A burgeoning population, health conditions and diseases that are merely treated — not cured — and more efficient diagnostic practices make the respiratory market a solid profit center that continues to increase.
Jacquelyn McClure BS, RRT, director of Lubbock, Texas-based The MED Group's National Respiratory Network, says home oxygen and treatment for sleep-disordered breathing are the segments of the respiratory market that are bringing providers the most revenues, but adds that information technology is also making a strong impact. According to McClure, technologies that can replace routine activities to free up labor for complex problem-solving and assessment activities are on the rise.
Baby boomers are moving into an age group or category where they are needing or requiring supplementary oxygen, says Ron Richard, Poway, Calif.-based ResMed's vice president of marketing. “Based on statistics, there are close to 10 million people who suffer from chronic lung disease in this country, and if you look at that, you're probably going to have at least 300,000 diagnosed per year that will require either partial or full-time support with some form of oxygen,” he says. “Regarding sleep disorders, an increasing number of links are being discovered between sleep and other chronic conditions, such as type 2 diabetes and obesity.”
TECHNOLOGY TO THE FORE
To meet the ever-increasing needs of home respiratory patients, manufacturers are taking steps to improve existing products as well as developing new technologies that make treatment easier, safer and more comfortable. “Clinical studies have shown that the more active a home oxygen patient is, the healthier he or she will be,” says Earl Yager, president of Chatsworth, Calif.-based Chad Therapeutics. “Thus, the goal for the home oxygen market should be to provide products that reduce costs while at the same time increase the quality of life for patients.”
According to Joe Priest, president and chief operating officer of Buffalo, N.Y.-based AirSep, advances in technology, such as AirSep's LifeStyle, a portable oxygen concentrator, are making a strong impact on the home oxygen market.
“Over the past two decades there have been advances in oxygen concentrators — great advances in reliability, sound reduction, and other positive aspects — but there has not been a real revolution from the market's perspective,” Priest says. “It has been sort of an evolution.”
Longmont, Colo.-based Sunrise Medical's DeVilbiss Respiratory Group is focused on using technology to help providers overcome the profitability pressures in home oxygen therapy and obstructive sleep apnea, says Rich Kocinski, senior vice president and general manager.
“HME providers' businesses are highly service-oriented, and finding ways to lower their operating costs is a significant challenge,” Kocinski says. “A good example is our eCompliance system that allows dealers to provide the information that they are being asked for, at a fraction of the cost of old technology systems. Better information and quicker exception reporting … is naturally less expensive.”
Sunrise also has a CPAP mask and conserver in development, both of which address patient and provider needs, according to Kocinski.
The market for sleep-disordered breathing is one of the most high-tech in the HME industry — and the fastest-growing. Sleep apnea affects more than 12 million Americans, reports the National Institutes of Health. However, a lack of awareness by the public and health professionals means a majority of those affected are undiagnosed and untreated, according to the American Sleep Apnea Association.
Currently, advances in the treatment of sleep apnea and sleep-disordered breathing are apparent in mask technology. Materials, engineering processes and the understanding of patient needs have all driven product innovation.
“There have been tremendous breakthroughs made in mask technology that are obviously improving patient comfort, which results in increased compliance,” ResMed's Richard says.
He adds that better quality masks are also more cost-effective for providers because they reduce the need for multiple callbacks.
Other technological advances for the treatment of sleep disorders include heated humidification and enhancements to positive pressure modality. Respironics, located in Murrysville, Pa., recently released a mask with features that address current needs. Its C-Flex mask modulates the application of pressure, relaxing air pressure during expiration and improving patient comfort and compliance.
The pediatric respiratory market also has seen improvements that are revolutionary, says Bob Fary, director of respiratory therapy for Apria Healthcare, Lake Forest, Calif., referring to the advent of small pressure support cable ventilators.
ENCOURAGING FUTURE
The respiratory business has long been the stronghold of the HME industry. However, legislative and reimbursement trends have affected its status. Where it once may have subsidized other product categories and enabled providers to be a “one-stop-shop,” that is no longer feasible. “Many companies have figured out a way to adjust, but [the Balanced Budget Act of 1997] may have created more specialists,” Priest says.
Some experts say reimbursement for respiratory services is at least adequate, but challenges do exist. Managed care and Medicare alike are slow to reimburse for new technology, and too often reimbursement decisions are not completely logical.
“[Payers] will pay for a CPAP machine, but they won't pay for a mask. Or, they will pay for a CPAP machine and a mask, but they won't pay for any replacements,” Richard says. “Right now the payers are the biggest obstacle in trying to help improve compliance.”
Overall, the future for respiratory care looks encouraging. Marc Rose, a partner with Paragon Ventures, a mergers and acquisitions firm in Newtown, Pa., says it is the leading route chosen by most people entering the HME industry.
“To be profitable in the respiratory business, you have to put procedures in place … and make sure you're in compliance,” he says. “If you can command the referrals and get the business, it's the way to go.”
Oxygen concentrators and CPAP/Bi-level devices will be the fastest-growing respiratory products for HME providers in 2003.
| Rank | Product | % of Providers |
|---|---|---|
| 1 | Oxygen Concentrators | 33.4 |
| 2 | CPAP/Bi-level Devices | 29.4 |
| 3 | Liquid Oxygen Systems | 5.6 |
| 4 | Portable Oxygen Systems | 4.8 |
| 5 | Oxygen Conserving Devices | 3.5 |
| 6 | In-home Fill Systems | 2.1 |
| 7 | Sleep Therapy Devices | 1.9 |
| 8 | Sleep Diagnostic Equipment | 1.6 |
| Source: HomeCare 2003 Forecast Survey | ||
