ELYRIA — Invacare Corp. received word Monday that it has satisfied the requirements of a consent decree with the U.S. Food and Drug Administration and can resume full operations at its Taylor Street manufacturing facility.
The company kept the much-anticipated news under wraps until Tuesday morning when company executives delivered it in grand fashion to employees.
Everyone at Invacare’s Elyria headquarters and manufacturing campus raced to the front lawn as Invacare Chairman and CEO Matt Monaghan and other members of his leadership team climbed onto the bed of a pickup to share the update with hundreds of associates while members of the Elyria High School Pioneer Marching Band played in the background.
“(There’s) a lot of excitement starting this morning,” Monaghan said, who noted that the company’s sales force already is telling customers about the news.
What this means for Invacare is simple: It can now sell its equipment — Invacare is a global manufacturer of specialized power wheelchairs designed for patients facing complex health conditions — without requiring a verification of medical necessity from its customer base, something that heavily hampered sales and production.
The FDA did not completely lift the consent decree in place since December 2012. Invacare still must undergo five years of audits by a third-party auditor selected by Invacare who will inspect the facility every six months for the first year and then annually for the next four years afterward.
But the decision does pave the way for the medical equipment producer to gain back its prominence in the market.
“This is important. This is definitely good news, but this is just one important part of an overall company transformation story,” said Lara Mahoney, Invacare spokeswoman. “There is more work to be done… We didn’t lose our customers overnight and they won’t return overnight as well.”
Mahoney said it’s too soon to speculate when Invacare will increase its production. It can take anywhere from 60 to 90 days to finalize a sale. But it only takes three to five days to build a power wheelchair once that takes place, she said.
Effects of decree
The consent decree, which had been in effect since Dec. 21, 2012, stemmed from violations found during FDA inspections between 2002 and 2012. It called for Invacare to stop manufacturing, designing and distributing manual and powered wheelchairs and components at its Elyria facilities until it met certain standards.
The FDA, after an on-site inspection that started May 30, said Invacare met the last standards. In a letter dated Monday, the FDA said, “Invacare can design, manufacture, process, pack, repack, label, hold, distribute, import into or export from the United States of America, the subject devices at or from the corporate or Taylor Street facilities.”
The consent decree only affected the Elyria facility, where Invacare employees approximately 600 people. This is significantly less than the more than 1,000 employed at Invacare before the federal agency halted full production.
The loss of employees impacted the city of Elyria with each year Invacare was under the consent decree. Mayor Holly Brinda celebrated Tuesday’s news.
“The city of Elyria is very pleased to learn that our global leader in health care, Invacare Corporation, will finally be resuming full operations at its corporate and Taylor Street manufacturing facility,” she said. “Invacare is clearly emerging from the FDA consent decree experience stronger, with a renewed vigor and a focus on quality that will aid in its transformation — resulting in quality products, and job stability and growth for the Elyria community.”
According to figures from city Finance Director Ted Pileski, tax revenue from Invacare totaled more than $1 million a year. A decline in revenue came with the consent decree.
Tax withholdings in 2011 and 2012 for Invacare were $1,222,603 and $1,216,588, respectively. They dropped slightly in 2013 to $1,087,727, again in 2014 to $951,451 and $855,916 in 2015.
Tax withholdings in 2016 saw an increase to $1,039,562.
The news that the publically traded company — Invacare is on the New York Stock Exchange as IVC and saw a 26 percent jump in stock prices after Tuesday’s announcement — is now free to ramp up production is being called a turning point for Invacare.
“It’s a huge, huge point in time for the marketplace,” Monaghan said. “We have some critically important medical devices that help people with really challenging conditions, and as of now we can sell them to everyone.”
Monaghan said in a statement that the consent decree was a precipitating event for Invacare.
“It caused us to evaluate all areas of the business,” he said. “We are emerging from this experience with a new, stronger foundation. While our transformation remains ongoing, we now have a leadership team with robust medical device and quality backgrounds; a clear transformation strategy that aligns the company toward its more clinically complex mix of products; a new commercial focus on our clinical competencies to better meet the needs of our complex rehab and post-acute customers; and an exciting new product portfolio.”
A new assembly line awaiting product at the Taylor Street facility will roll out Invacare’s new TDX SP2 power wheelchair with LiNX technology. It will launch in the third quarter. Tuesday, the assembly line sat idle, poised to run with nearby employees working on other power wheelchairs for customers who placed orders before the consent decree milestone with the FDA.
A more professional Invacare
The Invacare consent decree left many in Elyria with unanswered questions as the corporation worked behind-the-scenes with the federal agency without revealing much in the way of details to the public.
A tour of the plant Tuesday allowed Director of Operations Dave Malyk to answer the pressing matter of why this took so long for Invacare.
Dave Malyk, director of operations for Invacare
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To answer, he pulled out a pocket-sized booklet.
“It was about going down every part of the FDA regulation from top to bottom,” he said. “… And then making it practice. That’s how we do business every day.”
As a point of history, Mahoney said Invacare is a entrepreneurial company founded in the late 1970s by A. Malachi Mixon III. Its growth came through 51 acquisitions. The parts and pieces melting together over the years did so in a way that was not cohesive.
Of the things the FDA wanted was better documentation and verification of quality standards.
“We did all of that before, but it was manual for so many years,” Malyk said. “In the eyes of the FDA, if it’s not in documented and verified, it didn’t happen.”
Malyk likened the new Invacare facility to a 21st century automobile assembly plant with fully automated areas.
“Now, there is a process with clear checks and balances that say we did what we said we did when we build each and every wheelchair,” he said. “It is backed up by training and a culture of quality.”
The FDA also told Invacare it needed to do more work completing the remediation of certain design history files. The files deal with the complete design history of a finished medical device and have been a requirement of medical device manufacturers since 1990 when Congress passed the Safe Medical Devices Act.
The consent decree hit every facet of the company, which is undergoing a transformation, Mahoney added.
While it was nearly five years ago when the consent decree became a part of daily life for Invacare, it was about a year ago when the company fully outlined how as a result it was shifting it focus.
It was no longer going to be a one-stop shop manufacturer of medical equipment and instead would focus its energy making products that have a greater benefit to clinically complex medical conditions and post-acute care. By focusing more on product categories that can make a difference in complex cases, Invacare said it can better position the company for growth.
Quality and customers
The ebb and flow of activity Tuesday at the Taylor Street facility could not mask two observations: first, the volume of employees is far less than what Invacare employed just five years ago, and second, the employees left now feel a sense of duty to get it right for those the company lost.
Donna Gregory of Invacare
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“This is so bittersweet,” said 56-year-old Donna Gregory, a 30-year employee who works as a custom lead on the custom power assembly line. “With all the people that have gone and the people who are still here and worked through this process, this means a lot… We have always been the best. Now, we worked through all this and we are stronger, ready to show the world and medical industry that that is true again.”
Monaghan came to Invacare in 2015 in the midst of the consent decree work and the company’s work to create a culture of quality excellence.
“We made significant investments in our quality system, as well as manufacturing and design processes,” he said. “We are pleased to have FDA’s recognition of our progress, and we will continue to put quality at the core of everything we do.”
The culture shift matriculated down to every associate, even those who are on the front lines of manufacturing.
Nancy Gardner is a 30-year employee of invacare.
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“It has meant we have to make sure all quality standards are top-notch and performance is on-point,” said Nancy Gardner, 60, of Oberlin who has been with Invacare for 30 years. “We have always built with quality, but we’re taking it to another level.”
Gregory said Invacare employees were mindful of every audit and every inspection in the last five years, but tried to hold true to why they work at Invacare.
“It’s all about the passion we have for the people outside these walls that need these products — that’s why we can do this so much better now,” she said. “We are passionate about the people who use our products.”
Gregory said she cried tears after Tuesday’s announcement — happy tears.
“I was just running around because I wanted to get to everybody,” she said. “It feels like we won the championship.”
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