Oxygen therapy, one of the strongholds of the home medical equipment industry, is moving forward at a new speed. Changing patient demographics, decreasing reimbursement rates and an increasing need for more efficient products have prompted manufacturers to drive new technology to a different level. The result: healthier patients and more profitable providers.
In 2001, more than 13 million adults in the United States were diagnosed with chronic obstructive pulmonary disease, according to the American Lung Association. However, experts say that number could be much higher, with estimates ranging from 24 million to 35 million individuals affected. Organizations such as the ALA and the American College of Chest Physicians have initiated educational programs that encourage family physicians to diagnose COPD earlier so treatment can begin sooner. Although there is no cure for the disease, treatment can improve patients' quality of life by enabling them to increase their activity levels.
“The trend is that people are getting diagnosed earlier with COPD,” says Thomas Williams, managing director of Strategic Dynamics Inc. “As a result of being treated earlier, they are generally more active and ambulatory.”
Patients who are diagnosed at a younger age present opportunities and challenges to the oxygen market.
“The demographics [of patients requiring oxygen therapy] are changing. They are living longer and baby boomers are now reaching an age where they're starting to go on oxygen, and that is only going to increase,” says Kathy Odell, CEO of Inogen. “The people who have grown up with cell phones and Palm Pilots and computers are going to demand more of their health care technology, so that's going to challenge all of us to keep coming up with better products.”
And better products will produce a better quality of life for these patients.
“Correlating the aging baby boomer generation with predicted increases in the home care market is a big focus for health care marketers everywhere right now,” says Carla Laureano, marketing manager for CHAD Therapeutics. “I think we are seeing a trend in early detection of COPD and other lung diseases and a decrease in the stigma attached to oxygen users. This generation of COPD patients will be much more comfortable with technology than their predecessors, paving the way for some exciting products.”
New Generation of Products
Some of these products are already hitting the market. Industry experts say products that encourage easier ambulation are on everyone's radar screen, and that translates into portable and lightweight systems.
“The new technology that is now available is giving patients the ability to ambulate who have not been able to in the past,” says Tim Clark, executive director of global sales and marketing for Precision Medical. “The ambulation factor is one of the things that all of us in the industry are concentrating on.”
Odell agrees. “What is clear in the oxygen market now is that it is all about ambulatory oxygen,” she says. “We've known this for years, but we have younger patients and people who are used to being on the go who really don't want to give up being active. They are refusing to stay home and be tethered down to a machine.”
Inogen's device, the Inogen One, designed to be used as a stationary concentrator at home as well as an ambulatory device, can be used for daily errands and extended trips, Odell says.
Williams says this type of “universal” device is creating a great deal of interest.
“A universal oxygen concentrator is one that provides both stationary and portable oxygen, is lightweight, and operates off of AC or DC power,” he explains.
According to Williams, aside from the typical benefits that portable systems offer, the benefits of a universal system include easier travel for users because they do not have to make arrangements away from home and reduced operating costs for providers because of reduced deliveries to the home.
“The trends in new oxygen products are mobility and convenience,” says CHAD's Laureano. “Home cylinder filling systems like the Total O2 delivery system are finding growing enthusiasm, as are portable oxygen concentrators. We will continue to see either fully portable systems or ones with a strong ambulatory component.”
The home-filling products Laureano refers to are indeed creating a great deal of interest in this market. Although the first models introduced about five years ago drew some criticism, companies such as CHAD Therapeutics and Invacare are now offering next-generation products that have the industry buzzing.
“I'll admit, there were a lot of problems with quality and reliability coming out of the gate,” says Scott Wilkinson, Invacare's senior product manager for portable oxygen products.
Yet, home-filling units introduced this year have solved many of the initial concerns. They increase a patient's independence and save the provider money with fewer house calls to help refill tanks. Invacare's HomeFill II focuses on patient function, taking into consideration the user's limitations, which leads to compliance.
Wilkinson says these home-filling systems represent, among other things, the result of pricing pressures in oxygen therapy.
“Reimbursement comes from tax dollars, and there's only so much money to go around,” he explains. “Either cuts get made or taxes go up, and you know how people feel about increased taxes.”
In addition to ambulatory oxygen options and home-filling systems, conserving devices are also a target of research and development efforts.
“Even though conservers are not reimbursed directly, their technology is key in that it is necessary to achieve smaller, lighter, longer-lasting portables,” Wilkinson says. “The industry will continue to see conserver technology expanded and improved because of that.”
Precision Medical is introducing a conserver this month that the company says offers a high savings ratio. “The industry standard is a 3 to 1 savings ratio, and this product will offer a 5 to 1 savings ratio,” Clark says.
Cramer Decker's conserving device, which relies on inhalation/expiration detection technology, offers patients a device that is lightweight and simple to use. The next generation of conservers includes all-in-one devices that are both electronic and pneumatic, says Scott Decker, the company's vice president and general manager.
Portability and convenience are the buzzwords of the present and future in oxygen therapy technology, according to Stuart Bassine, president of OxLife. Likewise, Bassine says the industry will continue to see innovation since manufacturers simply cannot afford to “re-do” what they did last year.
Providing for the Provider
Clearly, patient need has made an enormous impact on the technological wave that is sweeping the oxygen therapy market. Yet, it is not the only factor.
Manufacturers say it is essential to be aware of provider challenges and needs, and to address them with technological solutions.
Providers must find new, more efficient ways of operating their businesses, says Precision Medical's Clark.
“We are seeing an unprecedented shift to end-user/consumer advertising on the part of the large manufacturers, which is changing the way that business is done through the current channels. Consumers are becoming more savvy, vocal and involved with their oxygen programs,” says CHAD's Laureano. “At the same time, rising overhead costs, static reimbursement and the threat of competitive bidding are forcing providers to buy the most cost-effective products they can.”
Provider needs cannot be ignored in this process, says Odell of Inogen. “The provider is the caregiver for the patient. If you don't make the products affordable for the provider, then they will have trouble delivering the kind of quality care to the patient,” she says.
All in all, innovation is on the rise. For the $200 million oxygen market, opportunity is present, particularly for providers who embrace solution-driven new technology.
Experts Interviewed: Martin Andonian, president, Andonian Cryogenics, New Bedford, Mass.; Stuart Bassine, president, OxLife, Hendersonville, N.C.; Tim Clark, executive director of global sales and marketing, Precision Medical, Northampton, Pa.; Scott Decker, vice president and general manager, Cramer Decker Medical, Irvine, Calif.; Carla Laureano, marketing manager, CHAD Therapeutics, Chatsworth, Calif.; Kathy Odell, chief executive office, Inogen, Santa Barbara, Calif.; Scott Wilkinson, senior product manager for portable oxygen products, Invacare, Elyria, Ohio; and Thomas Williams, managing director, Strategic Dynamics, Riverside, Calif.
For more information on these companies, check HomeCare's annual Buyers' Guide issue. To access the Buyers' Guide online, searchable by product and company, go to www.homecaremag.com and click on the “Buyers' Guide” toolbar button.
Creating a Model Of Profit
The time has come for home medical equipment providers to assess their oxygen therapy business and begin making changes. According to Thomas Williams, managing director of Strategic Dynamics Inc., the dilemma is how to provide for the patient and still remain profitable.
“Providers are going to have to understand what their acquisition and operational costs are for providing oxygen to their patients,” he says. “Then, they must calculate how much money they can make to ensure that they can provide that delivery system that the patient and doctor demand and still make a reasonable profit.”
“Fixed or decreasing reimbursement and competitive bidding will affect this process,” says Carla Laureano, marketing manager for CHAD Therapeutics. “The best way for providers to increase their profitability is to take a hard look at their real cost of doing business — including their service and delivery overhead — and then choose products that minimize these costs,” she explains.
The Impact of COPD On Quality of Life
Chronic obstructive pulmonary disease is a debilitating condition. COPD is an umbrella term used to describe the airflow obstruction associated mainly with emphysema and chronic bronchitis. Recently, the American Association for Respiratory Care conducted a national survey to understand the impact of this disease on the millions of people who are affected. Following are some of the results of the study, Confronting COPD in America:
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Nearly half get short of breath while washing and dressing (44 percent) or doing light housework (46 percent).
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One in three (32 percent) get short of breath while talking, and 28 percent have difficulty breathing even when sitting or lying still.
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Almost one in four (23 percent) say their condition has made them an invalid; 8 percent are too breathless to leave home.
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Half of all COPD patients (51 percent) say their condition limits their ability to work.
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Many say it also limits them in normal physical exertion (70 percent), household chores (56 percent), social activities (53 percent), sleeping (50 percent) and family activities (46 percent).
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Fifty-eight (58) percent say they panic when they cannot get their breath, 52 percent feel they are not in control of their breathing and 52 percent admit that their coughing is embarrassing in public.
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Close to half (47 percent) say they have a hard time making plans because of their condition, and 39 percent worry about having serious breathing problems when away from home.
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Sixty-six (66) percent say they expect their condition to get worse.
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Although COPD is a progressive disease, the survey revealed that younger patients (45 to 54 years old) report more severe and frequent symptoms and greater psychosocial impact than do older patients.
What's Your Bag?
Amid all the high-tech products that surround the oxygen therapy market, the bags and cases that are used to transport the growing number of portable systems are generating interest from both consumers and providers.
Scott Decker, vice president and general manager of Cramer Decker, says the company has focused on consumer need and interest to make a name in this untapped market.
Ergonomic considerations and user ability have made the most impact on design. Cramer Decker has created backpacks, fanny packs and shoulder bags to meet a variety of needs, including comfort and fashion.
COPD: The Facts
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In 2002, the annual cost to the nation for chronic obstructive pulmonary disease was $32.1 billion, including $18 billion in direct health care expenditures, $6.8 billion in indirect morbidity costs and $7.3 billion in indirect mortality costs.
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Long-term smoking is responsible for 80 to 90 percent of all COPD cases and is the most common cause of COPD.
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COPD claims the lives of more than 117,000 Americans annually.
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A smoker is 10 times more likely than a non-smoker to die of COPD.
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Other risk factors include occupational hazards, air pollution, heredity, second-hand smoke and a history of childhood respiratory infections.
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The quality of life for a person suffering from COPD diminishes as the disease progresses.
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Primary symptoms include a chronic wet cough and shortness of breath.
Source: American Lung Association
