As a supplier and installer of several types of accessibility equipment, I am constantly asked by my potential customers, “Why are accessibility lifts so expensive?” There are several contributing factors to the cost that you would expect me to talk about. First, the cost of the lift being built, then the cost to have it shipped. Once on site, there is labor costs involved for certified mechanics to install it. There are also overhead costs including certifications, permits, fuel expenses, etc… that need to be paid. And don’t forget the profit margin for each participant in the supply chain. That’s where these huge increases in price are coming from, the profit margins! Right?
Actually, many of the manufacturers and installers of accessibility equipment that I have spoken with over the past couple of years have been tightening their belts to stay competitive. Many have revamped their production process to try to keep costs to the consumer steady. Gone are the ten percent profit margins from a decade ago. In fact, many installers are quoting jobs at one percent profit or less just to stay in the market.
Producers of wheelchair lifts and home elevators are feeling the squeeze as well. In fact, one of the largest suppliers of accessibility products, TK Access, announced last year that they would be closing up shop in the United States and cutting approximately 230 jobs at their manufacturing facility. They would be followed a few months later by the closure of CemcoLift, a nearly a century-old manufacturer of elevator and accessibility equipment. This is sad news for the 100 people who were formerly employed in Hatfield Township outside of Philadelphia.
So if profits are at an all time low, and manufacturer’s are closing up shop, then why are prices continuing to skyrocket? Part of that answer is the new regulations and fees being imposed on suppliers and installers alike by the FDA. That’s right, in September of 2007, the Food and Drug Administration decided that the stair chair or vertical platform lift that you want to have installed to maintain access to the upper levels of your home as you age is a “medical device” and therefore must be regulated. Keep in mind that elevators and lifts are already one of the most heavily regulated trades falling under the requirements of building codes, elevator codes, electrical codes, ADA requirements, as well as additional requirements imposed by local authorities. So with any overreaching act of government, there must be an accompanying fee to go along with that. Originally in 2008, that fee was $1,706 annually. If a company is manufacturing 2000 units a year, then that breaks down to less than a dollar per unit, no big deal. However, keep in mind that most of the lifts installed by qualified mechanics are installed by small businesses. Many companies provide other products and services, therefore, accessibility equipment only accounts for a fraction of the work performed in a year. It’s not uncommon for a distributor to install 10 or less units in a year. It’s also not uncommon for the distributor and the installer to be two separate small business entities, each only participating on a handful of jobs in the course of a year.
Now, fast forward to 2013. Each supplier, distributor and installer of these “medical devices” is required to renew their registration with the FDA and pay the accompanying registration fee. Only now, that fee is $2,575. This is quite a sharp increase in only five years. This added cost is compounded 2-3 times in the supply chain, and we can see a real driving factor in cost increases. But wait, it get’s worse. Congress has already established the fees for several years to come. Next year the fee is set to top $3000. And by 2016, the fee will be almost $4000. So as each year passes, regardless of market trends, or supply and demand, the price for accessibility continues to rise.
To many, this may not seem like a big deal. It only accounts for a couple hundred dollars in the price of a $4,000 – $20,000 lift. But there are a few who will read this and realize that a few hundred dollars makes a huge difference. There are 3 factors that raise concerns;
1. A significant portion of the consumers purchasing these products are citizens on fixed incomes. These folks are facing increasing medical costs, prescription costs, insurance costs, and good old fashioned inflation. So purchasing a lift of any kind for their home has a huge impact on their budget. Even $50 can make the difference as to if they buy or bypass the lift. So with every tiny increase in price, fewer lifts will be sold in the industry.
2. As previously mentioned, margins are very tight within the industry. Since profits being incorporated into the price of the lift are only a fraction of a percent of the selling price, the suppliers, distributors, and installers have no recourse but to raise the price to the consumer, lose money on each installation, or go out of business.
3. The increases are being driven by hidden tax increases through the FDA. In the 2013 fiscal budget, an additional $220 million annual tax increase is headed our way. This increase is simply divided up among the registered facilities and added to the annual fee. Since the registration fee has already been set through 2017, watch for even sharper increases in 2018 and beyond.
On a personal note, I have met with many home owners and small churches that desire to install the needed equipment for themselves or their members. Many are stunned by the price of the lift, not including possible modifications to the building structure. So they elect to forego the project. Churches end up not being able to use basement meeting halls due to the lack of ADA accessibility. Upper floors in the homes of the elderly set vacant. Living rooms formerly used to entertain guests are converted into bedrooms.
So in conclusion, the burden of increased fees combined with impending annual tax increases is being borne by fewer and fewer registered suppliers, distributors, and installers. Those entities who decide to continue providing products and services will be installing less units than in prior years which will continue to raise the price per unit.
Landmark Elevator, Inc. continues to be a low cost/high quality provider using certified technicians and complying with all regulations. However, the costs aren’t as low as we would like to see them and certainly aren’t as low as they should be for the people that need them. So we are left asking, “Does the accessibility industry really need yet another level of oversight and regulation or is this just a way for the government to get their hand in your pockets?” You decide.