Given the graying of America, the outlook for the seating and positioning market should be bright and sunny. But like many segments in the home medical equipment market, reimbursement issues make the future look overcast.

"The outlook is getting cloudier and cloudier-and legislation is making it more so," says Tom Borcherding, vice president of sales, Crown Therapeutics, Belleville, Ill. "You have an aging population, so the opportunities definitely exist in the market for manufacturers and providers. But the downside is that reimbursement issues are becoming more challenging."

According to the most recent Theta Reports study available ("Home Healthcare Products Markets," December 1997), the adult spinal cord injury segment was thelargest market segment in 1996-accounting for 65 percent of the total-followed by the pediatric segment at 25 percent and the geriatric segment at 10 percent. As a result, the Theta Reports predicted that the aging U.S. population should drive significant market growth. Overall, the market in 1996 was valued at $115 million and was projected to grow at a 12 percent-a-year rate to $180 million by the year 2000.

On the flip side, Theta also noted in its research that one of the major issues holding manufacturers back is the lack of appropriate reimbursement codes for the wide variety of available products. Because of inadequate codes, for example, some more-advanced products are undervalued in reimbursement and low-end products are overvalued, according to Theta Reports.

This state of affairs is crippling the market, some manufacturers say, because it makes investing time and money into developing and incorporating new technologies more of a high-risk venture than it need be. With the current system, they explain, there's no way of knowing where a new or improved product will fall in the coding structure. A manufacturer could spend X amount on developing a product, need to receive X amount to turn a profit-but get only X amount in reimbursement because of the coding structure's ambiguities.

"There's a large and great risk to manufacturers because they have to develop a product before they know where it will fit in the coding," says Lauren Boulware, director of product management, Invacare Corp., Elyria, Ohio. "I don't think the coding is optimal right now. You can't differentiate enough between the array of products that are out there."

The result for a lot of products is that they either end up being left out of the reimbursement coding altogether or are lumped in with lower-paying general categories, manufacturers say. "The reimbursement system is insufficient," confirms Borcherding. "It doesn't address improvements in technology."

To remedy these problems, a number of manufacturers are now lobbying to change the reimbursement codes for seating and positioning products (see sidebar below).

"This issue is dictated by the funding sources," says Rick Suddendorf, director of sales and marketing, rehab division, Otto Bock, Minneapolis, "so we need to educate the people who are paying the bills. If they're not educated, you're going to continue seeing the inequities we see in the market today."

And these inequities are having an effect on the quality of products, which down the line affects the end-user, declares Dalena Ganakes, director of national sales, Convaid Inc., Palos Verdes, Calif. "Years ago, the market was shaped by who could make the lightest and brightest product," she says. "Now funding sources seem to be the driving force behind the manufacture of seating and positioning equipment."

Market research from Theta Reports echoes these laments: The problem with some new products isn't the technology, it notes, but rather it's finding someone to pay for it.