The home infusion therapy market continues to grow. For many patients, the convenience of having therapy outside of an acute care setting is preferable. And for some payers, the cost savings are similarly attractive. As the market matures and more therapies are proven to be safe and effective in the home setting, opportunities will continue to increase for providers.
“Home infusion therapy is currently an $11 billion market with projected growth to approach $16 billion by 2012,” says Jonathan Sadock, managing partner and CEO of Paragon Ventures.
According to Sadock, there are many factors contributing to this growth, including cost savings to the health care system, a changing reimbursement environment, an increase in new intravenous drugs and biologic products and impending health care reform.
“Compared to the costs of treatment in a hospital, home infusion therapy represents significant savings in excess of 80 percent. Administering these medications at home generally costs $150 to $200 a day, far below the cost of a typical inpatient hospital stay, which is $1, 500 to $2,500 each day,” explains Sadock. “Home infusion therapy also eliminates the risk that patients will be exposed to infections caused by hospital bacteria that can invade through IV lines and catheters.”
Erik Graaf, director of marketing for B. Braun Medical, says that while the market continues to grow, it has slowed somewhat due to the economy as well as market consolidation and reimbursement challenges. However, he stresses that the baby boomer population and an overall interest in quality of life for patients continue to make a positive impact.
“One of the biggest struggles for exponential growth is the way the reimbursement is currently structured in this country. A lot of therapies that are delivered by home infusion companies are not reimbursed by Medicare,” points out Graaf. “From a business perspective, it doesn't make a lot of sense because there are a number of benefits from a payer standpoint, including quality-of-life issues and reduction in overall costs.”
Sadock adds that growing numbers of patients needing intravenous medications are getting their treatments at home, but “the current gap in Medicare coverage is making it harder for older and sicker patients to swap hospital stays for home care. There are a number of legislative issues on the horizon that not only support the home infusion sector but can substantially propel its growth,” he says.
“If passed, they would cover the infusion-related professional services, supplies and equipment under Medicare Part B, while continuing coverage of the infusion drugs under Medicare Part D, the prescription drug benefit.”
If enacted, this legislation (see sidebar) would provide Medicare beneficiaries with the same access to home infusion therapies to which most privately insured and Medicare Advantage patients have had access.
“Currently, home infusion providers generate the majority of their revenue from third-party insurers and other payers,” explains Sadock. “For the provider, this legislation represents the opportunity for accretive revenues. Leveraging the existing pharmacy and infrastructure, these revenues will also improve operating margins and increasing profitability.”
Market Opportunities
The home infusion industry is making strides in product development in terms of pharmaceutical products and home infusion therapy delivery devices and supplies.
“Hundreds of new intravenous drugs and biologic products have come on the market in recent years to treat maladies such as infections, cancer and chronic diseases,” says Sadock. “Many of these medications require clinical care that can be administered more effectively and at lower cost in the patient's home.”
Likewise, home infusion therapy pumps are getting “smarter.”
Graaf says the trend is to create products that have a strong focus on safety and ease of use. Specifically, products are designed to increase dosing accuracy, decrease usage errors and promote efficiencies.
One of the obvious benefits of home infusion therapy is to keep patients out of the hospital, which is why safety, particularly the prevention of infection, is critical.
Randy Ealy, RPh, BCNSP, vice president of clinical services and corporate compliance for Barnes Healthcare Services, says he has seen an increased use of products that are applied directly to the skin to reduce the potential of infection.
“You don't want secondary infections in terms of patient care,” he says. “Additionally, when you have a patient, you want to hang on to them. If they are admitted to the hospital, it interrupts the flow of service.”
Ealy adds that in terms of product acquisition, there are favorable options.
“The distributors have done a good job in seeking out a variety of manufacturers for some of the ancillary products, such as tubing and dressings,” he says. “There is a fairly respectable effort from distributors in terms of keeping costs in line so we can continue to maintain a high level of service with cost-effective products that do what they are designed to do without a reduction in quality.”
Ealy notes, however, there are challenges in the market.
“There are some pressures in the home infusion industry where we see reduced reimbursements in the face of rising costs, and that certainly lowers margins and forces providers to be incredibly efficient,” he says.
For HME providers with a pharmacy component, home infusion could provide an attractive business opportunity.
“Home infusion therapy is a growth opportunity. There are both synergies and differences for the HME provider as many back-office functions are similar and can be adapted and scaled to existing systems,” explains Sadock. “There are also hurdles to enter the market. These include the need to establish a pharmacy along with regulatory, licensure and specialized clinical resources such as pharmacists and nursing staff.
"Before expanding into the home infusion market, the HME provider needs to fully understand the costs and market opportunities in their local service areas. One way to quickly expand into the home infusion therapy business is through acquisition."
According to Ealy, expanding into the home infusion market may offer an opportunity for HME providers to offset the losses the industry faces due to competitive bidding and other reimbursement reductions.
"Opportunities exist for HME providers who are involved in home infusion if they put a stronger emphasis on and increase their home infusion business," he says. "That is what we are doing at Barnes by adding staff to sell it and adding expertise where we can to expand our market and offset some of the HME losses."
Ealy explains that many payer sources are looking for providers that can cover a broad geographic area, which is good for regional providers. But this is not necessarily a negative trend for independent providers. "We are seeing a lot of smaller pharmacies working together to create service networks to be competitive," he adds.
When looking to enter into the home infusion market or to expand service capabilities, Ealy offers the following advice on how to do this efficiently and effectively:
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Do a market analysis that includes examining your hospital base and home nursing services to determine the potential for referrals.
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Educate referral sources, including physicians, on the benefits of home infusion in terms of cost and patient convenience.
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Create a highly efficient model that quickly moves referrals through process.
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Remember that to have revenue growth, you have to have volume growth.
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Prepare your pharmacy to adapt to that volume.
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Conduct an efficiency study that can enable you to map out procedures.
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Look at personnel and determine their capabilities and their appropriate role in the company.
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Ensure employees are productive by giving them the tools they need.
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Expand your service area and research ways to deliver products effectively at the lowest cost, including the use of geographic zoning, national delivery services, such as UPS and FedEx, and the use of local couriers.
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Educate patients and get their buy-in on new types of delivery methods.
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Reduce costs of supplies by getting distributors and suppliers to compete for your business.
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Do not cut corners on patient care even while searching for less-costly products.
Read the "Cover Equipment, Too, Says NHIA" sidebar for information on the inadequacy of the "Medicare Home Infusion Therapy Act of 2009."
Experts Interviewed
- Randy Ealy, R.Ph., BCNSP, vice president of clinical services and corporate compliance, Barnes Healthcare Services, Valdosta, Ga.
- Erik Graaf, director of marketing, B. Braun Medical, Bethlehem, Pa.
- Jonathan Sadock, managing partner and CEO, Paragon Ventures, Philadelphia.
Cover Equipment, Too, Says NHIA
Introduced earlier this year in both the House (H.R. 574) and the Senate (S. 254), the "Medicare Home Infusion Therapy Coverage Act of 2009" would close a gap under which the medications used in home infusions are covered, but not the services, supplies or equipment needed to deliver the therapy.
When CMS opted to cover the therapy under the Part D benefit in a way that did not include the equipment, the home infusion community warned its decision would limit and, in many cases deny, access to home infusion for Medicare patients.
"The situation is now reality," according to the National Home Infusion Association. "The result is that Medicare beneficiaries are being forced back into hospitals and nursing homes for treatment at greater cost to the program and significant inconvenience to the patients and their families."
At a health care reform hearing in June, Rep. Eliot Engel, D-N.Y., who introduced H.R. 574 in the House, testified that the proposed legislation "addresses an anomaly in the Medicare program that forces patients into hospitals and nursing homes to receive their multi-week infusion therapy when the same care could be delivered safely in the patient's home.
"For decades, private health insurance has covered home infusion therapy," Engel told the hearing panel. "It is used extensively by Medicare Advantage plans. Medicaid programs cover it. But Medicare fee-for-service stands alone in the failure to cover the services, equipment and supplies needed for home infusion therapy."
According to NHIA President Russell Bodoff, "If health care reform is to be successful, our country can no longer support the Medicare practice of utilizing limited health care dollars to keep patients in hospitals and nursing homes when it is not medically needed and when it is contrary to the physician's advice and patient's preference."
