Respiratory therapy continues to advance in home health care. Industry experts see no end to the market's steady and, in segments like sleep apnea, skyrocketing growth.
“The respiratory sector remains the most important revenue generator for home care providers,” says Erika Laskey, vice president of sales and marketing for CHAD Therapeutics. “Medicare spending for home oxygen grew 13 percent in 2002, and the aging population — the baby boomers — will start to impact our industry in as little as four years. Our future looks bright.”
Within the market, two elements continue to shape respiratory product development: cost concerns, and a growing, educated patient base.
Sleep Takes Center Stage
The sleep disorders segment of the respiratory market is “dynamic,” says Ron Richard, vice president of marketing for the Americas for ResMed, adding that “the majority [of obstructive sleep apnea] patients are private-pay. They are non-Medicare beneficiaries.”
Education about sleep-disordered breathing continues to increase awareness, and experts predict the $800 million segment will grow at about 20 percent a year, solidifying its position as the fastest-growing sector in the respiratory market.
Within this area, patient compliance remains center stage. “The biggest talk with CPAP [continuous positive airway pressure] isn't so much the machines,” says Jesse Keirn, vice president of market development at respiratory products distributor Roscoe Medical. “It's the interface, the mask and what kind of mask alternatives there are. Most conversation deals with what kind of interface is going to work best and patient compliance. If [patients] don't like the mask, the headgear, the way it fits, it's no good.
“It's always an ongoing battle with dealers to get their patients to comply,” Keirn adds.
The keys to patient compliance are comfort, fit, cost and durability, Richard says. All four have driven product development in the sleep arena. “Over the last 10 years, we've been focusing on building masks that actively seal on a patient's face and reduce the amount of leaks.”
These “intelligent” masks feature an active sealing cushion that facilitates low headgear tension. As a result, the masks last longer and work better, which ultimately saves money for everyone involved, according to Richard.
Patient compliance also is important as payers scrutinize what is medically necessary and whether a product is truly used. “You've got a machine out there that Medicare is paying for that is not being used,” Keirn says. “The dealers are trying to get their patient to comply with their order and use the machine [because] one, the machine can help the patient; and two, [the dealer] is getting business. If [the patient] is not using the machine, it's going to get yanked.”
“Whether it be sleep or oxygen … [payers] are going to be challenged to have more money coming out of their pockets to take care of the elderly, so they challenge, ‘Is the money being spent wisely?’” says Scott Wilkinson, senior product manager for portable oxygen products, Invacare. He adds that payers are “looking for proof” that patients are using the product, and whether the product has adequate clinical outcomes.
Monitoring Patient Compliance
If a patient doesn't comply, everybody loses. Here is where monitoring comes into play. New technology not only allows providers to monitor usage, but it also allows them to detect abnormalities and, in the end, better serve the patient.
For example, Richard says, using specialized software programs and even data inside ResMed's flow generators, providers can monitor for leaks and other information “so they can quickly make an assessment on patients that need help versus those that are doing well.
“It's … a red light-yellow light-green light approach to medicine,” he continues. “For people who have the green light, you don't want to spend much time with them; they're maintenance patients. [With] the ones in the yellow and red, you try to fix something as quickly as possible. That saves you money and time and, in turn, improves the patients' overall experiences and gives them a more positive outlook on therapy.”
According to John Frank, vice president of marketing for Respironics, special memory cards located in some products can track patient behavior, compliance and overall quality of life. And software programs can change a therapy mode without taking a device in for servicing.
“Such patient tracking is very advantageous to the provider,” Frank says. “Not only does it offer them a means to work closely with a physician, but it also reminds providers when equipment needs updating.”
Ensuring patient compliance requires additional work by providers — work that often is not reflected in reimbursement for the corresponding products, according to Frank.
“[Providers] are forced to do work on compliance without reimbursement,” he says. “It's responsible care to ensure … the patient is benefiting from the therapy. It demonstrates consultative care, as opposed to dropping off a device in [the patient's] home. The challenge is recognition [of this] by the payer.”
Cutting Costs, Not Service
Service, the costs related to that service and reimbursement for products are inextricably linked in the respiratory market. Savvy respiratory providers are looking for ways to cut costs, while keeping service intact, by purchasing cost-efficient products and encouraging patient wellness.
“Patients want equipment that meets their needs with limited amount of intervention on the equipment,” says Joe Priest, president and COO of AirSep.
The biggest necessity for respiratory patients is ambulation. Sleep product consumers are “mobile. They travel a lot. Whereas oxygen patients, many of them, are homebound, although you see more and more [oxygen] patients who want lighter-weight, smaller concentrators or liquid systems,” Richard says. “The more exercise they get, the better off they are.”
Bob Mogue, executive vice president of sales and marketing for respiratory-accessory manufacturer CareFore Medical, agrees that a goal in the respiratory market is to find ways for long-term oxygen patients “to ambulate, to be mobile and to be compliant with the therapy 24/7, including periods when they want to be active, away from the home or in a situation where they don't have to be tethered to an oxygen tank.”
Nevertheless, even ambulation and exercise can be inhibited by a tight reimbursement structure. “If [the government] squeezes down reimbursement, it will limit ambulation. People don't ambulate and the disease gets worse, and it forces them into institutional care, which drastically increases the government's investment,” Priest explains.
Providers, on the other hand, can decrease their investment by keeping a sharp eye on the costs of providing respiratory products and services.
“It's a fair-market opportunity. The only way [providers] can continue to treat patients is to get costs out of equipment delivery and maintenance,” Priest states.
Other experts agree. “We believe that home care providers are increasingly more interested in [using] products that drive their cost of providing service to patients down, as opposed to buying products based on acquisition price,” says CHAD's Laskey. “With the possible advent of competitive bidding [for durable medical equipment], this outlook will become even more important in the months ahead.”
“We focus heavily on delivering solutions through our products that bring operational cost savings well beyond the price of the equipment,” says Rich Kocinski, senior vice president, product/project management respiratory, Sunrise Medical. “Our products should facilitate business efficiencies and deliveries, paperwork, etc. … Without operational efficiency gains, most providers will have a hard time turning a profit.”
At last month's Medtrade show, AirSep introduced a high-liter, high-pressure concentrator. Combining high-leter and high-pressure aspects in one unit, the product “allows the provider to focus on patient service,” Priest explains.
“The most important thing the provider does is care and serve,” he continues. “We don't want the equipment to get in the way of that. Reliability is high on the design criteria.”
Service, however, is too often ignored by payers, he says. “A long-term risk for this industry is from the reimbursement side and the government's failure to recognize the service aspect,” Priest says. “The biggest cost is the service aspect.”
What's really required is “a revamping of the regulations to realize home care providers are indeed ‘providers’ who provide a service,” Priest adds.
According to Richard, reimbursement cuts, such as moving non-invasive ventilators to capped rental items, will hurt patients who require frequent or routine service. “Because the equipment doesn't need [service] doesn't mean the patient does not require it,” he says. “What needs to happen is, there needs to be a service code established, apart from the equipment rental itself, for the service that you need to provide to patients with long-term ventilator needs or that have chronic respiratory problems.”
Could there be a bright side to reimbursement cuts for respiratory products and services? It depends on whom you ask.
“[Tight reimbursement] makes [the market] much more competitive for manufacturers, because the home care provider is challenged when their income is cut. So, they look upstream for concessions from their suppliers,” Wilkinson says. “As their revenue per patient is cut through reimbursement cuts, they're looking for ways to cut costs. One obvious way is to lower equipment acquisition [costs].”
With increasing pricing pressure, “we're going to see radical product development,” Wilkinson predicts. “We're all trying to knock each other out with better products for home care providers so that they can get an attractive return on their investment. In the end, patients win from this.
“I know a lot of people will probably be angry at me for saying this, but some of the cuts drive competition, and, in the long term, it forces companies to turn out better products.”
AirSep's Priest does not agree that pricing pressures necessarily lead to better products on shelves for consumers. According to Priest, pricing pressures “could have somewhat of a stifling effect on product development.” He adds that although innovation on the manufacturer's side continues, providers, faced with reimbursement cuts, sometimes simply cannot afford the technology.
However, providers can continue to offer Medicare customers innovation, he says, by using Advance Beneficiary Notices, or ABNs. A provider can give the form to a Medicare beneficiary before furnishing items and services when they believe that Medicare will not pay for some or all of those items or services — including advanced respiratory-therapy technology.
“The ABN provision is an excellent one,” Priest says, especially with increased focus on reimbursement issues on Capitol Hill. “If a [Medicare] patient wants a product and will pay extra out- of-pocket for it, the ABN is a very valuable tool.”
And, Wilkinson and other experts acknowledge the market is becoming weary of “fighting it out” on price. “We understood that we weren't going to grow unless we developed some innovative new products.”
“Reimbursement … can and cannot limit research and development,” Respironics' Frank says. “I don't believe reimbursement should be the key driver of innovation. Innovation should serve the needs of the market. If there is a clear benefit to the patient, reimbursement should follow.”
Most industry experts believe increasing demand and better technology will keep the market growing in the years to come with smaller and smarter products. As battery and other technologies advance, the market might even see an oxygen device fit into a patient's purse or wallet.
More intelligence also will be built in. Already, auto-PAP devices can recognize and normalize a patient's periodic breathing patterns. Such advancements in product capabilities may make wireless monitoring, or telemedicine, more of a reality. Driving all of this are the needs of an educated market.
“I am a baby boomer,” says Mogue, and in the years to come “awareness of what's available, the options and choices, will continue to increase with our generation.”
Indeed, manufacturers agree that these patients, having more disposable income and more information at their fingertips than ever before, will push the respiratory market to new heights.
“People are always going to be sick,'” says Roscoe Medical's Keirn. “People need help, and we'll try to [provide] it.
“We may have issues with Medicare, but there's always going to be demand.”
Experts Interviewed: John Frank, vice president of marketing, Respironics, Murrysville, Pa.; Jesse Keirn, vice president of market development, Roscoe Medical, Strongsville, Ohio; Rich Kocinski, senior vice president, global product/product management respiratory, Sunrise Medical, Longmont, Colo.; Erika Laskey, vice president of sales and marketing, CHAD Therapeutics, Chatsworth, Calif.; Bob Mogue, executive vice president of sales and marketing, CareFore Medical, Olathe, Kan.; Joe Priest, president and COO, AirSep, Buffalo, N.Y.; Ron Richard, vice president of marketing for the Americas, ResMed, Poway, Calif.; Scott Wilkinson, senior product manager for portable oxygen products, Invacare, Elyria, Ohio. 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.
Manufacturers Tell How to Sell
The best, most-advanced respiratory products and reporting technologies would all be in vain without proper consultation and patient education.
“If you look to other disease management programs [such as asthma and congestive heart failure], patients are very much involved in their own care,” notes John Frank, vice president of marketing for Respironics. According to Frank, successful providers recognize that their job involves more than just equipment delivery. “Don't sell respiratory equipment; sell the unique services [you] provide as respiratory equipment experts.”
Take a “holistic approach” to patient care, says Ron Richard, vice president of marketing for the Americas for ResMed. Ask the patients questions up-front: Do they travel overseas? What history of physical problems do they have? Then, custom-fit an entire system. Arrange frequent telephone calls or visits for possible refits and re-education, and use software tools to remind staff when it's time to call a patient and what they want to talk about. “This helps providers improve their trailing revenue on accessories and helps reduce the unexpected, which, in the end, makes a tighter, cleaner, more profitable operation,” Richard says.
Scott Wilkinson, senior product manager for portable oxygen products for Invacare, says a strong relationship with referral sources is essential. “Be a consultant to them; don't peddle [products]. [Go] in and counsel them on why this product is going to be better for the patient,” he says.
And, says Bob Mogue, vice president for sales and marketing for CareFore Medical, look to manufacturers for solutions for patients, focusing particularly on “those companies that can provide answers and solutions versus those that don't.”
Opportunities for service-oriented providers to take advantage of the growing respiratory market are endless, these product experts say. “The door is open as far as what role [providers] want to play,” Wilkinson says. “Patients are becoming more educated every day. The Internet is full of a wealth of information about new products that better serve them.
“As [patients] are demanding them, providers are put in the position of ‘Am I going to offer them this new product, or lose my patient?’ Some [providers] play defense, offering the product when they have to. Others get a few of these calls and recognize an opportunity: ‘I'm going to jump on this, and I'm going to proactively market it to patients through advertising, and I'm going to grow my business.’ That's capitalism.”
Another benefit: “Patients feel like they're really cared for,” Richard says. And when patients tell their doctors how happy they are, that can result in increased referrals to the provider.
Respiratory Products Updates
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Newport Medical Instruments, Newport Beach, Calif., has acquired a patent, No. 5,762,480, for its “Reciprocating Machine,” which is used in the glass-chambered, dual micro-piston gas delivery system of Newport's HT50 ventilator.
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The Centers for Medicare and Medicaid Services has adopted a local medical review policy (LMPR) for mechanical in-exsufflation devices used by individuals with neurological disorders with some paralysis of the respiratory muscles. HCPCS code E0482, for a “cough simulating device, alternate positive and negative airway pressure,” will allow providers to bill Medicare for devices such as Cambridge, Mass.-based J.H. Emerson's CoughAssist.
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Longmont, Colo.-based Sunrise Medical's FlexAire Mask was voted most innovative product by attendees at Medtrade 2003, held in Atlanta Oct. 9-11.
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Strategic Dynamics, Riverside, Calif., has developed a software-based home oxygen delivery profitability model for HME providers. The model calculates a patient's oxygen requirements and provides a financial comparison between purchasing the equipment or leasing it.
As Seen on TV
Experts in the respiratory market are betting that the marketing of respiratory products and services will follow the lead provided by prescription drug advertising.
“It's not unheard of for a consumer to push for a drug he's seen on [television], and it's the consumer who informs the primary care doctor,” points out John Frank, vice president of marketing for Respironics.
“You'll see the same model in the respiratory care marketplace. More options are available for treatment, and I think the drug industry is a good case model to examine and compare against.”
As with the marketing of prescription drugs, “there's a great amount of public awareness through commercials and TV that try to bring an understanding to lay people what diseases are all about,” says Bob Mogue, vice president of sales and marketing for CareFore Medical.
“[Consumer] knowledge of the treatability of [sleep-disordered breathing], and the fact that it's treatable and that the means by which it is treated can be incorporated into anyone's lifestyle, means [there will be] more of a consumer approach to education and awareness,” he says.
And HME providers — not manufacturers — will be the ones doing the marketing — and reaping the benefits.
To help its dealers take advantage of the shift to a consumer approach, Invacare, for one, has developed a series of television commercials for its providers to use, according to Scott Wilkinson, the manufacturer's senior product manager for portable oxygen products.
“The market is really open for providers to market directly to patients,” he says. “We leave it in the hands of the provider.”
