Invacare Leaves a Troubled December Behind

Invacare closed 2012 with a very busy—and troubled—December. The Elyria, Ohio-based company that produces respiratory therapy, patient mobility and patient transfer technology kicked the month off with an agreement with the U.S. Food and Drug Administration (FDA) to correct wheelchair manufacturing problems; then came the announcement that the company would sell its medical supplies business to AssuraMed; and at the end of the month, layoffs at the Elyria facility were announced.

According to the FDA, the agreement reached dictated that Invacare cease all production of wheelchair components at its Elyria factory until all violations listed in the consent decree have been corrected and the company has been notified by the agency that it is in compliance with the Federal Food, Drug, and Cosmetic Act.

The Act requires medical device companies to follow current good manufacturing practice and to follow strict guidelines in reporting adverse events to FDA. To comply with current good manufacturing practice, a medical device company must establish and follow specific procedures, which are outlined in FDA’s Quality System regulations, to prevent quality problems in their devices. According to the FDA, seven inspections of the Invacare facilities subject to the consent decree since 2002 have documented violations of FDA’s Quality System regulations, along with failures to properly report adverse events to the agency.

According to the agreement, Invacare may continue to fulfill orders and written quotes that are already in the company’s order fulfillment system at the time the U.S. District Court enters the decree, as long as the provider completes a form certifying that he or she is aware of the decree and would still like for Invacare to fulfill the order.

“The company is pleased to have reached an agreement with the FDA and believes it represents an important step forward for Invacare,” said Gerry Blouch, Invacare president and CEO. “The terms of the decree contain important exceptions that will allow Invacare to continue to provide medically necessary products for the consumers who need them, as well as ongoing replacement, service and repair of products already in use. Throughout this process, the company will try, as much as possible, to minimize the impact on its associates, customers, and the people who rely on Invacare products to make life’s experiences possible.”

However, Invacare couldn’t avoid a significant impact to its Elyria employees: A “workforce reduction” was initiated on Dec. 27, cutting 365 hourly manufacturing associates down to 222. Some of those remaining are being assigned to different roles. Invacare offered 60 days continuance of pay and benefits for the 143 associates that were laid off.

“While we regret having to take this step, we recognize the need to align our workforce with our production volume,” said Blouch upon the announcement of layoffs. “We value and respect the hard work that our associates demonstrate on a day-to-day basis and we will provide assistance to those affected to help them with the transition. We remain committed to achieving full regulatory compliance and to resuming full operations at Taylor Street as quickly as possible.”

After the workforce reduction, Invacare will continue to employ approximately 1,050 associates in Northeastern Ohio and approximately 6,050 associates worldwide.

Invacare’s sale of its domestic medical supplies business Invacare Supply Group (ISG) to AssuraMed for $150 million came right in the middle of its December woes. Blouch called it an effort to “continue to reduce complexity in our business, focus on our core product lines and expand globally, with the long-term goal of returning operating margins back to high single digits.”

Headquartered in Twinsburg, Ohio, AssuraMed is a mail-order, direct-to-customer provider of disposable medical products to chronic disease patients.