For years, industry pundits and optimists have insisted that the home medical equipment industry is primed to serve the needs of the aging baby boomer population. Has that time come? Many in the HME industry believe it has — and the respiratory and mobility markets are leading the way.
The medical devices industry as a whole is expected to grow at a rate of 9 percent annually, according to San Jose, Calif.-based market research firm Frost & Sullivan. Frost's research shows that the respiratory market is expected to grow at a rate of 8 percent per year from 2002 to 2005. In addition, baby boomers are expected to lead to revenue growth for the wheelchair and scooter markets in the coming years. Industry sources also report off-the-chart growth for the sleep market at 18 to 20 percent per year, and an increase in home oxygen of 13 percent.
Marc Rose, a partner with Paragon Ventures, a merger and acquisitions firm in Newtown, Pa., says both markets are profitable, but in different ways. “Despite reimbursement cutbacks, the respiratory market has remained very profitable because of a combination of demographics and the demand for products and services,” he says.
Although the mobility market is sales-driven — in contrast to the oxygen-heavy respiratory market that is reliant on rentals — Rose says mobility is not only a profitable market, but also is catching the attention of those in the acquisition arena.
RESULTS-DRIVEN DEVELOPMENT
Technology is playing an important role in the optimism expressed by providers and manufacturers alike. Whether manufacturers are offering new, revolutionary products or making positive changes to existing products, providers and consumers are reaping the benefits.
“Manufacturers must continue to develop products that help home care providers service their patient population in the most cost-efficient way possible,” says Earl Yager, president of Chad Therapeutics in Chatsworth, Calif. “However, the emphasis should not be solely on cost-containment or reduction. Product innovations should capitalize on new technologies available and provide patients with devices that allow them to be as ambulatory as possible.”
Competition also plays a role in innovation, according to Bob Fary, director of respiratory therapy for Apria Healthcare in Lake Forest, Calif.
“A lot of product development is simply an attempt by the developers of the products to differentiate themselves from their competitors,” he explains. “It is a competitive world out there, and as products work their way towards becoming commodities, manufacturers are coming up with new features and new modes and so on in order to differentiate themselves.”
| Rank | Market | % of Providers |
|---|---|---|
| 1 | Respiratory | 47.9 |
| 2 | Mobility* | 27.2 |
| 3 | Beds/Mattresses/Pads | 7.0 |
| 4 | Sleep Disorders | 6.7 |
| 5 | Seating and Positioning | 5.3 |
| 6 | Bath Safety | 2.9 |
| 7 | Women's Health | 1.6 |
| 8 | Pediatrics | 1.3 |
| *Includes Manual Wheelchairs, Power Wheelchairs and Scooters | ||
| Source: HomeCare 2003 Forecast Survey | ||
A POSITIVE OUTLOOK
Even amid new threats of national competitive bidding and ever-present reimbursement challenges for high-end rehabilitation products, the HME industry is gaining momentum.
According to David T. Williams, director of government relations for Elyria, Ohio-based Invacare, opportunities will be abundant when HME providers stop being perceived as commodity brokers and start being accepted as professionals in the continuum of health care delivery. “There are a growing number of people who see opportunity and know opportunity when they see it,” he says.
Rose agrees. “If you have the right people, the right quality control and the appropriate referral sources, then this business can certainly be lucrative,” he says.
Rose adds that although the industry has seen many changes in the last 15 years, opportunity exists for those who operate efficient and streamlined businesses. “The people in this business are incredibly resilient,” Rose explains. “The industry has evolved and people have learned how to work with these changes and change the way they do business.”
