by Denise H. McClinton
Thursday, May 1, 2003

The market for respiratory products is seeing renewed interest from home medical equipment providers. New high-tech, streamlined products designed to improve patients' health and providers' bottom lines are changing the way the industry views respiratory care.

Experts say the fastest-growing segment in the category is the sleep market. John Frank, vice president of marketing for Respironics' homecare division, says the market for products designed to treat obstructive sleep apnea is growing from 18 to 20 percent a year, exceeding growth in the oxygen market by more than 10 percent.

“Over 15 million people in the United States have some form of a sleep disorder, and when you look at the number of people treated, which is only 10 to 15 percent, there is a very large opportunity ahead of us,” Frank says.

One of the factors driving accelerated growth is consumer awareness. “Major mainstream journals are writing articles about sleep, and informational programs on TV are discussing sleep and the problems associated with sleep,” Frank points out.

“This is driving awareness in the consumer market, which is certainly helping our purpose with obstructed sleep apnea, coupled with improvement in the diagnostic channels.”

He makes it clear, however, that the clinically proven benefits of treating sleep disorders are the real impetus behind the market's upswing.

“This growth does not come from savvy marketing,” he says. “There is very good clinical evidence that suggests that if you work on treating sleep apnea, you may potentially reduce hypertension, chances of stroke or heart failure.”

Rich Kocinski, senior vice president and general manager of Sunrise Medical's DeVilbiss Respiratory Group, affirms the positive outlook for the sleep market.

“The increasing awareness of the disorder is causing many of the previously undiagnosed people to seek treatment,” he says.

“The dynamics of the market are currently that there are more patients than can be processed through the sleep labs, and backlogs continue to exist. This capacity limit is realistically capping the growth at 20 percent,” Kocinski continues.

Customer-Driven Changes

The remainder of the respiratory market is also strong. “Clearly, obstructive sleep apnea is outpacing the rest of the market in terms of growth,” Kocinski confirms, “but note that the rest of the market is also growing at high single digits to low double digits. The market in its entirety is very solid.”

Oxygen-related products are contributing to the segment's increase. Tom Jones, CEO of Chad Therapeutics, says the conserver market is seeing “substantial” growth as a result of product obsolescence, the continuing increase of patients and the ever-increasing need for patient ambulation.

Likewise, products designed to streamline the oxygen business and make it more cost-effective are having an impact, says Doug Caffoe, director of marketing for respiratory products, Invacare.

Liquid oxygen is seeing “significant” growth, according to Dale Tyerman, general manager of respiratory homecare for Puritan Bennett. “This growth is being driven by improved clinical, economic and lifestyle outcomes. Now with breakthroughs in new technology, patients can lead more active, fulfilling lives.”

Technological improvements are occurring at all levels of the respiratory products market, and manufacturers say both providers and consumers are the reason.

“Our product development continues to take the providers and the end users into consideration,” says Kocinski of Sunrise. “Masks, for example, are heavily weighted with patient comfort and convenience features to appeal to the patient population, while at the same time, we must consider the impacts of the designs on the providers. A solution that is counter-productive to their business needs will clearly impact our ability to get the mask to the patients.”

Bob Mogue, executive vice president of sales and marketing for CareFore Medical, says input from HME providers cannot be ignored.

Chad's Jones points out that one vital issue for providers is cost. “Providers are demanding products that are less expensive to provide,” he says. “Sometimes this can mean they are facing higher initial acquisition costs, but the end result is a lower overall cost of servicing or using the products.”

On the other hand, consumer needs often focus on usability and comfort. “Patients want lighter, easier-to-use products,” Jones says.

According to Caffoe, today's consumers are well-informed regarding their own needs and the availability of products.

“Patients are more educated about their diseases, and I think that is really driving product changes, whereas perhaps 10 years ago, the doctor would prescribe a product and it wouldn't be second-guessed,” he explains.

All the parties who affect product innovation are most certainly considered in the development process, Tyerman adds. “In our industry, we need to consider the multiple customers driving our technology: the patient, the physician and the provider, as well as government policy, private payers and Medicare.

“At the end of the day,” he continues, “we need to stay focused on the patient and the provider. Our challenge is to make sure what we do for the patient meets the needs of all our customers.”

Getting the Word Out

Marketing is a continual challenge for the HME industry, but without it, patients might never experience the innovative products that can improve their lives. How, then, do providers effectively inform referral sources and patients about the newest technology and product introductions?

The best marketing approach is a comprehensive one. “Our customers tell us that they use virtually all types of media to market to their patients — radio, print and television, as well as direct marketing to referral sources via personal calls,” says Jones.

Educational marketing also is an effective tool when it comes to respiratory products. “Lunch and learn” events, which many providers still offer for their referral sources, can be effective venues for detailing high-tech respiratory equipment.

Experts say what's important is a broad approach that includes all key customer groups, including consumers. Frank of Respironics says consumer self-education is at an all-time high.

“Through the various Web sites and [support group] meetings that occur around the country, consumers become aware of new technology, and they drive their demands to their physicians,” he explains. “Typically, these informed consumers go to their physicians and ask about this new technology when they are diagnosed with a problem.”

Puritan Bennett's Tyerman says providers should never forget that the main thing they market is themselves.

“Ultimately, providers are the product they need to market to referral sources and patients. It is their service and desire to provide the best equipment for their patients that can differentiate them in the market,” he says. “Providers need to select and actively use new technologies that have true clinical and lifestyle benefits for the patient. They should also incorporate the technology they use into a broader message about how their patient care is of the highest quality.”

To Market, To Market

Technology is constantly improving in the respiratory market. However, before providers and patients see the latest and greatest, manufacturers must wade through many layers of scientific and market research — and the ever-important market clearance from the U.S. Food and Drug Administration — before they can begin selling a new product.

The first step, according to Kocinski of Sunrise, is gauging market demand. “When a need is identified, we run at a solution,” he explains. “Of course, we balance this with a disciplined design practice that assures good, quality products. Speed to market should not, and in our case does not, mean that we cut any corners.”

The next step is determining a product's ability to meet patients' or providers' needs safely and effectively. Frank of Respironics says timing of product introductions often depends on when the product is ready for use.

“If you have a product available today that has been approved by the FDA, and you have evidence that demonstrates the product is safe and effective, then your timing is now,” he states.

For many, the ideal time to introduce a new product corresponds with the timing of a major industry trade show. However, that is not the only concern in today's competitive environment.

“While industry trade shows provide effective venues for product introductions, I would hesitate to wait on any introduction just because a trade show is coming up,” says Jones.

Invacare's Caffoe agrees, noting that although trade shows offer a “captive audience,” the respiratory market is so viable now that manufacturers are releasing products as soon as they are ready.

Jones also points out the other critical components of a product launch. “At Chad, we usually introduce new products as quickly as we can get the product effectively to the market,” he explains. “By stating ‘effectively,’ I mean having the product on the shelf, receiving all FDA approvals, insuring demo units are in the field and having any required service components in place.”

When all the pieces are in place, then new products can begin to improve patients' quality of life.

“At the end of the day, if the product is a good solution, is a better value proposition, and is designed with quality, it will succeed,” Kocinski says.

Strong Potential

It's no secret the respiratory home care market is alive with new products. Caffoe says the influx of new technology proves the strength of the market and its potential for further growth. Although this segment of the HME industry has been plagued with reduced reimbursement, tightened regulations and increasing paperwork requirements, it is still a stronghold for the business.

“From what I hear in the field, a lot of companies are starting to look at respiratory from a dealership standpoint as an entry point to go into business,” Caffoe says.

Kocinski concurs. “We believe that the industry is very strong, and the demographics continue to support sustained growth,” he says. “It continues to have a very good focus on the respiratory segment and is evident by the trend for more HME providers to enter than exit the segment.”

There is a lot of potential for the respiratory market, particularly in the areas of sleep, oxygen and medication delivery, that should positively affect the entire HME industry, adds Frank of Respironics.

Maintaining a strong respiratory business can be a boost for sound HME providers. If competitive bidding becomes a reality, Caffoe says being a solid respiratory provider can increase the ability to be competitive in the marketplace — a win-win situation all around.

Whether a provider's focus is to tap into the fast-growing sleep market or to invest in the latest oxygen therapy technology, one thing is certain: The market for respiratory products is there.

Respiratory Conditions: Facts to Know

Asthma

  • Economically, asthma is responsible for $9.4 billion in direct health care costs and $4.6 billion in indirect costs, which are attributed to lost productivity.
  • In 2001, over 20 million Americans had asthma.
  • The number of deaths from asthma continues to decline: Mortality decreased 4 percent from 1999 to 2000.

Source: Trends in Asthma Morbidity and Mortality, American Lung Association, 2003

Chronic Obstructive Pulmonary Disease

  • In 1999, 119,524 people died of COPD, including 17,787 from emphysema and 1,172 from chronic bronchitis.
  • In 1999, the prevalence of emphysema was 14.0 per 1,000.

Source: Trends in Chronic Bronchitis and Emphysema: Morbidity and Mortality, American Lung Association, 2002

Sleep Disorders

  • At least 40 million Americans suffer from sleep disorders.
  • Sixty percent of adults report having sleep problems.

Source: National Sleep Foundation

Patient Support Organizations

Experts Interviewed:

Doug Caffoe, director of marketing for respiratory products, Invacare, Elyria, Ohio; John Frank, vice president of marketing, homecare division, Respironics, Murrysville, Pa.; Tom Jones, chief executive office, Chad Therapeutics, Chatsworth, Calif.; Rich Kocinski, senior vice president and general manager, Sunrise Medical/DeVilbiss Respiratory Group, Longmont, Colo.; Bob Mogue, executive vice president of sales and marketing, CareFore Medical, Olathe, Kan.; and Dale Tyerman, general manager of respiratory homecare, Puritan Bennett, Pleasanton, Calif. To follow up with these companies, check the complete listing in HomeCare's Buyers' Guide.