The outlook for the oxygen therapy device market remains positive, despite sharp changes in reimbursement that have had a profound impact on overall demand for the equipment, according to Mountain View, Calif.-based market research firm Frost and Sullivan.

According to the report, U.S. Oxygen Therapy Device Market, 1.2 million patients were using oxygen therapy devices in 2000, which included oxygen conservers, concentrators, regulators, compressed gas cylinders and liquid oxygen systems. Demand for such devices will grow, propelled by the aging Baby Boomer population, the report says. It projects the total estimated number of users to be 1.4 million by 2007. Total revenue for the devices in 2000 was $274.7 million and that figure is expected to climb to $377.2 million in 2007.

Despite reimbursement cuts, the concentrator market has experienced steady growth over the past few years, mainly because of the equipment's reputation as the most cost-efficient method to supply oxygen, according to the report. That trend is predicted to continue. Revenue totaled $141.1 million in 2000; the report predicts concentrator market revenue will reach $166.2 million by 2007.

The oxygen conserving market also is expected to continue to grow, due in part to the introduction of the less-expensive pneumatic conservers and in part to the continued growth in ambulatory patients. Growth, however, will be hampered by the lack of reimbursement for such devices and home medical equipment providers being forced to cover the cost of purchasing the devices themselves, the report states. Total revenue for the conserver market in 2000 was estimated at $14.4 million; the report predicts it will reach $27.6 million by 2007.

Unlike those market segments, the compressed gas cylinder market has experienced tremendous growth over the past few years. However, demand is expected to slow because of the near completion of steel cylinder replacements and renewed interest in liquid portables, compressed gas' major competitor, the report says.

According to the report, providers are shifting their focus to more portable and larger cylinders, which allow for fewer patient visits. Total revenue for the market, which was an estimated $40 million in 2000, is expected to only reach $40.6 million in 2007.

Low revenue growth is also expected for the regulator market, the report predicts. That is mainly attributable to reimbursement cuts that restricted prices and also because of demand for compressed gas cylinders. The price restrictions will also have little effect in bolstering the market because providers will begin to see regulators as disposable and will opt to purchase a new unit rather than repair older equipment, the report says. Total revenue for the regulator market in 2000 was an estimated $9.8 million; it is expected to reach $11.1 million in 2007.

The last market covered in the report, and probably the most dismal projection in recent years, is liquid oxygen. Revenue for liquid oxygen in 2000 was only an estimated $37.6 million. However, the report predicts the market will change for the better with the introduction of a new portable liquid oxygen system. It will continue to grow as more patients are switched to liquid and the overall number of oxygen patients increases, the report says, adding that revenue should more than double to $76.3 million in 2007.

For more information on the report, contact Nick Mariottini at 530/894-2136 or via e-mail at nmariottini@frost.com.

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