The number of Americans with asthma and allergies continues to grow. Statistics from the American Academy of Allergy, Asthma and Immunology show that more than 20 million Americans suffer from asthma and 20 percent of the population has allergies, making this segment of health care increasingly costly.
Yet, the home medical equipment industry continues to explore its role in this growing market. Provisions of the Medicare Modernization Act (MMA) have created uncertainties for providers of aerosol therapy — an important treatment component for asthma and allergy — leaving many to decide whether it makes sense to pursue these opportunities. On the other hand, at press time, Medicare had proposed a service-cost component for inhalation drug reimbursements, and is also planning to cover metered dose inhalers (MDIs) in 2006 as part of its “Part D” prescription drug benefit.
The Numbers Are There
Regardless, the sheer size of the market should pique interest, along with a reimbursement mix that includes managed care, Medicaid and Medicare — an attractive diversification for many providers.
“We have not seen any indication that it is slowing down,” says Rich Kocinski, senior vice president and general manager, Sunrise Medical/DeVilbiss Respiratory Group. “Obviously, reimbursement is an important issue, but [asthma and allergy] is still a very attractive market.”
Some experts say providers must concentrate on asthma and allergy primarily so they can offer a full range of respiratory care products and services to satisfy physician needs and managed care contract requirements. Kocinski says when companies are looking to expand their respiratory businesses they typically are referring to oxygen; however, aerosol delivery most often is part of the whole respiratory package.
“Referral sources want to deal with full-line respiratory providers, so it is very difficult to cherry-pick oxygen and stay away from everything else,” he explains.
Offering a complete spectrum of respiratory care services that includes asthma and allergy gives local and regional providers an opportunity to compete with large national companies, according to Rich Rosenthal, director of sales and marketing for Ferraris Respiratory.
“When providers can prove they have the expertise to supply technology to a patient, their alliances with doctors can improve,” he explains, referring to today's technology solutions that can help physicians monitor patients and the progress of their treatment. Such technology is driving innovation in the aerosol therapy products market.
Efficient, Effective Products
“There is a lot of innovation going on in terms of technologies and devices that deliver drugs in a way that is faster and more efficient and more effective for the patient,” explains Kevin Jones, product manager, aerosol therapy products, Invacare Corp.
Several key trends are affecting product design, development and treatment, according to Rob Lee, director of marketing for Pari Respiratory. These include lower age indications for asthma medications, the health care industry's desire to improve patient compliance and the move to treating patients in the home environment instead of the significantly more expensive in-office, outpatient or emergency room situation.
Lee says primary factors influencing patient compliance are the simplicity and convenience of taking aerosol treatments, the length of time required to take treatments and their benefits, such as patients feeling better, which reinforces treatment adherence.
Jones adds that a current trend is to give patients what they want in terms of effective treatment, portability and mobility, and to give providers what they want, meaning devices that will enable them to realize some profit.
“The big caveat that goes along with that is the whole issue of the proposed cuts in reimbursements for the medication. In the short term, this will drive a lot of companies to determine how much they are willing to invest on the device side. We are forging ahead from the equipment side with the medication reimbursement notwithstanding.”
According to Lee, the medical device industry is trying to address both reimbursement and consumer issues by providing fast and efficient reusable nebulizers with small compressors that operate on various power sources such as AC, DC and rechargeable batteries. As well, some products now are more “kid-friendly” and don't look like medical devices.
Technology Offers Solutions
Patient monitoring and compliance technologies are also coming up on manufacturers' radar screens.
“Product design is ‘evolving’ more so than ‘changing,’” says John Snobarger, president and CEO, Alliance Tech Medical. “Technologies are becoming available that offer better ways to measure, and products are moving from a mechanical to a digital electronic format.”
Emerging technologies are being used to provide clinicians with data that can help them monitor and adjust treatment plans, says Ferarris' Rosenthal. “Traditionally, asthma hasn't been a big enough disease to capture the attention of most home care providers, but that's changing,” he explains. “Now there are technology solutions that can collect data on the patient that you can only get from them when they're in their home.”
Rosenthal is referring to products that can measure the two primary indicators — peak flow and FEV (forced expiratory volume) — and then store the data for the home care provider or physician to create a printed report.
“In the past, that was only available in a very vague way with a patient trying to do peak flow monitoring at home, bringing in the diary chart to the doctor's office and trying to get support this way,” he says.
“With the advent of microelectronics and mass production, we can now produce devices that measure more important parameters that the physicians recognize as far more reliable measures than what was available before, essentially for the same price as what they've been paying for these mechanical things in the past.”
These breakthroughs are allowing HME providers to become intermediaries between patients and physicians.
“Home care providers are now able to act as a middleman to make sure these devices get into the hands of the patients properly and that the patient at home is shown how to use them,” says Rosenthal. “In many cases, they're putting programs together where they're collecting the data from the patients and delivering it to the doctors electronically.”
Good education, however, still provides the foundation for good patient compliance.
“There is a tremendous amount of education for patients to correctly take the [respiratory] medication,” explains Dan Fry, president of Revlis Medical. “Anybody can hand out an inhaler to a patient, but [patients] can end up in the hospital simply because they don't know what they're doing.”
Using equipment such as an inhaler “is very technique-driven,” explains RRT Shawn McCormick of asthma education firm Zoey LP. She points out that patients often have to “coordinate breathing [the medication] just right,” especially if using an inhaler without a holding chamber, which slows down medication delivery and “gets more medication into the lungs.”
Without proper instruction, Fry adds, a patient could be simply sucking medication into the mouth and not through to the lungs, setting an asthmatic up for some unpleasant side effects.
MMA Changes Raise Reimbursement Concerns
Amid ongoing product innovation and a growing population of patients who require aerosol therapy, the MMA has created unrest for providers and manufacturers alike. Yet the resolve to stay on course is strong.
The fear, Fry says, is the possibility of providers exiting the COPD business, traditionally much more profitable than other respiratory sectors, including asthma and allergy. If a company drops its profitable COPD business, “it's going to make it tough to [continue the business] that wasn't as profitable in the first place.”
Unlike COPD, the asthma and allergy market, with its young patient base, doesn't have Medicare as a primary payer. Dealing with young patients means dealing with managed care payers that may handle respiratory medications through prescription drug cards and pharmacies. “A lot of DME [companies] don't benefit from the meds on the pediatric side. [Patient] education is really the lynchpin for home care companies. [It's] what they offer that is really hard to get from a chain pharmacy.”
“If you know how to work within the system, this business should grow,” says Snobarger of Alliance Tech. “The market is still growing at 15 to 18 percent, and when a market is growing, there is business to be had. You just have to be more competitive and cost-effective in the way you operate.”
According to Kocinski, the issue of reimbursement “is probably going to affect product development in the long term, but I don't really know that we're going to see any … product that is going to overcome the issue in the very near term.
“The difficult part for manufacturers is that [product development] almost has to be tied to new drugs. Some of the more recent drugs on the market, particularly the higher-end ones that have come about in the past 10 years, are what we call device-specific.”
Invacare's Jones raises another point that speaks to consumers' role in shaping the asthma and allergy market. “Despite any resistance from providers because of any proposed cuts, the consumer doesn't care. We need to be aware that we're connecting ultimately to that end user or patient, and we deliver those products and make them available to providers.”
He cites portable nebulizers — which are for the most part cash sales and the fastest-growing segment of the asthma market — to demonstrate that consumers are driving parts of the market.
While providers of aerosol therapy products must consider physician needs and consumer desires to be successful in the asthma and allergy arena, they must also reexamine business processes.
“Medicare reimbursement directly impacts the profitability of supplying and servicing respiratory patients,” says Pari's Lee. “It will affect the number of HME companies willing to remain and participate in the marketplace.”
He feels HME providers will be forced to work smarter to reduce costs. One example might be providing patients with reusable rather than disposable nebulizers, which saves shipping, billing and packaging expenses. Another is considering the total cost of compressors and nebulizers instead of only the initial cost. More after-hours and weekend service can be avoided by purchasing a durable unit with a proven record instead of the most inexpensive product.
Jones agrees that “smart products” are one of the solutions to the current, confusing situation. “We feel that the key to all of this is to make products that are profitable for the provider and effective for the patient,” he says. “The cuts coming into play only put the onus on [manufacturers] to help providers figure out how they can still meet the needs of their patients in a way that helps them offset some of [their costs] — or loss of revenue — that will result from the [reimbursement] cuts.”
The conclusion for asthma and allergy product providers is not a new one: It comes down to service. HME providers can teach, support and provide a link between physicians and patients, but this bridge must be recognized by payer sources.
“You can always go into some store and buy [a product], but … a lot of good it does to have it at a cheap price if nobody is there to show you how to use it,” sums up Snobarger.
Experts Interviewed:
Michael Brown, product manager for asthma products, and Rich Rosenthal, director of sales and marketing, Ferraris Respiratory, Louisville, Colo.; Dan Fry, president, Revlis Medical, Windermere, Fla.; Kevin Jones, product manager, aerosol therapy products, Invacare Corp., Elyria, Ohio; Rich Kocinski, senior vice president and general manager, Sunrise Medical/DeVilbiss Respiratory Group, Longmont, Colo.; Rob Lee, director of marketing, Pari Respiratory, Monterrey, Calif.; Shawn McCormick, CEO and chairman, Zoey LP, San Antonio, Texas; and John Snobarger, president and CEO, Alliance Tech Medical, Granbury, Texas.
Disease Management Can Pay Off for Asthma Patients
For providers that want to obtain managed care contracts for their respiratory patients, some products available today offer the tools they need to monitor patients and show outcomes. That means asthma disease management programs are not only for the national companies; smaller, local providers now also have a shot.
“Asthma has been a difficult disease for providers to put their arms around because of the lack of tools available to monitor patients,” explains Michael Brown, product manager for asthma products, Ferraris Respiratory. “Typically, the managed care product will try to encompass the COPD patients and the emphysema patients, but the asthma patient is becoming more sought after for HME providers in a disease management role.”
To be successful in the arena, Brown advises building a program that offers care for all respiratory patients. “Managed care organizations want to call one number to take care of all of their patients,” he says. “That way, they get the contracts and they get more patients. It's a variety of patients that encompass a respiratory contract.”
When looking at a disease management program for asthma patients, the following outcomes are what managed care organizations look for:
-
Reducing medication use and using it more effectively
-
Monitoring patients' peak flow and FEV (forced expiratory volume)
- Keeping patients out of the emergency department
-
Reducing emergency department and physician visits
-
Keeping patients in school
-
Reducing costs, including direct and indirect costs
In the News
Despite medical advances and a better understanding of asthma, a team of researchers at Johns Hopkins Children's Center in Baltimore was troubled to find that 20 precent of children with asthma do not get enough exercise, even though some physical activities such as running and swimming have been shown to decrease the severity of asthma symptoms.
According to the study, almost one-fifth of all parents agreed with a statement that exercise is dangerous for children with asthma.
One-quarter of parents of asthmatic children also said they were afraid their child would get sick with exercise, and that their child gets upset with strenuous activity. Children whose parents held such beliefs were more likely to be inactive.
The study's findings also indicate that children with moderate or severe asthma — including those who take asthma-controlling medications — were less likely to engage in high levels of physical activity.
Urban children with asthma who attend schools that provide inhaled corticosteroids had improved symptoms and fewer days absent from school than children who did not receive them through the school.
Although national guidelines recommend that children with mild to severe persistent asthma take daily maintenance medications, undertreatment with these medications and poor adherence is common, especially for young urban children.
In an article published in The Archives of Pediatrics & Adolescent Medicine (May 2004), the authors maintain that school-based systems of preventive care could become standard for the management of childhood asthma in underserved communities.
People with asthma were 12 times more likely to develop chronic obstructive pulmonary disease (COPD) than people who did not have asthma, according to a 20-year study from the University of Arizona in Tucson.
Asthma and Allergy Facts and Figures
-
20.3 million Americans report having asthma
-
6.3 million children under 18 report having asthma
-
More than 70 percent of people with asthma also suffer from allergies
-
10 million Americans suffer specifically from allergic asthma
-
There were 1.8 million asthma-related visits to emergency departments in 2000; more than 728,000 of these involved children under 18
-
There were 465,000 asthma-related hospitalizations in 2000; 214,000 of these involved children under 18
-
There are approximately 5,000 deaths annually from asthma
-
Direct health care costs for asthma in the United States total more than $9.4 billion annually; indirect costs (lost productivity) add another $4.6 billion for a total of $14 billion. Inpatient hospital services represented the largest single direct medical expenditure at more than $4 billion
-
Estimates from a skin test survey suggest that allergies affect as many as 40 to 50 million people in the United States
-
Allergic diseases affect more than 20 precent of the U.S. population
-
Allergic diseases are the sixth leading cause of chronic disease in the United States
-
At least 35.9 million people in the United States have seasonal allergic rhinitis (hay fever)
-
Approximately 16.7 million office visits to health care providers each year are attributed to allergic rhinitis
Source: American Academy of Allergy, Asthma and Immunology
