As oxygen reimbursement continues to tighten, the never-ending challenge for respiratory providers is to find ways to cut costs without sacrificing the quality of the products and services they offer. The answer for some, say respiratory product manufacturers, is oxygen conservers.

"There is a growing awareness of the benefits that conserving devices can provide to ambulatory oxygen patients and also the cost effectiveness of conserving devices from the provider's perspective," says Bob Mogue, director of sales and marketing, Chad Therapeutics. "So there is something for both patients and [home medical equipment] dealers."

According to manufacturers, one of the primary benefits gained from using oxygen conservers is lower cost. A conserver is designed to control the flow of oxygen to patients and therefore conserve oxygen. That means the provider does not need to supply the patient with oxygen as often.

"The real cost of providing oxygen is not the oxygen itself but rather getting out to the patient's house and delivering the oxygen and having to pay for a truck, a driver and maintenance as well as other costs," says John Goodman, vice president of technical and professional services, Transtracheal Systems. "So providers can save money if they can reduce the number of visits to the patient's home through the use of conserving devices."

Manufacturers say that the patient also benefits by using a conserving device because the total oxygen delivery system is more lightweight and portable. That allows the patient more mobility and improves patient morale.

"Oxygen conserving devices provide many patient benefits as far as therapy is concerned," says Douglas Bosnik, vice president and general manager, Western Medica. "The patient can get longer use of an oxygen cylinder, which gives him or her greater ambulatory time. So the benefits of using oxygen conservers to increase ambulatory time contributes directly to better patient therapy."

The Cost Equation All of these benefits, though, come with a price. Medicare has fixed reimbursement rates for oxygen therapy regardless of how the oxygen is delivered. Conserving devices are a non-reimbursable item and must be paid for in cash by either the provider or the patient.

With the cuts in Medicare reimbursement for oxygen over the last two years, some HME providers may not be inclined to buy these devices. But that could be short-sighted, manufacturers say.

"For the dealer, conserving devices can be a real value adder in terms of reducing the cost of running your business. They can make the dealer more profitable," says Tom Steinhauer, oxygen product manager, Sunrise Medical. "These devices can also be something HME providers can use as a big differentiation point and a marketing tool to promote themselves."

What's more, they point out, the average price of oxygen conservers has decreased considerably over the past few years, so the investment required to purchase one is not what it used to be. And an influx of new conserver manufacturers makes the market even more competitive and could further drive down the average price.

Innovations to Come In addition to a decrease in prices, the increased number of manufacturers coming into this market could spark new product advances.

"This market is ripe for innovation," Bosnik says. "The reason is because there are a lot of issues that still need to be addressed, such as how to provide better oxygen therapy to patients while at the same time reducing costs to HME dealers. And these issues are not solved with traditional problem-solving methods but rather with technical breakthroughs."

Some manufacturers are making conserving devices that are smaller, lighter and able to track physiological information, such as the patient's level of inspiration and expiration. While most of the devices are electronic, pneumatic devices have been getting more attention because they are easier to use. One of the drawbacks of the pneumatics, though, is that their oxygen-saving ratios are not nearly as high as those of the electronics. In an attempt to make these devices easier to use for the patient, manufacturers are moving away from two-piece systems to more one-piece systems, which include a conserver and regulator.

"One of the positive elements from an end-user standpoint is that the products today are more user-friendly than four or five years ago," says Kevin Smith, product manager of oxygen conservation products, AirSep Corp. "Patients are more able to operate these devices because manufacturers have gone to integrated designs, and patients are less intimidated by these products as a result."

A Growing Need Manufacturers are generally optimistic about the future of the oxygen conserver market,anticipating continued high growth, especially with the number of oxygen patients expected to double by 2005. Also, they note, those patients requiring portability will continue to grow from around half of oxygen patients today to more than two-thirds in the next five years-and that should increase the demand for conservers.

"The market is not going to go away," says Perry Cook, product manager for portable oxygen systems, Invacare Corp. "And the current growth rate is strong enough that the probability of the market slowing down is pretty slim for some time to come."

WHAT KIND OF money can an HME provider save by using a conserving device? Manufacturers offer the following breakdown:

For a continuous-flow patient, a provider must deliver oxygen once every two weeks, or 26 times a year. The average provider spends about $40 to make each delivery, so the cost for deliveries alone for an entire year is $1,040. For each delivery, six oxygen cylinders are provided, and each of them costs around $3, so the cost of the oxygen for the whole year is $468. Therefore, the total cost for providing oxygen to a continuous-flow patient is around $1,500.

By using a conserving device, a provider would need to make deliveries only once every six weeks, or nine times a year-a three-to-one savings ratio. The cost of deliveries to this patient is $360 a year, the cost of oxygen $162 a year, and the total cost $522, a savings of about $1,000 compared with continuous flow's total.

And how much does a conserving device cost? Manufacturers say devices are $300 to $400, a drop from the $500 to $600 three years ago.-R.P.

Douglas Bosnik, vice president and general manager, Western Medica, West Lake, Ohio; Fred Brown, product manager for conserving devices, Mallinckrodt Inc., St. Charles, Mo.; Perry Cook, product manager for portable oxygen systems, Invacare Corp., Elyria, Ohio; John Goodman, vice president of technical and professional services, Transtracheal Systems, Englewood, Colo.; Dean Huber, general manager, Air Supply, Detroit, Mich.; Bob Mogue, director of sales and marketing, Chad Therapeutics, Chatsworth, Calif.; Kevin Smith, product manager for oxygen conservation products, AirSep Corp., Buffalo, N.Y.; and Tom Steinhauer, oxygen product manager, Sunrise Medical, Somerset, Pa.

While oxygen-conserving devices have attained greater awareness and acceptance among physicians and clinicians, some manufacturers believe that even more should be done to spread the word about their effectiveness.

"One of the challenges is to do a better job on education," says John Goodman, Transtracheal Systems, adding that the industry needs to show that conservers work and to identify which patients are most likely to be successful with a conserver. That could be difficult, he says. While there have been many studies on oxygen conservers, most have been on small patient populations, and very few were designed to study long-term effects. The result, he says, is that no papers have been published using large patient populations in "a randomized and controlled fashion."

"This makes it tougher to convince physicians to prescribe oxygen conservers," Goodman says. "Physicians are more scientifically tuned in and want to see the data before allowing a trial on a particular patient."

He suggests that the industry needs "clinicians, like respiratory therapists, to do evaluations of conserving devices under conditions of rest and exercise to make sure that the conserving device can keep up with the patient's oxygen demand." -R.P.