On November 23, 2021, Spectrum News 1 sat down with CalOx owner, Steve Yaeger, to discuss the supply chain issues affecting businesses. Yaeger has dedicated his life to maintaining the legacy of his small family business, CalOx, located in Atwater Village. Since 1936, CalOx has been providing food- and medical-grade gases like oxygen and liquid nitrogen to Southern California hospitals, clinics, businesses, and consumers. But in nearly a century of business, they have never experienced anything like the current supply chain shortages hitting the globe.
Even as the world works to move on from the pandemic, the effects of COVID-19 continue to be felt. The production of goods and services has been greatly reduced, and there aren’t enough warehouse workers or truck drivers to deliver the goods. These disruptions are driving up prices and leading to a growing shortage of everything from household goods to electronics to automobiles. Even with the increased need for oxygen that arose during the pandemic, these supply chain shortages have put tremendous strains on companies like CalOx.
Thanks to these shortages, the cost of equipment has gone up significantly for CalOx, with many parts needing to be airlifted from overseas. “People would say, ‘You guys must be making so much money.’ But, in fact, we’re probably about breaking even, if not losing money,” said Yaeger. “When a container goes from $2,000 to rent to get the product over from overseas up to $20,000, that cost is passed down to us, so our manufacturers are raising our costs.”
And unlike a restaurant or retail store, CalOx’s reimbursement is fixed by Medicare. That means they can’t adjust pricing and pass those costs on to their consumers. According to the Centers for Medicare & Medicaid Services, the CARES Act has mandated higher payments, but that hasn’t been enough for CalOx to break even. “The entire HME [home medical equipment] industry is in danger right now because our costs are going up and our reimbursement isn’t keeping pace with our increased costs,” Yaeger said.
What’s worse is that these supply chain issues are likely to continue for another nine to 12 months. Disruptions to the supply chain at the pandemic’s onset took nearly a year to resolve. So while supply-chain experts say that the best option is to wait and start tapering demands for goods, that’s not a possibility for most small to mid-sized companies like CalOx. While most larger companies use their resources to get through the delays and bottlenecks, smaller companies are working to stay in business.
But CalOx is part of Yaeger’s family legacy, and supply chain shortage won’t be the one to close their door. Founded during the Great Depression and having survived multiple economic downturns, CalOx has proven that it’s here to stay. Today, CalOx continues to distribute medical- and food-grade gases to small and medium-sized businesses across Los Angeles. Our comprehensive gas delivery fleet has certified, trained technicians who are proud to serve the needs of local businesses. With gases including medical-grade oxygen, liquid nitrogen, nitrous oxide, compressed air, and carbon dioxide, as well as services ranging from gas delivery and refills to maintenance, CalOx specializes in gases for your business. Contact us today for a quote!
