wheelchair manually” (Public Law 95-216).

The need for a specially sized wheelchair, based

on the patient’s physical build or on the structural

feature of the place of use, may be determined

by the supplier and need not be included on the

prescription.

Products that do not fit any existing category

of reimbursable durable medical equipment may

not be covered under Medicare, and creation of

a new category requires a congressional amendment, Section 1861(s)(6) of the Social Security Act

was amended in 1977 to allow coverage of “durable medical equipment including . . . . wheelchairs (and devices designed to serve the same or

similar purpose as that performed by a wheelchair . . . “) (italicized parenthetical phrase was

that added by the amendment). Representative

Griffin, from the Michigan district in which Amigo Sales is located, sponsored the amendment. At

that time, Amigo was the only manufacturer of

a three-wheeled power alternative. Interestingly,

the Amigo had been covered under Medicare prior

to 1976, at which time the decision was made to

discontinue coverage, necessitating the amendment (6).

National data on costs to Medicare of wheelchair purchases, rentals, or repairs could not be

obtained.

Veterans Administration

The VA is reportedly the largest Federal purchaser of wheelchairs, although the authors’ calculations made for this case study suggest that

Medicaid is larger when State and Federal shares

are combined. In 1976, the VA accounted for 11

percent of all wheelchair purchases (in dollars)

(17). The VA pays the full cost of two wheelchairs

for those veterans who medically require them

and who meet the VA’s eligibility requirements.

Eligibility depends primarily on the extent and

service-connected status of the veteran’s disability.

A physician must determine the need for a

wheelchair; the rehabilitation therapist or the

prosthetics technician determines the type of

wheelchair needed based on environmental and

physical factors. Provision of a power wheelchair

requires approval by a committee at the VA facility. Veterans engaged in registered sports, such

as wheelchair basketball, may have their sports

chairs supplied by the VA. Once it supplies a

wheelchair, the VA also makes or pays for needed

repairs to an eligible veteran’s chair and provides

a substitute wheelchair for use while the veteran’s

own chair is being repaired, if necessary.

VA medical centers may purchase wheelchairs

for their own and veterans’ use from one of three

categories. The first category is a low-priced manual chair used for transportation within hospitals

and clinics. Called a “depot” chair, it is purchased

in large quantities under competitive contract

(currently with the Invacare Corp. ) and stocked

in regional depots. This method generally provides a wheelchair most quickly and least expensively.
. 

Second, a wheelchair may be purchased from

those listed on the Federal Supply Schedule compiled by the General Services Administration

(GSA). Chairs listed must fit a “commercial item

description” (CID)—a description of a wheelchair

design based on the design of a currently available model. If an appropriate CID does not exist, a manufacturer may petition the VA or GSA

to write a CID to fit its product. A description

must be approved by the U.S. Department of

Commerce and the GSA before it is finalized.

Within each CID, wheelchairs are given priority

based on price.

Finally, a VA facility may purchase a wheelchair for an individual veteran if it is not on the

Federal supply purchasing list. A waiver from the

VA Central Office in Washington, DC, is necessary if the cost exceeds $1,000.

The VA has long set design or performance

standards for most wheelchairs it buys. Historically, the VA’s standards have been written with

a specific wheelchair in mind, usually an Everest

& Jennings, Inc. (E&J) model (17). In 1977, performance standards were written that focused

more directly on function rather than design specifics. Standards for power wheelchairs are currently under revision, based on the conclusions

of the Wheelchair Workshop III, cosponsored by

the VA (26). A child’s wheelchair made by E&J

Canadian has been identified that comes close to

meeting these standards, and modifications to

make a similar adult chair are underway. If the

VA decides that the adult chair meets the standards, it will become the VA model. Manufacturers

who will want to obtain VA contracts may have

to make products similar to the E&J wheelchair.

Effects on Innovation

The policies of these three reimbursement programs may hinder innovation in wheelchair design and diversity. Medicaid pays in full, but only

for the least costly chair needed. Medicare pays

only part of the allowable charge, which may itself be less than the actual charge. A supplier who

accepts Medicare payment on assignment receives

80 percent of Medicare’s allowed charge directly

from Medicare. The supplier must agree, however, not to demand in total more than Medicare’s

allowable charge. This policy creates an incentive

to encourage the patient to buy the ‘least costly

model that satisfies his or her prescription. In addition, the large, established companies are the

best able to compete on the basis of price. The

problem, however, is that the patient’s prescription may not fully describe his or her needs.

Prior to the promulgation of performance

standards for manual chairs in 1977 and for powered chairs in 1981, the VA’s procurement standards may have protected the user’s safety, but they

appeared to function mostly in the interest of the

major manufacturers (29,30). When VA standards

were written in accord with E&J specifications,

products were often evaluated on the basis of how

closely they conformed to E&J’s model. Also,

manufacturers interviewed for this case study indicated difficulty in learning the protocols that the

VA would use to evaluate a new product. This

uncertainty has made innovation risky, as manufacturers do not know whether their products

will meet VA standards and, if they do not,

whether those standards might be modified.

Federal payers currently focus their payment

decisions on purchase price without considering

maintenance and repair costs. Although small

manufacturers tend to have a competitive disadvantage in purchase price, due to diseconomies

of scale, they may be superior in quality, and

hence less expensive over the product’s useful life.

No data are available, however. Decisions made

on the basis of total annualized cost would appropriately reward more durable models. Such analyses might open the door to smaller manufacturers, making the market less oligopolistic and more

competitive,
AS A REGULATOR

Classification of Wheelchairs

The Center for Devices and Radiological Health

of the FDA is charged with classifying all medical devices according to their potential risk to

users and the degree of regulation required. Class

I, general controls, encompasses devices for which

general controls are sufficient to provide reasonable assurance of safety and effectiveness. These

general controls are required of all three classes.

Class II, performance standards, contains devices

for which general controls are considered insufficient to assure safety and effectiveness, and information exists to establish performance standards. Class III, premarket approval, applies to

devices for which Class I general controls are insufficient, information does not exist to establish

a performance standard, and the device supports

life, prevents health impairment, or presents a potentially unreasonable risk of illness or injury (35).

Manual wheelchairs intended for short-term,

indoor use are Class I. All other manual wheelchairs, power wheelchairs, standup wheelchairs,

and three-wheel motorized devices (power alternatives) are considered Class II. Stair-climbing

wheelchairs are Class III devices (31). Ninety days

premarket notification and good manufacturing

practices are required for all medical devices including wheelchairs. Manufacturing practices regulate conditions in the factory and bookkeeping

procedures, but do not affect the products. To

date, no standards have been written for any Class

II products.

Development of Standards

Naturally, dealers’ incentives to maintain their

reputation motivates them to sell only safe and

effective products; however, without stringent established guidelines, safety and effectiveness can

be determined only through experience. Only the

alternatives to power wheelchairs have undergone

extensive testing to earn qualification for thirdparty payments. A dealer may attempt to minimize the possibility of selling a hazardous product by purchasing only from established companies, but even this is no guarantee. For example,

in 1971, E&J sold the “Remarkable Mark 20, ” an

electric wheelchair designed for outdoor use by

people with minimum hand coordination. It

caused several potentially serious accidents (17).

To prevent such accidents, the industry would

need performance standards for safety, testing to

determine whether standards are met, and enforcement to assure that standards are followed.

The lack of standards may also bear on the repair rate of wheelchairs. A wheelchair’s need for

repairs causes not only inconvenience and expense, but also can be a source of accidents. Accidents due to crossbars’ breaking, for example,

may be attributed to metal fatigue brought on by

extended hard use of the chair, or to defective

materials or welding. User complaints registered

with the FDA’s Center for Devices and Radiological Health include wheelchairs catching fire and

wheels falling off (17). Manufacturers and the

FDA blame the need for repairs on improper use

by the consumer (17), but standards might improve wheelchair durability.

Wheelchair performance standards are currently being written by a task force of the Rehabilitation Engineering Society of North America. This

task force is an independent group composed of

seven wheelchair researchers, three wheelchair

manufacturer representatives, two consumers, one

FDA representative, one VA representative, one

occupational therapist experienced in wheelchair

prescription, and one surgeon specializing in

spinal cord injuries. Although the standards will

not be officially available for several years, manufacturers who are participating in the writing of

the standards have access to the proposals and

can consider them in their product design (27).

When completed, the standards will be adopted

by the American National Standards Institute, although they will be voluntary only. The strongest

force for compliance may be the pressures of the

international marketplace. Rehabilitation Engineering Society of North America, which is the

U.S. representative to the International Standards

Organization (ISO),4 is designing its standards in

4

The ISO, headquartered in Geneva, Switzerland, sets performance and safety standards for dozens of types of scientific and medical

devices.
coordination with the ISO standards, also in preparation. To the extent that Western European and

South American countries adopt ISO standards

as law, those U.S. companies with large export

businesses will have a strong incentive to comply with the standards of the Rehabilitation Engineering Society of North America (14).

Investigation and Resolution

of Complaints

If a person believes a wheelchair is defective,

he or she can register a complaint with the FDA

Center for Devices and Radiological Health, Device Experience Branch, which conducts a search

for prior complaints against the product and summarizes the product’s history. Only complaints

that have been registered with the FDA are included in that history; rarely is a privately handled complaint included. The complaint is assigned a priority rating based on the reason for

it. Cases that resulted in death receive highest

priority. Those cases where serious harm could

have or did occur receive the next highest rating.

Both of these types of cases must be resolved within 30 days. The least serious level of complaint,

a routine investigation, has no time limit (15).

The suggested priority and the summarized

product history are sent to the Center’s Regulatory Guidance Branch, where they are evaluated

and action is taken. Full investigations are conducted by the field manager responsible for the

geographic area in which the manufacturer is located. The field manager inspects the manufacturing plant and product specifications to decide

whether the plant is capable of manufacturing to

specifications. Assembly and quality control are

evaluated, as is the quality of the raw materials.

If the complaint is of the lowest priority, the inspector may choose not to investigate until the

required biennial inspection (15).

After completing the investigation, the field

manager sends an evaluation and recommendation to the Regulatory Guidance Branch, which

makes a final decision, FDA prefers voluntary corrective action by the manufacturer rather than direct government intervention. Depending on the

nature of the problem, the manufacturer may correct it at its source or may issue a recall of the

affected products. Compliance is monitored by

followup inspections, typically 30 days for a correction of an in-house problem and 3 months for

a product recall.

If the manufacturer refuses to take appropriate action voluntarily, several options are available to FDA. FDA can require the manufacturer

to give public notice, repair or replace defective

wheelchairs, or give a refund to the user if there

exists an unreasonable risk of harm to public

health. FDA may petition the court to order a recall of devices that it determines are “misbranded”

or “adulterated, ” In theory, devices that fail to

meet applicable standards could be recalled on

these grounds. Finally, “red tag” injunctions may

be issued, prohibiting shipment of products from

individual warehouses. In practice, these actions

are rarely carried out, because they are slow and

cumbersome for FDA, and certainly unpopular

with the manufacturer.

The most powerful leverage actually at FDA’s

disposal is the threat of a public announcement

that could accompany such legal actions alleging

that a product is defective, misbranded, or adulterated. To avoid such harmful publicity, manufacturers usually voluntarily recall a product that

FDA considers defective or comply with other requests for corrective action (22).

AS A SUPPORTER OF RESEARCH, DEVELOPMENT, AND EVALUATION

National Institute of

Handicapped Research for fiscal year 1983 included not only $750,000

exclusively for wheelchairs, but also other proThe National Institute of Handicapped Research grams, such as work station modifications for dis-

(NIHR), sponsors research of interest to people abled persons, that relate indirectly to wheelchair

with disabilities. Its $36 million research budget users (28). The NIHR Rehabilitation Engineering
Center at the University of Virginia is researching such areas as power systems, seating, and human factors in wheelchair use. It is also assisting

the Rehabilitation Engineering Society of North

America in developing standards of wheelchair

performance and design (see section “As a Regulator”). It supports two regional institutes to

evaluate innovations, disseminate new product

ideas, and stimulate the manufacture of all types

of devices for handicapped persons.

The National Aeronautics and

Space Administration

Through its Langley Research Center, the National Aeronautics and Space Administration is

currently devoting about $50,000 annually in professional time and expenses to apply state-of-theart engineering techniques to wheelchair design

as part of its mandate to demonstrate terrestrial

applications of technology (42).

Veterans Administration

The VA’s Rehabilitation R&D program includes

wheelchair research and development projects

based on the VA-cosponsored Wheelchair III

Workshop (26), as well as a collaborative effort

with the National Aeronautics and Space Administration involving computer simulation. Goals include design improvements targeting the wheelchair base, power base, and stability. In fiscal year

1983, the VA provided $511,000 for rehabilitation R&D projects on the power wheelchair, seat

cushions, anti-roll back design, and a feedback

controller.

Over two decades, the VA Prosthetics Center

encouraged innovation by demonstrating that

new types of wheelchairs were technologically

possible, safe, and, most importantly, that there

was a significant market for them—the VA. For

example, the VA Prosthetics Center’s work with

power wheelchairs in the early 1970s demonstrated that electric wheelchairs could be safely

used at speeds greater than a slow walk, and that

they could be designed to be used on rough terrain. This encouraged wheelchair manufacturers

to make chairs with those capabilities. Efforts centered around lightweight sports wheelchairs had

similar effects (13). These occurrences support the

hypothesis that manufacturers will innovate if

they feel secure that their products will be purchased by Government agencies and reimbursed

by third-party payers. The VA Prosthetics Center in New York City is now responsible for

evaluating wheelchairs and other rehabilitative

products.

AS A JUDGE OF PRODUCT LIABILITY

Product liability is a risk to any manufacturer.

If a wheelchair-related injury or death occurs, the

victim or family may file a lawsuit for financial

compensation in Federal or State court against the

manufacturer and others involved. However, the

lack of standards for the wheelchair industry

clouds the issue of responsibility.

One manufacturer claimed that product liability

suits have replaced medical malpractice suits as

the most common and most profitable lawsuits

filed today. Many manufacturers choose to settle

out of court, rather than incur the costs of a court

battle. Others will incur the court expenses, if they

believe the incident was not the fault of their product, to uphold their principles and discourage frivolous suits. Regardless of how the manufacturer

chooses to resolve complaints filed, the costs are

high.

The fear of possible product liability suits is a

major obstacle to innovation, according to several of the manufacturers surveyed. This fear is

greatest for an entirely new product and less for

the majority of innovations, which are modifications of existing products.

All wheelchairs, especially power and power

alternative wheelchairs, require a certain level of

coordination to operate safely. Manufacturers
specify which impairments complicate the safe to the doctor and therapist who ordered it. Beoperation of their product with the hope of pro- cause of this fear of a product liability suit, some

tecting users and avoiding responsibility for ac- doctors and therapists may hesitate to prescribe

cidents to users with those impairments. This or recommend a new product whose safety has

process may, however, shift the responsibility for not been proven.

safety to the dealer who sold the wheelchair and
4 .

Overview of Innovation
Overview of Innovation

ECONOMIC THEORIES OF INNOVATION

For this report, an “innovation” is any product or product modification that substantially improves the quality or decreases the cost of a product, while introducing a technology, material, or

concept not previously found in any similar product on the market. Although this definition includes process innovations (changes in the means

of production), this case study is most concerned

with product innovations (changes in the final

product), especially those that introduce a new

concept into wheelchair design.

A primary tenet of macroeconomics holds that

individuals and firms act to maximize their own

utility (satisfaction) or profit. Firms make products for which they expect to receive financial rewards. Although theorists agree on this general

goal, they disagree as to its effect on innovation.

They also disagree with the commonly held belief

that perfectly competitive firms must innovate to

remain competitive. This latter belief mixes the

economic idea of perfect competition with the

everyday meaning of “competition. ” By definition in economic theory, perfectly competitive

firms have no reason to innovate because products are not differentiated and because the same

technologies for production are available to all

firms.

In 1915, Taussig proposed that innovations result from attempts to fulfill an expressed demand

with the expected reward of profit. Hicks recognized that once the product exists, the incentive

must change from reaping profit to reaping continued and increasing profits. In 1932, he proposed

that the task of innovation is to decrease the cost

of production, hence increasing the amount of

profit (10).

Schumpeter characterized the role of large corporations with considerable market power and

with large research laboratories as the source of

innovation of the day. Many economists using

static economic theories would predict that industries with a large number of small firms would

encourage innovation. By emphasizing the role

of large firms, Schumpeter explicitly remarked

that such fragmented industries with many small

firms would not innovate for two reasons: First,

in such a structure, firms find it difficult to get

necessarily high profits because imitations would

be almost immediate, thereby eliminating excess

profits and destroying the incentive to innovate.

Second, firms in this structure would not have

the size to support the requisite industrial research

laboratories. Some readers of Schumpeter are

under the impression that he advocated monopoly

as the source of innovation. Rather, he viewed

large firms, whether or not they were in industries with single dominating firms (monopolies),

as rivals competing to fulfill expressed consumer

demands with the expectation of profits (21). Galbraith agreed, noting that for firms that do not

compete on price, innovation offers an alternative means of increasing market share and profits (10). Empirically, Kamien and Schwartz found

that in general industries with intermediate degrees of competition have had more innovations

than those at the extremes, although there are certain industries on either side that show high degrees of innovativeness (10).

As mentioned earlier, the wheelchair market

seems to fit the intermediate category by having

a few large firms that have a very large market

share and several smaller firms. The two largest

wheelchair manufacturers, Everest & Jennings,

Inc. (E&J ) and Invacare Corp., control approximately 70 percent of the market in dollar sales,

but about 50 other firms are also listed in the

ABLEDATA System as wheelchair manufacturers. The industry also seems to fit into the intermediate range because, as economists would

predict, buyers recognize the large companies’

brand names more readily than small companies’

names and are willing to trust a name they recognize and know to be established.

35
MANAGEMENT AND GOVERNMENT PERSPECTIVES

Innovation is a costly and risky process, especially for small firms. Several of the manufacturers

interviewed for this study (see ch. 5) cited the high

cost of innovation as the largest impediment to

the introduction of new products. While the Federal Government could encourage innovation

through contracts or favorable tax treatment, the

efficiency of these approaches requires careful

study. In aggregate, expenditures by industry for

all types of health R&D are substantial. In 1982,

industry spent $3.4 billion and the Federal Government spent $5.0 billion (38).

Since industry spent such a large sum, this finding might suggest that Government support of industry R&D is not necessary. However, there are

times when Government funding is appropriate.

The wheelchair market is small and diverse. R&D

efforts by industry focus on active users, the most

lucrative segment of the market. Government

funding might be useful in areas that would complement existing research, such as the large, general-purpose manual wheelchair market and the

market for certain specialized rehabilitative wheelchairs. The manual wheelchair may be neglected

because there are strict price limitations by thirdparty payers making it difficult for suppliers to

charge a premium for added quality. The specialized rehabilitative wheelchair may be neglected

because development costs are too high and the

potential market is too small. For both types of

wheelchairs, however, added features may be

worth the costs.

It may also be useful to target Government

funding toward the areas where the results are not

patentable (e. g., a new use for an existing material). Such subsidy could be awarded directly as

grants and contracts by such agencies as the National Institute of Handicapped Research or indirectly through amending the Internal Revenue

Code to create tax incentives (generally through

accelerated depreciation) for targeted R&D activities.

Some economists believe that the conflicts over

proprietary rights to information obtained

through Government-supported research make

Government cooperation unattractive to manufacturers (10). The manufacturers surveyed indicated that this is not a major problem. It seems

likely that contracts could be negotiated that

would satisfy both the manufacturer and the Government and would benefit the consumer by increasing the rate of innovation.

When questioned about patent rights, wheelchair manufacturers felt that they were not of major importance because the firms cannot count on

having the 17-year period of sole design that patents are supposed to provide. Lawsuits alleging

patent infringement are seen as an expensive stalling tactic, designed to give a product a strong

foothold in the market before competitors can

make a similar product. It was agreed that making a similar product that does not infringe upon

a patent is not difficult for a determined competitor, Being first on the market was considered to

be a significant advantage.
 5.

Survey of Wheelchair

Manufacturers
—

5.

Survey of Wheelchair Manufacturers

SURVEY METHODS

Eleven wheelchair manufacturers chosen from

a list developed from products listed in the National Rehabilitation Information Center’s data

bank, ABLEDATA, on about July 1, 1983, were

interviewed between July 15 and August 31, 1983.

This list might be imperfect due to lags in updating

ABLEDATA about new or discontinued products,

but was the best available. Ten of these manufacturers were selected through a sequential sample designed so that the larger the number of products listed for the manufacturer, the greater its

chance of being selected (see app. A). This sampling process made the sample less prone to bias

from any ability to update the list. (Most updates

would probably apply to small manufacturers. )

The principal investigator wrote a letter to manufacturers selected for the survey describing the

study and kinds of information sought (history

of past innovations and descriptions of R&D activities), and inviting them to participate. When

one company declined to participate due to time

constraints, a replacement was chosen through the

process of sequential selection.

None of the companies chosen at random manufactured power alternatives to wheelchairs. Amigo Sales, Inc., was then chosen as a representative of that group on the basis of its previous work

with the U.S. Congress’ Office of Technology

Assessment (OTA) and the availability of its information on the products. This brought the total

to 11 companies surveyed. The officials of selected

manufacturers were then interviewed by telephone according to a semi-structured set of questions (see app. B).

INNOVATIONS OF THE PAST DECADE

Respondents were asked to identify their most

significant innovations over the last 10 years.

Many such innovations focused on increasing the

mobility of wheelchair users (table 5), particularly

the active user (table 6) who is apt to want a chair

that is easy to use (lightweight and easy-rolling);

transportable (lightweight, easy to disassemble,

folding); durable; and safe to use outdoors. Dynamic brakes, which keep the wheelchair from

gaining speed when going downhill, are a helpful

safety device to an active person.

Most manufacturers interviewed identified

higher cost of an innovative product as the largest

impediment to marketing new devices, but surprisingly only one manufacturer specifically identified low cost to the buyer as an advantage to

an innovation. One possible explanation is that

manufacturers do not perceive reducing the cost

of their product as a significant concern to wheelchair users, due to the high percentage of wheelchairs paid for by third-party payers. Perhaps

Medicare’s prevailing charge system creates a price

umbrella. As copayments and competition increase, as seems likely, manufacturers may begin

to be more concerned with lowering product cost.

All of the innovations identified by the manufacturers were currently available at the survey

date, possibly because manufacturers are eager

to sell their present products or because they did

not think of or care to mention products that are

not current. It may also be that most of the innovations identified are so recent that they have not

yet become obsolete. Indeed, all five innovations

for which dates reported were developed within

the last 4 years (see table 7).

Most of the innovations identified were improvements of existing products (table 8). Seven

innovations were based on personal experience

and identification of unmet needs; three of them

39
Table 5.–Wheelchair Innovations, 1973.83

Code a Innovations Features/advantages Code d Innovations Features/advantages

Manual wheelchairs:

M1a lightweight manual

M1b Iightweight manual

M2 compact folding chair

M3 free-rolling chair

M4 stainless chair

Power wheelchairs:

P1 proportional control

P2 folding electric chair

P3 lightweight electric

P4 power wheelchair

box

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

lightweight

disassembles

serves active user

lightweight

Iow-friction tires and

bearings

folds in one piece

lightweight

fits compact car trunk

lightweight

stainless, noncorrosive frame

stainless, noncorrosive frame

conventional design

Improved bearing construction

lightweight

durable construction

high-technology joy stick

solid-state circuitry

infinite variability in speed

and direction

lightweight

electric

folding

electric

lightweight

disassembles

dynamic brakes

automatic steering correction

Iightweight

Sports wheelchairs:

S1 sports chair

Power alternatives:

PA1a three-wheel alternative

PA1b three-wheel chair

Accessories:

Acl telescoping leg rests

Ac2 solid seat

Ac3 conversion kit for E&J

power drive

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

lightweight

16 different seating positions

adjustable seat/back heights

lifetime warranty on frame

three wheels

disassembles

dynamic braking

narrow

usable in planes

extendable wheelbase

adds stability

optional elevating seat

swivel seat

disassembles

narrow

three wheels

controls on handlebars

( ‘looks fun’

infinite number of positions

better support

better support

increased speed

durable

simple to service

low cost

a lnnovatlon~ ,dent,fled through the su~ey were cate~rlzed as being for manual wheelchairs (M), power wheelchairs (P), SpOrf S wheelchairs (S), Power alternatives

(PA) or wheelchair accessories (Ac) Within each cateaory, the products were randomly assigned code numbers Small letters after an Innovation code are used to

differentiate between products of similar description -

SOURCE D S Shepard, Harvard School of Publlc Health, telephone survey of manufacturers, 1983 (see app B)

also used existing technology. Only 4 of the 15

innovations used technology from other fields.

They were from simpler fields, such as bicycle and

stretcher manufacturing. Many people in Government R&D centers believe that current high technology is not being fully utilized by the wheelchair industry. The survey found no instances of

high technology transferred to wheelchairs. The

showed an application of state-of-the-art electronics. It incorporated a wheelchair controller with

self-correcting steering on slopes (see ch. 6). This

survey suggests that existing R&D or marketing

are often inadequate for the transfer of high technology.

Table 6.—Frequency of Features or Advantages

in Wheelchair Innovations, 1973-83

Feature or advantage Frequenc y

a

Lightweight . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Easily disassembles . . . . . . . . . . . . . . . . . . . . . 4

Serves active user. . . . . . . . . . . . . . . . . . . . . . . 3

Durable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Folding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Dynamic brakes . . . . . . . . . . . . . . . . . . . . . . . . . 2

Low-friction brakes/bearings . . . . . . . . . . . . . . 2

Better support . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Narrow width . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

aFrequency was measured only for those features or advantages with a frequencY

greater than 1

SOURCE D. S. Shepard, Harvard School of Public Health, telephone survey of

manufacturers, 1983 (see app B)
Table 7.—Length of the Development Process Table 8.—Source of the Innovative Idea

Innovation 

cod e

a

11 mo.

>12 m o .

12 mo.

12 mo.

<12 mo.

12 mo.

Prototyp e

dat e

Innovation

code

M1a . . . . . . . .

M1b . . ... . .

M2 . . . . .

M3 . . . . . . . .

Ma ., ...,.., .

P1 . . . . . . . . .

P2 . . . . . . . .

P3 . . . . . . . . .

P4 . . . . . . . .

S1 . . . . . . . .

PA1a . . . . . . . .

Pa1b. .,..,. .

Ac1 . . . . . . .

Ac2 . . . . . . . .

Ac3 . . . . . . . . .

Total .., ..,. .

Percent d 

. . . .

Personal

experienc e

—

—

x

x

—

x

x

—

—

x

—

x

—

—

x

7

46,70/.

Existing

{

product

x

x

—

x

x

Technology

transfe r

c

X

b

4 mo.

12 mo.

8 mo.

18-24 mo.

12 mo.

12 mo.

Manual wheelchairs:

M1a . . . . . . . . . . . . . . .

M1b . . . . . . . . . . .

M2 . . . . . . . . . . . . . . . .

M3 . . . . . . . . . . .

M4 . . . . . . . . . . . .

Power wheelchairs:

P1 . . . . . . . . . . . . . .

P2 . . . . . . . . . . . . . . . . .

P3 . . . . . . . . . . . . . . . . .

P4 . . . . . . . . . . . . . . . . .

Power alternatives:

Pa1a. . . . . . . . . . . . . .

PA1b . . . . . . . . . .

Sports wheelchairs:

S1 . . . . . . . . . . . . . . ..

Accessories:

Ac1 . . . . . . . . . . . . . . . .

Ac2 . . . . . . . . . . . . . . . .

Ac3 . . . . . . . . . . . . . .

Median. . . . . . . . . . .

N A

9/82

1979

N A

N A

N A

N A

N A

9/80

1981

N A

11/79

N A

N A

N A

9/80

x

—

x

x

x

x

—

—

—

—

— x

x —

— —

x

x

x

x

x—

12

80.0%

4

26.7%

a“X”indlcates that ldeawas denvedfrom personal experiences w!thwheelcha!rs

or from Identlflcatlon of unmet needs

blnnovat[on was a modlflcatlon or Improvement of an exlstlng product

Clnnovatlon was based on a fransfer of technology from another health care

product or another field

dpercent, basedonI!jinnovatlons for whlchthelnnovatlon Isat leaSt partlallY

attributable to each source

SOURCE D S Shepard Harvard School of Publlc Health, telephone survey of

manufacturers, 1983 (see app B)

acategorlesof ,nnovatlons were for power wheelchairs (P), manual wheelchairs

(M), power alternatives (PAL sports models (S),and accessories Wflhln each

category the prcducts were randomly assigned numbers Small letters after

an !nnovatlon code dlfferent[ate prcducts of stmllar descrlptton but different

manufacturers

b ‘x Is the Iengt h of tl me I n months from the conception of the Innovation Idea

to the mak!ng of the prototype

C“’y ‘ IS the length of time In months, from the mak!ng of the prototype to the

first commercial dellvery of the product

SOURCE D S Shepard Harvard School of Publlc Health telephone survey of

manufacturers 1983 (see app B)

SOURCE OF FUNDING FOR INNOVATIONS

The R&D efforts behind the innovations stud- not seem to feel that the loss of control over patied were all privately sponsored. None of the man- ent rights, which often accompanies Government

ufacturers interviewed received any Government funding of projects, was a major problem. The

funding, although some of them do cooperative advantage that comes from being first on the marwork with universities on Government-funded re- ket with a new product was said to be much more

search projects. Several respondents expressed in- important than patent rights.

terest in Government funding of R&D, They did

REIMBURSEMENT BY GOVERNMENT PAYERS

All of the innovations identified by the study The Veterans Administration (VA) takes longer

are now reimbursable under Medicare and Med- to approve a new product for purchase than it

icaid, if they are medically necessary and pre- takes to approve one for reimbursement by Mediscribed by a physician. care and Medicaid. Only 10 of the 15 innovations
42 ● Health Techlnology Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

identified through the survey are covered by the ment standards but is not on the Federal Supply

VA. Of those 10, two are reimbursable only with Schedule; the other does not meet standards (table

a waiver. One of those two meets VA procure- 9).

Table 9.—Eligibility of Innovations for Purchase by the VA —— ——— — --- — ————

Innovation code

———

Yes No Innovation code Yes No

.—— ——. —

Manual wheelchairs:

M1a . . . . . . . . . . . . . . . . . . . . . . . . . . . .

M1b . . . . . . . . . . . . . . . . . . . . . . . . . .

M2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

M3 ... . . . . . . . . . . . . . . . . . . . . . . . . .

M4 . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total ., . . ., . . . . . . . . . . . . . . . . . .

Power wheelchairs:

PI . . . . . . . . . . . . . . . . . . . . . . . . . . . .

P2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

P3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

x

x

x

x

x

3 2

x

x

x

P4 . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

Sports wheelchairs:

S1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . .

Accessories:

Ac1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ac2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ac3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . .

Grand total . . . . . . . . . . . . . . . . . . . . . .

Percent of innovations . . . . . . . . . . .

x

1 0

x

x

X

a

3 0

10

670/o

5

330/0

Power alternatives:

Pal.. ........, . . . . . . . . . . . . . . . . . x

PA1b . . . . . . . . . . . . . . . . . . . . . . . . . . . X

a

Total .......,. . . . . . . . . . . . . . . . . . 1 1 —————————— ——- ——— aproduct IS not on the Federal SUpplY Schedule purchasing I!st, but may be bought In Indwidual cases

SOURCE D S Shepard, Harvard SchoolofPubhc Health, telephone survey of manufacturers, 1983 (seeapp B)

R&D EFFORTS

All but one of the companies surveyed have

their own R&D departments. The one relies solely

on outside firms for its R&D. Four of the companies use outside firms in addition to in-house staff,

The outside companies generally develop a particular part to be used in the wheelchair, for example a lighter weight alloy or anew controller.

The manufacturers pointed out that they and their

subcontractors do not do basic research but develop new ways of putting together known materials and ideas.

Although most manufacturers said R&D was

a critical part of their operations and success,

some were hesitant to specify the size of their R&D

operations. The largest R&D budget identified

was 5 percent of gross annual sales (see table

The limited quantitative responses indicated a

lo).

median of 4 percent of sales and 9 full-time equivalent

employees devoted to R&D.

The areas of R&D tended to parallel the kinds

of products already under production. Only a few

manufacturers mentioned development in a part

of the market in which they did not currently have

products.

The most common area of R&D mentioned involved utilization of lighter and stronger materials, Also important were development of better

control systems and more esthetic design (table

11).
Table 10. —Location and Size of R&D Departments

Manufacturer codea

1 .. .. ., . . . . ...

2 . . . . . . . . . . . . . . . . . . . .

Locationb

IH

IH

CT

IH

IH, CT

IH

IH

IH, CT

IH

IH. CT

—

Size of department -

Percent of sales F T E

C

Qualitative

—d 7 — —

NAe

50/0

4%

N A

—

N A—

>2%

9

NA

—

—

N A

10

N A

—

N A

—

—

NA—

NA

“the main structure of the company” —

11 . . . . . . . . . . . . . . . . . IH, CT “absolutely crucial . now more than ever .”

Median ., . . . . . . . . . . 4% 9

aMaflufacturer code numbers were randomly assigned to the companies surveyed The codes used are constant for this and all other tables

—

blH lndlcates an In-house R&D department, CT lndlcates contractual arrangements with other cOm Panles

CFTE IS full-flme.equivalent employees

dDash Indicates data are expressed In other terms

eNA Indicates no data are available on Size Of department

SOURCE D S Shepard Harvard School of Publlc Health telephone survey of manufacturers 1983 (see app B)

Table 11 .—Types of R&D Efforts

Manufacturer code Areas of R&D Manufacturer code -

Areas of R&D—

1 ............ ●

●

●

●

2 . . . . . . . . . . . . . . . ●

●

3 . . . . . . . . . . . . . . . ●

4 . . . . . . . . . . . . . . . ●

●

●

5 . . . . . . . . . . . . . . . ●

●

●

control systems

posture support systems

curb-climbing wheelchairs

wheelchair design

style; appearance

attachment to motorize a manual

chair

N A

a

stronger, lighter materials

more efficient design

stronger construction

more cost-effective production

procedures

improved control mechanisms

stronger, lighter materials

style; appearance

6 . . . . . . . . . . . . . . . ●

●

7 . . . . . . . . . . . . . . . 

●

8 . . . . . . . . . . . . . . . ●

9. . . . . . . . . . . . . . . ●

●

●

10 ......., . . . . . . ●

●

11. . . . . . . . . . . . . ●

●

●

— —.

apJA Ind(cates no data available

SOURCE D S Shepard Harvard School of Publlc Health, telephone survey of manufacturers 1983 (see app B)

airline models

rehabilitation models

stronger, Iighter materials

electric wheelchairs

N A

a

stronger, lighter materials

decreased rolling resistance

increased durability and longevity

improved control mechanism

refinement of current products

style; appearance

stronger, lighter materials

lower rolling resistance

—— .—

TARGETS OF MARKETING CAMPAIGNS

Dealers are most influential in diffusing an innovation; 9 of the 11 manufacturers surveyed aim

their marketing campaigns at dealers. Six of them

also target the end user, five the institution (hospital, rehabilitation center, or nursing home), four

the foreign markets, three the VA, and two the

therapist. Clearly, more than one market may be

targeted simultaneously.

It was surprising that only two mentioned the

physical therapist because it is often the therapist

who decides what kind of chair the user is to have.

One explanation for this fact may be that the manufacturers meant to imply marketing to therapists

when they said they market to institutions. Another possible explanation is that, although therapists often decide what features are needed on
an individual user’s wheelchair, it is the dealer tures of which they need to inform therapists,

who often decides which brand is ordered. Unless there may be very little return on these marketa company makes a wheelchair with unique fea- ing efforts (table 12).

Table 12.— Marketing Procedures: At Whom Is the Marketing Aimed?

Manufacturer code Therapist Dealer Institutio n Use r V A Exports

1

-

. .. . . . . . . . . . . . . . . ‘-’ — x x — — —

2 — x x x

3 . . . . . . . . . . .. . . . . .

— —

— — — x — —

4 — x x —

5 . . . . . . . . . . . . . . 

— —

x x — x x

6

—

— x — —

7 . . . . . . . . . . . . .

— —

— x — — x

8 . . . . . . . . . . . . . . . .

—

— — x x

9 . . . . . . . . . . . . . . . .

— —

— x — — x x

10 . . . . . . — x — x x

11 . . . . .

—

x x x x x x

Total . . . . . . . . . . . . 2 9 5 6 3 4

Percent a . . . . . . . . . . . 180/0 820/o 45% 55% 270/o 360/o

aPercent of the 11 manufacturers surveyed who market to each group

SOURCE D S Shepard Harvard School of Public Health, telephone survey of manufacturers, 1983 (see app B)

MARKETING TOOLS

Of the 11 manufacturers surveyed, 10 said they

introduced new products at trade shows, 7 depend

on their sales force, 6 advertise in professional and

trade journals, 5 advertise in user journals, and

2 rely heavily on word of mouth (table 13).

Ironically, although the most frequently used

marketing device is trade shows, many of the

manufacturers added that the shows were not very

helpful in marketing their products. They serve

to show what the competition is doing and to introduce new products, but not to make large sales.

Actual sales take place outside of the trade shows,

mostly through personal contact between sales

representatives and dealers or institutions.

Advertising in professional and trade journals

educates therapists and dealers on what is availTable 13.—TooIs Used to Market a New Product

Manufacturer Word of Trade Professional User Sales

code mouth shows journals a

journals brepresentatives

‘1 . . . . . . . . . . . . . . — x x x

2 . . . . . . . . . . . . . . . .

—

x x — x

3 . . . . . . . . . . . . .

—

— x — x

4

—

— x — x

5 . . . . . . . . . . . .

—

— x x x x

6 . . . . . . . . . . . . . . . — x x — x

7 . . . . . . . . . . . . . . . . — x — — x

8 . . . . . . . . . . . . . . . . — x — x

9

—

— — x

10 : : : : : : : : : : : : : : : :

— —

x x x x

11 . . . . . . . . . . . . . . . .

—

— x x x x

Total . . . . . . . . . . . . 2 10 6 5 7

Percent c . . . . . . . . . . . 180/0 91 % 55% 45% 640/o

aprofesslonal journals include trade journals for therapists, hospital SUPPIY catalo9s, etc

buser Journals include rnag~lnes for persons with disabilities (e g., Paraplegia News), catalogs, and newsPaPers

c percent of 11 manufacturers surveyed who use each marketing device.

SOURCE D S Shepard, Harvard School of Publlc Health, telephone survey of manufacturers, 1983 (see app B)
able and builds brand-name recognition. Adver- Users may have to request that a dealer order

tising directly to the user is useful for small com- them; but if enough orders are placed, the dealer

panics with products that fall outside of the usual may decide to stock the item. Word of mouth is

range, e.g., three-wheel power alternatives and also a useful advertising tool for these smaller,

sports chairs. These products are not usually pre- less traditional companies.

scribed and not a regular part of a dealer’s stock.

OBSTACLES TO MARKETING

The largest single impediment to marketing a

new product is its cost, according to 8 of the 11

manufacturers surveyed (table 14). “Cost” includes the cost of the R&D needed to develop the

new product, the cost of setting up production

for a new product, and, most significantly, the

cost of the marketing process itself.

Three of the manufacturers also identified communication as a major obstacle to marketing a

new product. The best communication is through

personal contact with sales representatives who

can demonstrate and educate. That is a very costly, limited process, given the dispersed locations

of therapists, dealers, and users. Advertisements

in professional, trade, and user journals are not

as good because they reach not the entire market, but only those people with a special interest

in wheelchairs. Not all users read user journals,

and most first-time purchasers do not. One of the

most widely read user journals, Paraplegia News,

is read almost exclusively by veterans.

Three manufacturers said that the medical community is slow to accept new concepts and designs in wheelchair technology. Part of this reluctance hinges on safety issues. For instance, doctors

and therapists may hesitate to prescribe a power

wheelchair that runs at a higher speed than most,

because they are at risk of malpractice suits if a

person is injured while using a device. The manufacturers are aware of this but believe that doctors and therapists are unwilling to prescribe new

devices even for people who want them and are

capable of using them safely.

Brand-name identification was also mentioned

as a marketing impediment for smaller companies.

This is less of a problem for manufacturers of

unique products than for those who make a more

Table 14.— Factors That Are the Largest Impediments to Marketing a New Product

Manufacture r cost of

—

Medica l Brand Thirdcod e product Communicatio n

a

acceptanc e identificatio n

c

party payment d

—

1 ‘. . . . . . . . . . — x —

2 . . . . . . . . . . . .

— —

x x x x

3 . . . . . . . . . . . .

—

x — — —

4 . . . . . . . . . . .

—

x — — x

5 . .

—

x — — x

6 . . . . . . . . .

—

x — — —

7 . . . . . . . . . .

—

x — —

8 . . . . . . . . . . . .

— —

— x —

9 . . . . . . . . . . . .

— —

x — — x

10 . . . . ... .

—

x — x

11 . . . . .

— —

— — x — x

Total . . - 8

—

3 3 2 3

Percent e 

. . 73 % 270/o 270/o 180/0 270/o

acommun ,Catlon between man ~ fact Urer and others (dealers, therapists, doctors, users) IS I Imtted and d! fflcult, hl nderlng dlffuslon of in novatlons

bproduct5 that Vaw greatly from the norm are SIOW to& accepted by the medical community and hence are not Prescribed Diffusion Is hindered

cSt ron g brand name Identlflcat!on makes It d Ifflcul t to get people to try a product from a company with which they are not faml II ar

dThlrd. party reimbursement ,s djfflcu[t t. get for new ~roduct5 [t ,s also often slow In Corning rnaklng dealers hesitant to Sell products for wh!ch they may nOt be

rel m bursed or that are more expensive than the rel m bursement rece[ved Money Is lost d u ri ng the lag time between bi III ng and recel pt of relmbu rsement

‘Percent of the 11 manufacturers surveyed who identified each item as an !mpedlment to marketing

SOURCE D S Shepard, Harvard School of Publlc Health, telephone survey of manufacturers, 1983 (see app B)
46 . Health Technology Case Study 30: The Market for Wheelchairs: Innovations and Federal Policy

standard product. Given two products that appear to be essentially the same in function and

design, it is more likely that a therapist will prescribe and a dealer will stock brands that are familiar to users. Manufacturers also said that

brand-name identification is more of a problem

with first-time users than with people who are

making a repeat purchase, Active users tend to

be aware of the products around them and to

compare features. On a second purchase, the user

may have enough information to request a particular brand of wheelchair, whereas the first-time

user depends almost entirely on the therapist and

dealer to make that decision.

Third-party reimbursement policies are an obstacle to marketing as well. Products that do not

fall into established categories may not be reimbursable at all or only at a rate below cost. Dealers

are hesitant to sell products on which they do not

make enough profit. Under Medicare, they may

choose not to accept third-party assignment and

to bill the user directly for the full cost. This practice is also not a guarantee of full payment, as the

user may not be able to afford the price or may

choose to go to a different dealer where thirdparty assignment is accepted. The lag time involved in obtaining third-party reimbursement for

more expensive or less standard products may also

discourage dealers from selling them. Long lag

time may result from a claims review process that

may approve all purchases of inexpensive, standard models as a matter of course but review all

purchases of more expensive, more innovative

wheelchairs very carefully.

Although most manufacturers carry product

liability insurance, one manufacturer surveyed

believed that the high cost of such insurance curtails innovation by keeping profits low. His company, therefore, focused on product improvement, rather than on development of entirely new

products. Although such a focus will not lead to

major breakthroughs, it usually produces results

more quickly and at lower cost than development

of new products.

ROLE OF STANDARDS

Almost half of the manufacturers surveyed (5 tant. Of these three, an importer from Britain conof 11) said that they take existing or proposed siders both VA and British standards; one takes

standards of outside organizations into account proposed Rehabilitation Engineering Society of

when designing their products (table 15). Three North America standards into account; and one

of the five identified the VA standards as impor- considers only VA standards. Two indicated that

Table 15.— Role of Voluntary Standards in Manufacturers’ Design of a New Product

Manufacturer code Yes No Don’t know Which ones?

1 . . . . . . . . . . . . . . . . — x — —

2 . . . . . . . . . . . . . . . . — X

a b — —

3 — — x —

4 . . . . . . . . . . . . . — X

a — —

5 X

a — — VA

6 . . . . . . . . . . . . . x – — VA, British standards

7 . . . . . . . . . . . . . . . . X

a — — —

8 x — — RESNA

9 . . . . . . . . . . . . x – — —

10 . . . . . . . . . . . . . . . . — x — —

11 . . . . . . . . . . . . . . . . — x — —

Total . . . . . . . . . . . . 5 5 1

Percent c . . . . . . . . . . . 45% 45% 90/0

a products are manufactured to the company’s own standards, which are said to be more Strln9ent than any existi n9 or Proposed standards

bstandards change too often and are too difficult to understand for it to be financially feas!ble tO use them.

c percen t of manufacturers surveyed who gave each reSPOnse.

SOURCE D S Shepard, Harvard School of Publfc Health, telephone survey of manufacturers, 19L13 (see app. B)
their internal standards were more stringent than

existing or proposed standards.

Five of the companies stated that they do not

take external standards into account, with one

adding that existing standards are too confused

and confusing to make them worth considering.

One other manufacturer did not know what role

standards played in the development of its products, since the wheelchair was designed by an outside firm.

VA standards were the most frequently mentioned, both by those who use them and those

who do not, probably because they are the only

currently written standards. Manufacturers hoping to obtain a VA contract obviously must consider VA standards.

Reactions to the idea of industry-wide standards were mixed. Some manufacturers disliked the

idea because they felt the standards would be set

too low; they are already manufacturing products to conform to more rigorous standards than

they expect to see adopted. If low standards are

adopted, they felt that products that meet the

standards but are of lower quality and cost than

their products would gain a competitive advantage. Other manufacturers, who also believed

they are making a high-quality product, welcomed the idea of standards because they believed

it would force the lower quality competitors to

improve their products, thus benefiting the users.

Standards would raise the cost of cheaper products, thereby decreasing the price differential and

eliminating some of the current competitive advantage the lower quality manufacturers may

have. Regardless of what effect manufacturers

thought standards would have, most felt that they

would be lower than current technology makes

possible.

EFFECTS OF OTHER FEDERAL POLICIES ON R&D

When asked about the effect of Government two of them were unsure, and four of them said

policies on R&D, three respondents said they were that they were subject to other influences (table

not influenced by any other Government policies, 16). For two of those last four, the relevant agency

Table 16. –Presence of Government Policies That Affect R&D

Manufacture r

cod e

1 . . . . . . . . . . . . . .

2 . . . . . . . . . . . . . .

3 . . . . . . . . . . . . . .

4. . . . . . . . . . . .

5 . . . . . . . . . . . . .

6 . . . . . . . . . . . . . .

7 ..,... . . . .

8. . . . . . . . . . . . . .

9., . . . . . . . . . . . .

10. , ... . . . . .

11 . .

Yes

—

x

—

x

x

—

x—

x

—

x

6

550/0

No

x—

—

x

x—

3

270/o

Don’ t

know Which ones?

— —

— Government funding of R&D. The company

cannot compete, has a disincentive to fund

its own R&D.

x – — FDA—good manufacturing practices, quality control, complaint monitoring.

— Product liability laws. HCFA reimbursement and approval processes for new, innovative products.

x — — FDA—good manufacturing practices. — —

— Standards have an indirect effect on product design. — —

— VA specifications—the company hesitates

to make anything that they cannot sell to

the VA.

2

18 0/0

Total . . . . .

Percen t

a

aPercent of 11 manufacturers surveyed who gave each response

SOURCE D S Shepard Harvard School of Public Health, telephone survey of manufacturers 1983 (see app. B)
is the Food and Drug Administration (FDA). centive for a small company to fund its own R&D.

Although the FDA has not yet written any stand- A small company cannot compete with the level

ards, companies are subject to “good manufac- of funding and amount of Government R&D and

turing practice, ” which pertain mostly to rec- hesitates to invest large amounts of money and

ordkeeping procedures. In addition, the FDA time into R&D only to have a Government ageninvestigates complaints that come through their cy come out with the same product sooner, acoffice and may choose to monitor quality. cording to this manufacturer.

Interestingly, one small manufacturer (#2) felt

that R&D by Government agencies was a disinPARTICIPATION IN OBTAINING REIMBURSEMENT

Six of the eleven companies surveyed participate in getting their products approved for thirdparty payment (table 17). Five of these six focus

their efforts on getting VA approval and contracts. One of them aids individual users in getting VA payment for their wheelchairs but does

not have a VA contract. Two of them have participated in getting Health Care Financing Administration (HCFA) approval of their products. One

has participated

Table 17.—Active

Approved

in getting approval from an

Participation in Getting Product

for Third-Party Payment

—

4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5....................... .

Total . . . . . . . . . . . . . . . . . . . . . . . . . .

Percent e

. . . . . . . . . . . . . . . . . . . . . . . . . . .

Yes No

— x

X a b c d —

X

b

X

a 

=

X

a c —

X

a —

— x — x — x — x

X

a —

6 5

55 ”/0 45 ”/0

acompany partlclpate5 In getting VA approval of their product

bcompany may Part lclpte In getting VA payment for their product in lndlvldual

cases

ccompany has participated In getting HCFA aPPrOval of their product

dcompany has participated (n getting reimbursement from parties other than

HCFA and the VA

epercent of manufacturers surveyed who gave each resPonse

SOURCE: D. S. Shepard, Harvard School of Public Health, telephone survey of

manufacturers, 1983 (see app. B)

agency other than HCFA or the VA. The remaining five manufacturers do not participate.

In general, it is not necessary to petition for

HCFA approval of a product. As long as the product can be classified in an existing category of

durable medical equipment, it is not necessary to

get special approval. When the Amigo was first

designed, it was not classified as a wheelchair. As

discussed above, a congressional amendment was

necessary to obtain coverage. Companies that

have made similar products since then have been

assured of HCFA coverage.

A company may wish to create a new coverage classification when its product can be covered

under an existing category but is so much more

costly than other items in that category that reimbursement to dealers would be minimal, An example might be a curb-climbing wheelchair. Although this device might be classified as a power

wheelchair, its cost is so much greater than most

other power chairs that the reimbursement rate

would discourage dealers from selling it. For example, under Medicare, the product might have

an allowable charge of $1,500. or $2,000, while

its actual cost could be $10,000. If a special category could be created for it, then reimbursement

would be based on its cost, and the disincentive

to selling it would be removed, However, the cost

and time involved in petitioning for the new classification may be substantial.
6.

Case Studies of Innovations
6.

Case Studies of Innovation;

CASE 1: PAST INNOVATION: INVACARE CORP.’S POWER ROLLS@ IV

Description

chosen as the subject of this case study because

of its demonstrated improvement in performance,

its capture of a significant market share, and Invacare’s cooperation. 1 One model is shown in figure 1.

i ng

, regenerative braking, and self-correcting

steering. Dynamic braking is the ability to maintain a constant speed (not accelerate) on a downgrade. Regenerative braking means that the batteries are wired to recharge themselves during

braking. The self-correcting steering keeps the

wheelchair from veering to one side when it is on

an uneven surface. This wheelchair is also lighter

than many similar wheelchairs.

Development

An ambitious new group of investors and a new

president took control of Invacare in 1979. They

in January 1980, following extensive market research. This research sought to answer the

questions:

• What is currently available in wheelchairs?

• What do users want?

● What end product will satisfy these desires?

Invacare’s study took about 4 months to complete. During that time Invacare talked with therapists in rehabilitation centers and hospitals and

with dealers and users.

———-——— —.——

‘Ini[~rmation for these case studies, was obtained at the Invacare

Corp. in Elyria, OH, on Aug. 17, 1983. The authors visited two

manufacturing plant sites, headquarters offices, and the testing unit,

and interviewed a number of company officials ]ncluding the pres]-

dent, vice presidents in charge O( engineering and marketing, product test technicians, and others.

The marketing and engineering departments

worked together to translate the comments and

suggestions they received into technical concepts

for an end product. For example, a user’s comment that, “I don’t want my chair to run away

from me. Why does it gain so much speed going

downhill?” was translated into the concept of

dynamic braking. The technology developed had

to be simple enough for dealers to service, and

safe enough to convince therapists of its benefits

for users.

While conducting its market survey, Invacare

hired a market research firm to study wheelchair

design. Talking to many of the same types of people, this research firm investigated what people

would like a wheelchair to look like and presented

a series of intermediate drawings and a final composite to Invacare. This design had to be modified to fit the limitations of the mechanics. For

instance, the spacing of the wheels had to allow

room for the batteries.

It took approximately 9 months from the time

the idea was introduced to the time the first prototype was made. Several different prototypes

were tested over the following 6 months for mechanical and electronic problems. Testing included

subjecting the prototypes to extremes in temperature, testing battery life and battery heating during use, and using the prototypes in the field to

make sure they performed appropriately.

Commercial Introduction

The product was first introduced into commercial use through demonstrations in July 1981, with

the first dealer delivery being made in September. The marketing strategy was developed along

with the wheelchair. It was based on answers to

the questions:

● What does the competition have?
Figure 1

SOURCE: Invacare Corp

How do they sell it? When the product was ready in final form, InWhat success and failure are they having? vacare’s sales force attended demonstrations and

How can we improve upon our competitors’ were trained in the product’s functions and use.

problems? The sales force was then authorized to begin to

How can we explain and sell technical inno- tell dealers about the product. Although the Powvations such as “dynamic braking?”
made aware that a new, substantially different

power chair would be available shortly. They

were discouraged from making large orders for

other chairs until they saw what the new one had

to offer. When the chair was finally made available, a promotional price was offered.

Diffusion of the Innovation

By the end of 1983 (21⁄2 years since its introduction ), the chair had captured 25 to 30 percent

of the power wheelchair market.

Invacare credits its success in marketing the

Power Rolls IV to its sales force. It was responsible for convincing dealers and therapists that the

product is worth selling and prescribing. Invacare

also conducted training sessions for therapists. If

the therapist was part of a large rehabilitation center, demonstration models were made available

for use. Dealers were educated in the maintenance

of the product. The product was priced to dealers

to allow them a reasonable markup within their

reimbursement allowance.

The two largest impediments to the innovation

were price and product liability. The price had

to be within the range the market would bear, given the prices of existing power wheelchairs and

reimbursement constraints. Product liability was

a crucial factor in the development of the Power

Rolls” IV because the electronics were a new design. Product liability has not been a great concern in the revisions since then, as the product

has now been proven.

Diffusion of the innovation to other manufacturers has taken several years. Everest & Jennings

is said to be working on a similar product. They

have marketed a product whose performance falls

between those wheelchairs previously available

Discussion

The introduction of the Power Rolls R IV represents a combination of “technological push” and

“demand pull.” “Technological push” is a theory

of innovation that says innovations are a product of improved technology’s making innovation

possible. Without the technology of dynamic

braking and self-correcting steering (a capability

of the electronic controller), the innovation would

not have been possible. However, had it not been

for users wanting a product with those features,

i.e., “demand pull, ” the chair would not have been

made (23).

The speed of the diffusion of the Power Rolls

IV may have been enhanced by the demand pull,

but diffusion to other manufacturers has been

time-consuming. The two main reasons for the

lag are: First, the competitor must watch the sales

of the new product to determine if it is successful

and worth imitating. Second, once that decision

is made, the competitor must develop and market the product. This process can take as much

time as the original development of the innovation.

Diffusion to users can also be aided by directly

approaching the users through, for example, advertising in user journals, such as Paraplegia News

or Accent on Living. Users may also be reached

in rehabilitation centers. The same training sessions that are conducted for the therapists may

be open to the users.

CASE 2: POTENTIAL INNOVATION: CURB-CLIMBING WHEELCHAIR

Description of Innovation tor tread, much like that used on a tank. A

Swedish model, available for 15 years, has large

Users of wheelchairs face obstacles to daily liv- wheels and a large motor.

ing that most people never think of, such as side- . -

walk curbs and other uneven surfaces. An innova- Obstacles tion that has yet to be introduced to this country,

although it is available elsewhere, is a curb-climb- Why, if the technology exists, has this type of

ing wheelchair. It can also climb hills and navi- wheelchair not been introduced in the United

gate on ice and snow. A German model has trac- States? Although some U.S. manufacturers are,
54 . Health Technology CAse STudy 30: The Market for Wheelchairs; Innovations and Federal Policy

in fact, working on just such a chair, there is still

a considerable lag time. Four reasons for this delay were identified (23).

First and most significant is product liability.

The German model can sit on a steep stairway,

but many people would have a difficult time

maintaining balance at such a steep angle. The

addition of a seat belt and shoulder strap is no

guarantee of safety; people can forget to use them,

and seat belts can break. Regardless of whether

an accident is caused by a neglectful user or product malfunction, the manufacturer is at risk.

The second reason is funding. The R&D efforts

to produce a curb-climbing wheelchair as a safe

product are very costly and would need to be reflected in the price to the purchaser, estimated at

$10,000 (23). It is doubtful that many third-party

payers would be willing to pay for such an item,

or that many users would be able to afford it

themselves. Even if third-party coverage was obtained, a copayment of 20 percent or more (depending on allowable charge limitations) under

private insurance or Medicare would be a significant obstacle. The market is too small and reimbursement too limited to make this innovation a

priority for any company. Apparently, this has

not been a problem for European manufacturers,

as the Government and private insurance reimbursements tend to be more complete.

The third reason relates to user preference. U.S.

manufacturers believe that American consumers

like streamlined devices; the curb-climbing chair,

as it is currently designed, is very heavy and

bulky. Manufacturers believe that even if users

have the desire and money to purchase such a

wheelchair, they will be displeased with the

design.

The final reason has to do with the technology

transfer between countries, Although U.S. manufacturers could design their own models of a

curb-climbing wheelchair, it is less costly to obtain the technology from companies already making the product. These companies are, in principle, willing to license their knowledge to U.S.

manufacturers; but the U.S. manufacturer finds

the licensing negotiations difficult, feeling that the

foreign companies have an exaggerated conception of the size and wealth of the U.S. market,

The U.S. companies have so far been unable to

meet the demands of the foreign companies and

are not likely to invest the money needed to develop the product on their own.

Foreign manufacturers have not yet exported

these chairs directly to the United States and are

unlikely to do so for almost the same reasons that

innovations are not being made in this country.

The cost of manufacturing is high and is increased

even further by import taxes. Under U.S. reimbursement systems, the importing manufacturers

would face the same reimbursement difficulties

as domestic manufacturers. Last, European manufacturers, who have sufficiently valuable assets

and reputations, are subject to the same product

liability risks as U.S. manufacturers.
Appendixes
.—

Appendix A.—Acknowledgments and

Health Program Advisory Committee — — — .—

ACKNOWLEDGMENTS

A number of people deserve thanks and recognition for their contributions to this report. We thank the

officers and employees of the wheelchair manufacturing and distributing firms for participating in our survey.

As we promised them confidentiality, we cannot thank them by name. We appreciate the suggestions and assistance of Jane Sisk, Cynthia King, Jack Langenbrunner, and Katherine Locke of the Office of Technology Assessment (OTA). Mr. A. Malachi Mixon, III, President of Invacare Corp., and his associates, kindly provided data

for the two case studies. We thank the following wheelchair users, researchers, government officials, and insurers who generously provided their time and expertise to

Jay AuWerter

Invacare Corp.

Elyria, OH

Peter W. Axelson

Veterans Administration

Palo Alto, CA

Henry Bergman

Public Citizen Health Research Group

Washington DC

Robert J. Britain

Food and Drug Administration

Department of Health and

Human Services

Washington, DC

Guy E. Clark

Barrier-Free Design Consultants, Inc.

Sub Lakes, AZ

Larry Comella

Food and Drug Administration

Department of Health and

Human Services

Silver Spring, MD

Clyde C. Cook

Veterans Administration

Washington, DC

J. Richard Crout

Boehringer-Mannheim Corp.

Rockville, MD

Donald L. Custis

Veterans Administration

Washington, DC

Patricia Dumphy

Massachusetts Department of

Public Welfare

Boston, MA

Gil Haury

Invacare Corp.

Elyria, OH

us directly or as reviewers for OTA.

Douglas Hobson

Rehabilitation Engineering Program

University of Tennessee

Memphis, TN

Ralf Hotchkiss

Oakland, CA

David L. Jaffe

Veterans Administration

Palo Alto, CA

Mane Kasprzyk

Blue Cross and Blue Shield of

Massachusetts

Boston, MA

Carolyn Keeley

Massachusetts Department of

Public Welfare

Boston, MA

Ron Lipskin

Veterans Administration

New York, NY

Jan Little

Medical Equipment Distributors, Inc.

Maywood, IL

Donald Marlowe

Center for Medical Devices

Rockville, MD

Lee Matthews

Food and Drug Administration

Department of Health and

Human Services

Silver Spring, MD

Samuel R. McFarland

Southwest Research Institute

San Antonio, TX

Colin A. McLaurin

Rehabilitation Engineering Center

University of Virginia

Charlottesville, VA
Donald Milani

Abbey Medical

Brighton, MA

A. Malachi Mixon III

Invacare Corp.

Elyria, OH

Harold Pellerite

Food and Drug Administration

Department of Health and

Human Services

Silver Spring, MD

Jacquelin Perry

Rancho Los Amigos Hospital

Downey, CA

Hymie Pogir

Invacare Corp.

Elyria, OH

Anton Reichenberger

Veterans Administration

New York, NY

Nigel Shapcott

Rehabilitation Engineering Center

University of Tennessee

Memphis, TN

David Wayne Smith

University of Arizona

Tucson, AZ

Anne R. Somers

Department of Environment and

Community and Family Medicine,

Rutgers University

New Brunswick, NJ

Anthony Stares

Ortho-Tech International, Inc.

New York, NY

Gordon Stout

Berkeley, CA

Robert A. Streimer

Health Care Financing Administration

Department of Health and

Human Services

Baltimore, MD

Joseph Traub

National Institute of

Handicapped Research

Department of Education

Washington, DC

Raymond P. Whitten

National Aeronautics and

Space Administration

Washington, DC

Irving Kenneth Zola

Brandeis University

Waltham, MA

Robert E. Smith

Veterans Administration

Palo Alto, CA
HEALTH PROGRAM ADVISORY COMMITTEE

Sidney S. Lee, Committee Chair

President, Milbank Memorial Fund

New York, NY

Stuart H. Altman*

Dean

Florence Heller School

Brandeis University

Waltham, MA

H. David Banta

Deputy Director

Pan American Health Organization

Washington, DC

Carroll L. Estes**

Chair

Department of Social and Behavioral Sciences

School of Nursing

University of California, San Francisco

San Francisco, CA

Rashi Fein

Professor

Department of Social Medicine and Health Policy

Harvard Medical School

Boston, MA

Harvey V. Fineberg

Dean

School of Public Health

Harvard University

Boston, MA

Melvin A. Glasser ***

Director

Health Security Action Council

Committee for National Health Insurance

Washington, DC

Patricia King

Professor

Georgetown Law Center

Washington, DC

Joyce C. Lashof

Dean

School of Public Health

University of California, Berkeley

Berkeley, CA

Alexander Leaf

Professor of Medicine

Harvard Medical School

Massachusetts General Hospital

Boston, MA

Margaret Mahoney** * *

President

The Commonwealth Fund

New York, NY

Frederick Mosteller

Professor and Chair

Department of Health Policy and Management

School of Public Health

Harvard University

Boston, MA

Norton Nelson

Professor

Department of Environmental Medicine

New York University Medical School

New York, NY

Robert Oseasohn

Associate Dean

University of Texas, San Antonio

San Antonio, TX

Nora Piore

Senior Advisor

The Commonwealth Fund

New York, NY

Mitchell Rabkin*

President

Beth Israel Hospital

Boston, MA

*Until April 1983

**Until March I984

***Untll October 1983

****Until August 1983
60 ● Health Technolgoy Case Study 3 0: The Market for Wheelchairs: Innovations and Federal Polic y

Dorothy P. Rice

Regents Lecturer

Department of Social and Behavioral Sciences

School of Nursing

University of California, San Francisco

San Francisco, CA

Richard K. Riegelman

Associate Professor

George Washington University

School of Medicine

Washington, DC

Walter L. Robb

Vice President and General Manager

Medical Systems Operations

General Electric Co.

Milwaukee, WI

Frederick C. Robbins

President

Institute of Medicine

Washington, DC

Rosemary Stevens

Professor

Department of History and Sociology of Science

University of Pennsylvania

Philadelphia, PA
—...— —— .

Appendix B. —Sampling Procedures

for Survey of Manufacturers —— —

For feasibility, the survey was initially limited to 10

of the 53 eligible manufacturers listed in the National

Rehabilitation Information Center’s data bank,

ABLEDATA. The technique of sequential proportional

selection (sampling with probability proportional to

size) was used to choose the companies. To obtain a

reasonable representation of the industry, larger companies were given a greater chance of being chosen

than smaller companies. This was accomplished not

by using sales data, for they were unavailable, but

through ABLEDATA information on the number of

products listed for a company.

All the manufacturers identified through ABLEDATA’s listings of manual, power, sports, and power alternative wheelchairs were ranked according to

the number of listed products they made, n, from least

(1) to greatest (32). Within a given size, companies

were listed alphabetically. Foreign companies without

U.S. distributors were not included. The cumulative

numbers, N, were calculated (table B-l). The grand

total, G (the final N) was divided by 10, the desired

sample size, to give the sampling interval.

Any company that manufactured a greater number

of products than the interval was automatically included in the sample. Companies and their products

thus included were subtracted from the sample frame,

giving a reduced total of products, T. A new interval

was computed based on the number of companies remaining to be selected and T.

A random starting point was chosen using a random number table. The sampling interval was added

to that starting point once for each company wanted

for the sample. The companies whose cumulative N

equaled or first exceeded each total, beginning from

the top of the list, were chosen for the survey. When

one company declined to participate due to time constraints, a replacement was chosen by continuing the

process of sequential selection. This procedure provided the first 10 participants.

Table B-1 .—Sampling Frame for Survey of Wheelchair Manufacturers

n

a Company N

b

n

a Company N

b

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

Abbey. . . . . . . . ... ... ... . . ... ... . .

Alpha . . . . . . . ... . . . . ... ... ... .

Bair. . . . . . . . . . . . . . . . ... ., ., . . .

Braun . . . . . . . . . . . ... . . . . . . . . . . . . .

E. F. Brewer . . . . . . . . . . . . . . . . . . . . . . . . .

ChairLift . . . . . . . . . . . . . . . . . . ... , . . .

Convaid . . . . . . . . . . . . . . . . . . . . . ... .

Equalizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Falkenberg . . . . . ... . . ... ... .

General Engines. . . . . . . . . . . . . . . . . ...

Ja-Dik . . . . . . . ... ... , ... ...

Kimed

Mastercraft : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

Mobility Engineering . . . . . . . . . . . . . . . . . .

Mobilizer ... . . ... . . . . . . . . . . ...

Motion Designs . . . . . . . ... ... . . . . . . . . .

Motovator ... . . . . . . . . . . . . . . . . . ... . . .

L. Mulholland ... ... ... ... ... ... . . .

National Welded . . . . . . . . . . . . . . . . . . . . .

Ortho-Kinetics . . . . . . . . . . . . . . . . . . . . . . . . . .

Ortop . . . . . . . . . . . . ... . . . . . . . . . . . . .

Rosenthal . . . . . . . . . ... ... . . . . . . . . . . . . .

Seidel . . . . . . . . . . . . . . . . . . . ... ... ...

—Sherry . . . . . . . . . . . . . . . . . . . . . . . . . . —

1 1

2 1

3 1

4 1

5 2

6 2

7 2

8 2

9 2

10 2

11 2

12 2

13 2

14 4

15 4

16 5

17 6

18 8

19 8

20 9

21 14

22 14

23 15

24 32

Solo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Steven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

21st Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

X-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Accumec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Amigo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Damaco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

E& J Canadian . . . . . . . . . . . . . . . . . . . . . . . . . 36

Hall’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Production Research . . . . . . . . . . . . . . . . . . . . . 40

Quadra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Wheeler Dealer .................. . 46

Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Voyager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Newton . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

International Medical Equipment . . . . . . . . . . 65

Invacare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Ortopedia . . . . . . . . . . . . . . . . . . . . . . . . . . 81

A-Bee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

Colson . . . . . . . . . . . . . . . . . . . ... . . . . . . . . 104

Sears . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 118

Stainless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

E&J . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

a“n’ IS the number of products made by each company

b“N ,s the running total of the number of products made, n Computations G the grand total, equals 165 The number of companies desired for sample equaled

10 The lnltlal tntervalwas 165 10 165,s0 E&J was automatically !ncludedln the sample Therevlsed !nterval was calculated bynotlngthat T, the revised grand

total after E&Jselectlon IS 165 32 133 and 133 9 - 148 We rounded the result down (to 14) (If the Interval was rounded upto 15, the final total, G, would

be greater than 133 so we would not be ableto select the last manufacturer )The random statilng point equaled 13(from a random number table with rangeof 1

to 14) We added 14to 13 repeatedly toget9 totals 13,27 41 55 69 83 97 111 125 The comparmes chosen were those whose N was equal toone of the totals

or were the f!rst to exceed one of the totals

An addlt!onal manufacturer was chosen by acontfnuatlon of this process, adding 14 to the last total, 125 Since 139 IS greater than 133(T) we recycled to the

beg!nnlng of the sample frame The newest total became 139 133 6 so the sixth manufacturer was chosen as the replacement

SOURCE Dertved fromUS Department of Education National lnstttute of Handicapped Research Nat!onal Rehabllltatlon information Center ABLEDATA System 1983

61
Appendix C.— Interviewer’s Schedule for Telephone

Interview of Wheelchair Manufacturers

Part 1: General Information

1. a.

b.

c.

d.

2.

What do you believe to have been your company’s most significant innovations in the last

10 years?

Briefly describe those innovations.

What advantages do these innovations have

over previous products?

Are these innovations:

● currently on the market?

● no longer on the market?

● expected to be on the market in the future?

Which of the above innovations were most important for the sales of your company? (Please

limit to 3.)

Part 11: Specific Past Innovations

3. a.

b.

c.

d.

4.

5.

6.

Medicare

VA

Medicaid

Other

State, of

When was the need for this innovation first

identified? (month, year)

When was the first prototype of this innovation constructed? (month, year)

When was the innovation first offered for sale

commercially? (month, year)

When was the innovation first delivered commercially? (month, year)

Where did the idea for that innovation come

from? For example, was it inspired by personal

experience with wheelchairs, by an identifiable

weakness in existing wheelchairs, by R&D efforts in another sector, or by something else?

Were the R&D efforts responsible for this innovation sponsored:

• totally by the government?

● mostly by the government?

● half by the government, half by private

concerns?

● mostly by private concerns?

● totally by private concerns?

Was this innovation approved for payment,

in the State in which your company is headquartered, by:

Yes/ No/ Date approved Length of approval

Don' t Know (month year) process

Part Ill: R&D and the Marketing Process

b.

c.

d.

8. a.

b.

9. a.

b.

c.

10. a.

b.

c.

11. a.

b .

c.

12. a.

b.

How important is R&D to your company as

a whole? If possible, please express the amount

spent on R&D as a percentage of gross annual

sales.

With what kinds of R&D is your company involved? The specific projects are not important, only the general areas of research. As

with all of these questions, your answers are

voluntary and confidential.

Are there any innovations under development

which you would be willing to describe?

What is your company’s usual procedure for

marketing a new or substantially improved

product?

What factors tend to be the largest impediments to the rapid marketing of new or substantially improved products?

When designing a new or substantially improved product, do you take into account voluntary standards in existence or expected to

be in existence in the future?

If you do consider any voluntary standards,

which have the most influence on product

design:

● Veterans Administration?

● Rehabilitation Engineering Society of North

America (RESNA)?

• International Standards Organization

(ISO)?

If advance copies of proposed RESNA standards were made available to you, would they

influence product design and innovation?

Are there any government or Federal agency

policies which affect R&D?

Which ones?

What effect do they have?

Do you actively participate in getting your

product approved for third-party payment by

government and private insurers?

Describe this participation process.

Does this process have an effect on the decision to design a new product or on the design

of a new or substantially improved product?

Do you have any objections to our identifying one of your innovations, described in Section II, in our report?

Would you like to have your company identified in our report? Do you object to it being

identified in our report?

7. a. Does your company have an active R&D department of its own, or does it contract with

R&D firms, or both?

62
— —

Appendix D. —Glossary of Terms and Acronyms

Glossary of Terms

ABLEDATA System: Computer data bank of the National Rehabilitation Information Center.

Discounting: A procedure used in economic analysis

to reduce to present value those costs and benefits

that will occur in future years. Discounting is based

on two premises: 1) individuals prefer to receive

benefits today rather than in the future; and 2) resources invested today in alternative programs

could earn a return over time.

Health maintenance organization: An organization

that acts as both insurer and provider of comprehensive but specified medical services by a defined

set of physicians to a voluntarily enrolled population paying a prospective per capita amount.

Innovation: Any product or product modification that

substantially improves the quality or decreases the

cost of a product, while introducing a technology,

material, or concept not previously found in any

similar product on the market.

Manual wheelchairs: Type of wheelchair built in the

traditional chair shape with wheels instead of legs.

It may be propelled by the user’s hands or feet or

pushed by another person.

Power alternatives: Motorized vehicles that function

like power wheelchairs but do not look like typical

wheelchairs; most have three wheels and resemble

golf carts or motor scooters.

Power wheelchairs: Motorized wheelchairs, usually

battery-powered, which are heavier than manual

wheelchairs.

Process innovations: Changes in the means of production.

Product innovations: Changes in the final product.

—

Total annualized costs: Annual overall costs of (wheelchair) use, calculated by taking the sum of: 1) the

purchase price divided by a factor based on expected years of use and, 2) the annual repair and

maintenance costs.

Glossary of

ABLEDATA –

ANSI –

CID –

CPV –

E&J —

FDA –

FTE

GSA -

HCFA –

HMO –

HUD –

ISO

NIHR –

OTA –

R&D –

UMTA –

VA

Acronyms

Computer Center at National Rehabilitation Information Center

American National Standards Institute

Commercial Item Description

cumulative present value

Everest & Jennings, Inc.

Food and Drug Administration, U.S.

Department of Health and Human

Services

full-time equivalent

General Services Administration

Health Care Financing Administration, U.S. Department of Health and

Human Services

health maintenance organization

Housing and Urban Development

International Standards Organization

National Institute for Handicapped

Research, U.S. Department of Education

Office of Technology Assessment,

U.S. Congress

research and development

Urban Mass Transportation Administration

Veterans Administration

6 3
References
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2.

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— —

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