The Right Fit

The orthopedic market benefits from a multi-tendril supply chain, with manufacturers supplying products to the gamut of health care outlets from mass discounters to the orthopedic surgeon. Basic products sell at the Wal-Marts and chain drugstores of the world, while high-end, custom orthotics get to patients through doctors' offices and specialized orthotics and prosthetics companies. So where does the HME provider fit in?

Between the chain pharmacy and the O&P specialist, says Rhonda Machin, vice president of marketing for FLA Orthopedics. “The HME dealer is unique, more approachable than an O&P provider. You get a more professional product than you'd find in a [chain] pharmacy, but they won't be as high-end as [products found] at an O&P dealer.”

“The orthopedic marketplace is enormous,” says Pat Schelf, vice president of marketing and general manager of OrthoRehab, a division of Otto Bock. “It includes an enormous array of hospital orthopedic supplies, implantables, instrumentation used during surgery, supplies used by orthotists in their offices, therapy equipment and diagnostic tools. And historically, orthopedics has been a relatively modest piece to the overall home care equipment supply portfolio.”

Schelf adds that, for reimbursement purposes, Medicare has organized all these products into four groups: custom-fit, off-the-shelf high-fit, off-the-shelf low-fit and softgoods. The last two, he says, are where most HMEs do business, although he adds that with the right investment, some providers have crossed over into higher-end products and built a solid business model around them.

According to Mark Francois, vice president of investor relations for Dj Orthopedics, the rehab orthopedic market — which includes knee, back and upper extremity supports, fracture boots and other products — alone produces about $1.6 billion a year. Those numbers come from various bracing and other orthopedic alternatives that offer “a noninvasive solution to relieving pain,” he says.

HMEs, by and large, see only a small portion of that billion. Machin estimates that orthopedic supports — including back supports and other softgoods — sold in HMEs generate about $100 million annually.

But most experts believe the O&P market in home care will grow by a few percentage points each year, and perhaps more for those willing to bypass third-party payers and go retail.