LONGMONT, Colo.--In a bold move to counter the industry's turbulent conditions, Sunrise Medical will break into two separate businesses, one specializing in mobility and the other in respiratory equipment, the company announced last week.
Under the plan, set to take effect July 1, Sunrise Mobility will supply Quickie, Jay, Guardian, Hoyer and Bio Clinic products. The company has also reached an agreement with A.R.T. (Artistry in Rehab Technology) to offer its portfolio of products, which include Whitmyer, AES, Rehabilitech, Kid Kart and Kid's Up brands.
The respiratory company, DeVilbiss Healthcare, will supply the DeVilbiss respiratory and sleep therapy product lines.
"High-performing organizations reinvent themselves to both survive the waves and to get ahead of the waves," said Michael N. Hammes, chairman and CEO of Sunrise Medical, in a videotaped announcement.
And the waves in the HME sector have grown increasingly menacing in the past few years with the onset of competitive bidding, the Deficit Reduction Act's 36-month cap on oxygen rentals, drastic changes in power wheelchair coding and reimbursement, impending changes in manual wheelchair codes and increased legislative and regulatory demands.
"We are in a time of change as an industry," Hammes said, adding that splitting the company will allow both entities to become "more flexible, more agile and more responsive" to industry demands.
"Ultimately," he said, "the creation of the two separate organizations will improve focus and create long-term value for customers. A truly focused approach can make all the difference in the world. And we just couldn't provide the necessary focus as one organization."
Under the new structure, Hammes will become CEO of Sunrise Mobility and continue his role as chairman of the overall company. Kees Regeling has been named president and CEO of DeVilbiss Healthcare.
The new structure will be an asset, Regeling said. "As a separate organization, we'll be better able to identify and plan for shifts in the market and react accordingly. This really will strengthen our position as a player both domestically and internationally."
Headquarters for DeVilbiss will be in Somerset, Pa., where that company was based before being acquired by Sunrise in 1993.
In an attempt to curtail spiraling production and labor costs, DeVilbiss is also considering relocating some of its manufacturing operations from Somerset to a new facility in China, sources said. A presence in that country would underscore DeVilbiss' intent to increase its stake in the global respiratory market. With a decision on the potential relocation anticipated in mid-June, however, officials would not confirm published reports that said the company might eliminate 40 jobs at the Somerset plant.
A statement issued Thursday said Sunrise and DeVilbiss were still finalizing details of their global operational and commercial plans, but it was certain that each organization would have its own sales force.
Company execs also said the new structure would not "slow new product launches or cut research and development." Indeed, DeVilbiss is working on new products that should launch this calendar year, including a new CPAP platform and ambulatory oxygen solution.
DeVilbiss customers can continue to order products through Sunrise Medical until July 1; after that date, they must be ordered through DeVilbiss Healthcare. Sunrise Mobility will begin representing A.R.T. products July 1, but aside from selling and marketing, the A.R.T. Group will remain independent, the statement said.
A Web page including details about the reorganization is available at http://www.sunrisemedical.com/evolution.