While the challenges of working in home health care still manage to keep most manufacturers up at night, manufacturers of specialty respiratory products are donning wide smiles and raising their voices to speak about the future of this market. Leading manufacturers aren't shy to talk about the double-digit growth rate they say is practically guaranteed for the next 15 years for ventilators, portable oxygen systems, humidifiers, conservers and concentrators.

“We're seeing a double-digit growth rate globally,” says Dan Van Hise, director of marketing for Puritan Bennett, a division of Tyco Healthcare. According to Van Hise, hospitals that contract with managed care organizations are being pressured to move patients out of the hospital setting and into the home, and this equates to market potential for specialty respiratory manufacturers.

“Two trends are powering things along: The overriding aging baby-boom trend and the general trend of a rise in home health care” says Steve Cole, president of Dedicated Distribution. More patients are being considered treatable in the home, he says, and this translates into growth for the sector.

Baby boomers with more traditional lung problems from smoking cigarettes and working in coal mines are aging, says Ron Miller, national sales and marketing manager for Victor Medical. During the next 15 years, baby boomers reaching age 60 will contribute to the patient base for respiratory products, industry leaders say.

And while smoking may be a weakening trend in the United States, “[lung] disease is just now surfacing for long-term smokers,” says Tom Jones, president and chief executive officer of Chad Therapeutics.

A Patient Friendly Focus

As a result of this projected growth, the specialty respiratory market is ripe for the introduction of new products, according to Van Hise. “Patient needs aren't what they were four to five years ago,” he says. “They're higher [now], because when patients are discharged, they're generally sicker than they were in the past.”

This change in trends is producing fuller-featured, lighter products that are more suitable for use in the home environment, experts say. “Products are smaller, lighter, easier to use,” says Bob Mogue, executive vice president of sales for CareFore Medical.

“Features that used to be typical of a hospital setting are now more commonplace in the home,” Van Hise continues. From ventilation to home oxygen, he says, new products are much more ergonomic. Product development is more thorough and patient-friendly, moving away from the caregiver focus that dominated product development in the past, Van Hise says.

Products for use in the home, such as ventilators, have “incorporated features used in the hospital setting,” says Dan Fleming, group marketing manager for the critical care division of VIASYS Healthcare.

“The trend is toward smaller devices that can be used in the car and taken anywhere,” says Daniel Shetley, marketing director for OxLife. According to Shetley, the target customers in the specialty respiratory market are vacationers, so products are being developed to meet their traveling needs.

For heated humidifiers used with ventilators, newer products are easy to use and no longer require extensive medical staff, says Steve Moore, director of marketing for Fisher & Paykel Healthcare. Products are geared toward preventing nuisance calls to the dealer, he says.

Missing: Reimbursement

Unfortunately, as is the case in most sectors of the HME industry, innovative product development is hampered by reimbursement, industry leaders say. For example, most experts agree that all-encompassing respiratory codes slow the introduction of new products.

“This market segment is not funded well,” Moore says. According to manufacturers, more efficient products — that often are better for the patient — are being kept off the market because of Medicare constraints.

“Reimbursement limits innovation, and doesn't always work in the best interest of the patient,” says Rob DuPuis, market manager for Luxfer Gas Cylinders. At Luxfer, DuPuis has seen demand grow for all-aluminum cylinders — which are 50 percent lighter than their cheaper composite counterparts — but the market has yet to embrace them because of inadequate reimbursement, he says.

Reimbursement problems also have slowed the introduction of innovative nebulizer products, says Rob Lee, product manager for Pari Respiratory Equipment. Vibrating membranes — which enhance patient compliance and are more efficient than standard nebulizers at dispensing medication — have no reimbursement code, Lee says. Despite the fact that the patient will feel better using them, their introduction into the marketplace has been slow due to reimbursement, he says.

According to Van Hise, reimbursement for specialty respiratory products is significantly lower — and sometimes non-existent — today compared to five years ago. “Year after year reimbursements have been falling,” Van Hise says.

Up To the Challenge

“For anyone with a family member going into the home care environment from the acute care environment, it's scary,” Van Hise says. Despite pressure from managed care to move patients out of the hospital with more speed, “physicians are reluctant to put patients in the home because of the lack of care the health care system can provide,” he says.

“Manufacturers are doing more for the patient with far fewer dollars,” Van Hise continues.

“The challenge is living with the constraints and yet delivering the care patients deserve,” Jones adds. Despite reimbursement challenges, manufacturers are working to provide quality care to patients through new technology and improved efficiency on the dealer's end.

“Demand will continue to grow,” despite the “dampening effects [of] continuing constraints placed by reimbursement,” Jones says. “It's clear that the government will continue to try and curtail medical spending, but patients won't accept inferior care.”

An Exception to the Reimbursement Rule

Washington is willing to yield, it seems, when it comes to respiratory care for children, who often make up the most acute and challenging cases in respiratory home care, says Dan Fleming, group marketing manager for the critical care division of VIASYS Healthcare.

“There's a large, untapped market of pediatric patients who are just now being served well by lighter, fuller-featured, more mobile ventilators,” he says.

Reimbursement codes for pressure-support ventilators will go into effect in January 2003, and Fleming says it will be satisfying to see durable medical equipment providers and home care providers receive some acknowledgement.

Hospitals and providers also are working hand-in-hand to better treat the pediatric population, according to experts. Ventilators are “special equipment,” and are historically more complicated because of an array of required settings, says Steve Moore, director of marketing for Fisher & Paykel Healthcare.

If a child is in the hospital for a few months, hospitals prefer to send them home with the same equipment, Moore says. Dealers often come into the hospital with new equipment before discharge, so the child and their parent feel more secure, he says.

“The transfer home can be really disconcerting,” Fleming says. “So it's nice [for patients] to have some familiarity when they get home.”

Experts Interviewed:

Steve Cole, president, Dedicated Distribution, Kansas City, Kan.; Rob DuPuis, market manager, Luxfer Gas Cylinders, Riverside, Calif.; Dan Fleming, group marketing manager for the critical care division, VIASYS Healthcare, Palm Springs, Calif.; Tom Jones, president and chief executive officer, Chad Therapeutics, Chatsworth, Calif.; Rob Lee, product manager, Pari Respiratory Equipment, Monterey, Calif.; Ron Miller, national sales and marketing manager, Victor Medical, Denton, Texas; Bob Mogue, executive vice president of sales, CareFore Medical, Olathe, Kan.; Steve Moore, director of marketing, Fisher & Paykel Healthcare, Laguna Hills, Calif.; Daniel Shetley, marketing director, OxLife, Cape Coral, Fla.; Dan Van Hise, director of marketing, Puritan Bennett, a division of Tyco Healthcare, Pleasanton, Calif.; and Chris White, director of sales and marketing, LifeGas, Atlanta, Ga.