Cleveland Total demand for disposable medical supplies is expected to expand 5.3 percent annually through 2004 to nearly $56 billion-and home health care will be the fastest-growing market, according to a new report.

"Preventive medicine, self-treatment, earlier hospital releases and the expansion of senior residential facilities will broaden sales prospects in the home health care segment," stated Cleveland-based Freedonia Group in its report U.S. Disposable Medical Supplies.

Sales in the home care segment will reach $8.6 billion by 2004, up 6.5 percent annually from 1999. Despite such growth, however, home uses of disposable medical supplies will be concentrated in only a few product groups. Favorable growth opportunities are anticipated for IV administration kits, enteral feeding sets, oxygen delivery accessories, prefilled and empty hypodermic syringe systems, dialysis sets, adhesive tapes, and general patient utensils, such as bedpans and basins.

On the consumer side, trends promoting self-care will increase demand for first-aid kits, bandages and dressings, diabetes monitoring products and home medical test kits. A growing incidence of incontinence related to population aging will boost sales of related products.

The report also stated that one of the main factors in determining the success of disposable medical goods in the home care market is the establishment of strong retail distribution channels. A common sales strategy that therefore has emerged is extending marketing efforts to reach establishments and organizations involved in home care.

For more information about this report, contact the Freedonia Group at 440/684-9600 or go to www.freedoniagroup.com. -R.P.

Alexandria, Va. Total revenue growth in the home care industry fell in 1998 from 15 percent to 10 percent-and respiratory products accounted for half of all revenue, according to the Health Industry Distributors' Association's 1999 Home Care Financial Performance Survey.

At the same time, Medicare was the most important payer source, representing nearly one-third of industry revenue, according HIDA's report, which surveyed 101 companies representing $1.9 billion in annual revenue, operating in 960 areas and employing 16,200 people.

"The principal purpose of this financial survey is to enable individual firms to benchmark their performance on key financial variables to industry averages and to the averages of firms of similar size and type," the report stated.

Oxygen reimbursement cuts and other reimbursement changes implemented at the beginning of 1998 had a significant negative impact on industry performance that year, the report contended. Compared with the 15 percent growth rate in 1997, the 10 percent growth rate in 1998 is simply the result of less revenue per patient, according to the report.

More firms reported weaker growth in their businesses. In 1998, 47 percent reported negative or weak (less than 10 percent) growth, compared with 31 percent reporting such growth in 1997. Still, 30 percent of respondents reported robust growth of 20 percent or more in 1998, compared with 36 percent in 1997.

The survey also examined how growth rates varied by size of firm. Smaller firms (with revenues of $3 million or less) endured dramatic decreases in growth, with rates ranging from 4 percent to 8 percent in 1998, compared with 14 percent to 25 percent in 1997. Larger firms (revenues of more than $3 million) sustained growth rates of approximately 16 percent. The report estimated this probably is the result of acquisitions and aggressive competitive efforts to gain market share.

Despite the cuts in oxygen reimbursement, however, respiratory remained the dominant industry product category, representing 50 percent of total industry revenue. Home IV and HME products and services were the two next largest product categories, accounting for 22 percent and 18 percent of industry revenue, respectively.

The report showed the trend in growth rates for firms that had revenue accounting for more than 50 percent in one of the key industry segments. All segments of the industry reported lower growth in 1998 than in 1997: Respiratory declined from 16 percent to 9 percent, HME went from 16 percent to 12 percent, and home IV fell from 31 percent to 15 percent.

Still, most companies were optimistic about growth in 1999, reporting steady or slightly higher growth. The smaller firms forecast 5 percent to 10 percent growth, while the larger firms predicted 15-18 percent growth. By primary business, respiratory companies expected 10 percent growth, while HME companies forecast 12 percent and home IV companies 20 percent.

As for payer sources, Medicare ranked at the top with 31 percent of industry revenue. Managed care (regular payments) accounted for 26 percent, private insurance (usual and customary) represented 21 percent, and Medicaid took up 11 percent. -R.P.