As with most segments of HME today, there is much uncertainty surrounding the future of the diabetes market with competitive bidding around the corner and a push for less ex-pensive products.
Although providers will have to wait to see how this affects the market, they can be certain of one thing: Diabetes is growing at an alarming rate, and the need for diabetic supplies will only increase in the coming years.
The American Diabetes Association estimates that in the United States, 24 million people, or 8 percent of the population, have diabetes.
Every day, approximately 4,110 people are diagnosed with diabetes, the association says, warning that if present trends continue, one in three Americans born in 2000 will develop diabetes in their lifetime. The vast majority of these cases are type 2 diabetes, which is attributed to lifestyle. “Unfortunately, the diabetes market is growing because of the population's obesity, lack of exercise, eating habits and poor compliance,” says Frank Suess, president of West Palm Beach, Fla.-based Pharma Supply. “It's positive for the business, but not the population.”
And even though the medical community knows that proper testing and control of blood sugar can help patients prevent serious complications such as kidney disease or amputations, getting patients to comply with testing and treatment continues to be a challenge, says Cathy Pereira, manager of national accounts and government relations for Ft. Lauderdale, Fla.-based Home Diagnostics.
“Since diabetes develops over time, people don't feel the impact of the disease until complications such as blindness begin to occur, and oftentimes these complications cannot be reversed,” she says.
The good news is that home medical equipment providers can play an important role in helping to prevent these complications by educating patients on the disease and providing supplies that will help in- crease compliance.
“There's a big emphasis on preventative medicine,” says Edward Letko, managing director of New York-based US Diagnostics. “That's why I see this market growing, and I have a very hopeful future for this market.”
Easy Does It
For patients with diabetes, many advancements are making the disease more manageable and increasing patient compliance. For instance, blood glucose meters have become more reliable, faster, smaller, require less blood and are easier to use, says Pereira.
In fact, one of the biggest needs for diabetic patients are products that are easy to use and read, providers and manufacturers say.
“Manufacturers are building products that are more and more feature-rich, but are harder to understand at the patient level,” says Carolyn Hughes, director of sales and marketing for Scotts Valley, Calif.-based Palco Labs. “The majority of newly diagnosed diabetes patients are senior citizens. These people have trouble reading and understanding technically convoluted instructions that use terms they were never familiar with in the first place.”
Because many patients with diabetes have vision problems, large, easy-to-read display screens on glucometers are in high demand. “The [most frequent] request we've always gotten is for a larger display size,” says Raul Lopez, director of operations for Miami Lakes, Fla.-based provider BayShore Dura Medical. This is not only limited to a screen with giant letters but it could also be a meter that gives a nice-sized printout, he notes.
Talking meters that have come out in recent years also help those with poor vision by announcing the results, Suess says. In addition, the meters prompt patients on how to use the device, simplifying the process for them.
No-coding technology in blood glucose meters is another new innovation that simplifies the testing process for the patient by automatically detecting what type of testing strip is being used, Pereira says.
For people that require more intensive management, primarily those with type 1 diabetes, integrated therapies help patients more easily monitor and control their blood sugar, says Claudia Graham, vice president of global therapy access for Medtronic, Northridge, Calif.
One recent development is continuous glucose sensing combined with insulin pumps, she notes. These devices allow patients to monitor their blood sugar levels all day so they can see what happens between blood sticks, then adjust insulin levels as necessary. For example, the system will show the patient what their blood sugar levels were while they were asleep, something they could not otherwise test.
Less Pain, More Gain
Manufacturers also are spending more time and resources developing products that reduce pain for patients, says Palco's Hughes.
While most meters on the market today require smaller amounts of blood for testing — which makes it less painful to get the sample — the lancing devices themselves are being refined to minimize discomfort.
For lancing devices, the major factors that affect pain are the velocity and angle of the needle, how deep the needle goes into the skin and how clean the edges of the needle are, Hughes explains. If, for example, the needle is pitted, it's going to hurt more and create bruises, she says.
Although strides have been made in this area in recent years, it is important for providers to choose quality products because some of the lower-quality lancets and lancing devices on the market can inflict more pain than necessary, she says.
Alternate site testing is another new trend in lancing devices that reduces discomfort.
Because most patients draw blood at the fingertip for glucose testing, fingers can get sore when they have to test on a regular basis, Hughes says. Also, some patients have dexterity or vision issues that make finger testing difficult.
To solve this problem, some new lancing devices allow patients to test other parts of the body such as the forearms, base of the palm, base of the thumb and thighs. In order for these devices to be effective, they must allow patients to draw enough blood for testing, and they need to give a consistent result, she says.
Because CMS' has not made clear what its long-term intentions are for diabetic supplies, manufacturers and providers are closely watching the competitive bidding situation to see how it might affect the market.
Bids have already been submitted for the first round of Medicare DMEPOS competitive bidding, which affects only certain mail-order diabetic testing supplies. For the second round of the bidding program, diabetic supplies were left off of the product list altogether, and CMS has indicated that it intends to expand the mail-order bid nationally at a later date.
CMS is encouraging Medicare beneficiaries in the first 10 MSAs to purchase diabetic testing supplies though mail order, but patients are free to continue buying these products in-store, to be reimbursed at the normal rates. But if CMS reimburses mail order at less, it may be cheaper for patients to buy that way because they'll save money on their co-pays, according to Mary Ellen Conway, president of Capital Healthcare Group, Bethesda, Md.
She also notes that Medicare patients with other insurance probably will continue to buy supplies at the local store because it won't cost them more.
“Anybody who has a secondary doesn't care [about saving money through mail order], because it's more convenient for them to go down the street,” Conway notes. “I don't think people are terribly worried because on a local level, people still have to go to the pharmacy to get insulin, so they'll still pick up their supplies when they are there. I think we'll have to see how it plays out.”
Pharma Supply's Suess also says that for home care providers who sell diabetic products in-store, the effects of competitive bidding are likely to be minimal.
“If a patient is used to going to a local DME store to get diabetic supplies, they probably do that because they have a good relationship with the store. Some of the elderly just want to get out,” Suess says. “I don't see them losing patients to a mail-order company if they didn't lose them already.”
For the first round of competitive bidding, set to begin in July in 10 MSAs, CMS has limited the bidding to mail-order business for certain testing products: blood glucose/reagent strips, calibrator solution/chips, lancet devices, lancets and batteries. CMS estimates that 60 percent of these diabetic supplies already are delivered through mail order.
For those that provide these supplies nationally on a mail-order basis, Suess says they also don't have much to lose, unless they're specialized in only one of those MSAs and don't advertise in other cities. Based on conversations with providers, he estimates those that fail to win a bid will lose, on average, only 7 to 8 percent of mail-order patients.
Lopez also isn't concerned about how competitive bidding will affect his company's diabetic supply business. In fact, while many providers shied away from mail-order bids during the first round, he's looking at competitive bidding as an opportunity to enter new markets outside of Miami.
“We think we can offer good products at good pricing and quick delivery,” he says. “If we're awarded one of the bids, it could be an interesting acquisition,” he says. (CMS has said it will announce winners for the first round of competitive bidding in March.)
One of the major challenges for providers that do win the mail-order bids is that reimbursements are expected to be much lower, Suess notes. “If you figure in overhead and shipping costs, combined with low margins, there's not a lot left, and you have to do it with volume,” he explains. “That's why a lot of small mail-order companies sold out already.”
Another major challenge is that lower reimbursements may increase the need for less expensive (possibly inferior) products, Letko says. Over the past year he says he has already seen new entrants coming into the market and selling significantly below traditional prices.
“I see that when people are selling [test] strips below $10, there's no way they can meet the standards that other companies do,” he says. “I personally think that people who just sell on price will not be around long. What they're doing is taking shortcuts.”
Educating patients and the community on how to treat this disease is key to building trust with referral sources and patients, sources say.
“Education is one of the few things that's a little bit lacking,” says Suess, adding that many mail-order companies already have diabetes educators in place to answer patients' questions.
Suess recommends that providers partner with diabetes educators to put together educational programs for patients. “Your referral sources will look at that in a positive way, and you'll get more referrals out of that,” he says.
Lopez agrees that education can pay off both for patients and providers. He suggests working with retirement communities, which usually offer activities like open mike night, bingo night, health seminars and other opportunities to educate patients on diabetes and make them aware of company services.
Another idea for providers is to team up for presentations with their local chapter of a diabetic association or related organization in the community, Lopez says. Providers can ask for a town-hall meeting where members of the association can give feedback about what they like or don't like about specific products.
Neither should providers neglect marketing this category to referral sources such as physicians' offices, hospitals and social workers, Lopez says.
“It's important to be in their face and to let them know who you are and what products you carry,” he says.
But with referral sources, communication runs both ways, notes Lopez, who says it is crucial that providers listen to feedback about the products they carry. Since patients typically have regular contact with referral sources, nurses or social workers may be the first to hear about a problem with a particular product.
“If we get complaints from one facility saying, ‘We find that our patients are having a difficult time using brand XYZ because they claim the monitor is too small,’ then we look for a different product with a bigger monitor, bigger letters or a bigger display,” he says.
Even though diabetic products have a low profit margin, providing quality products and education ultimately can help HMEs build business in other areas, Letko says.
“This will lead to a loyal customer. So when they're sick and need other products, whether it's a wheelchair or bed or any other supply, they will come to that dealer,” he says. “The patient is going to be more inclined to go to somebody who is working with them overall [instead of] just on profit volume.”
According to a study released in January by the American Diabetes Association, the prevalence of diabetes continues to grow, with the number of people in the U.S. with diagnosed diabetes now at 17.5 million. Another 6.5 million are unaware they have the disease.
According to the association, diabetes has become one of the leading causes of death in the U.S., and is associated with increased risk for a number of serious, sometimes life-threatening complications, including heart disease and stroke, high blood pressure, blindness, kidney disease, nervous system damage, amputations, dental disease and others. Diabetes is a chronic disease that has no cure.
From the report, called “Economic Costs of Diabetes in the U.S. in 2007”:
- Diabetes cost the U.S. $174 billion in 2007 in both direct care and reduced productivity.
- Direct medical expenditures to treat diabetes totaled $116 billion: $27 billion for direct treatment, $58 billion to treat diabetes-related chronic complications and $31 billion in excess general medical costs. Indirect costs from absenteeism, reduced productivity, permanent disability and mortality due to diabetes totaled $58 billion.
- Half of the cost of treating diabetes comes from inpatient care, with other expenses attributed to medication and supplies (12 percent), retail prescriptions to treat complications (11 percent) and physician office visits (9 percent).
- Diabetes increases hospital stays for other conditions by almost 50 percent.
- People with diagnosed diabetes have average medical expenditures that are 2.3 times higher than what they would be in the absence of the disease.
- For categories analyzed in the report, $1 out of every $5 health care dollars in the U.S. is spent caring for someone with diagnosed diabetes, while $1 in $10 is attributed to diabetes.
- 56 percent of all health care expenditures attributed to diabetes are for health resources used by the population age 65 and older.
- Between 60 and 70 percent of people with diabetes have a form of neuropathy, such as sensory impairment or pain in the foot or hands, and about 82,000 lower-limb amputations are performed each year on people with diabetes.
- 73 percent of diabetes-attributed deaths occur among people age 70 and older, with another 7 percent occurring among people age 65-69.
s when the body's immune system destroys pancreatic beta cells, the only cells in the body that make the hormone insulin that regulates blood glucose. To survive, people with type 1 diabetes must have insulin delivered by injection or a pump. This form of diabetes usually strikes children and young adults, although disease onset can occur at any age. Type 1 diabetes accounts for 5% to 10% of all diagnosed cases of diabetes.
Type 2 diabetes accounts for about 90% to 95% of all diagnosed cases of diabetes. It usually begins as insulin resistance, a disorder in which the cells do not use insulin properly. As the need for insulin rises, the pancreas gradually loses its ability to produce it. Type 2 diabetes is associated with older age, obesity, family history of diabetes, history of gestational diabetes, impaired glucose metabolism, physical inactivity and race/ethnicity.
- In 2005, 1.5 million new cases of diabetes were diagnosed in people age 20 years or older
- Diabetes is the fifth-deadliest disease in the United States.
- Since 1987 the death rate due to diabetes has increased by 45 percent, while the death rates due to heart disease, stroke, and cancer have declined.
- While an estimated 14.6 million have been diagnosed with diabetes, 6.2 million people are not aware that they have the disease.
- At least 54 million people have prediabetes.
- The total annual economic cost of diabetes in 2002 was estimated to be $132 billion. Direct medical expenditures totaled $92 billion and comprised $23.2 billion for diabetes care, $24.6 billion for chronic diabetes-related complications, and $44.1 billion for excess prevalence of general medical conditions. Indirect costs resulting from lost workdays, restricted activity days, permanent disability and mortality due to diabetes totaled $40.8 billion.
- The per capita annual costs of health care for people with diabetes rose from $10,071 in 1997 to $13,243 in 2002, an increase of more than 30 percent. In contrast, health care costs for people without diabetes amounted to $2,560 in 2002.
- One out of every 10 health care dollars is spent on diabetes and its complications.
- Heart disease and stroke account for about 65% of deaths in people with diabetes.
- Adults with diabetes have heart disease death rates about 2 to 4 times higher than adults without diabetes.
- About 73% of adults with diabetes have blood pressure greater than or equal to 130/80 millimeters of mercury (mm Hg) or use prescription medications for hypertension.
- Diabetic retinopathy causes 12,000 to 24,000 new cases of blindness each year making diabetes the leading cause of new cases of blindness in adults 20-74 years of age.
- Diabetes is the leading cause of kidney failure, accounting for 44% of new cases in 2002.
- About 60% to 70% of people with diabetes have mild to severe forms of nervous system damage. The results of such damage include impaired sensation or pain in the feet or hands, slowed digestion of food in the stomach, carpal tunnel syndrome, and other nerve problems.
- More than 60% of nontraumatic lower-limb amputations occur in people with diabetes.
Source: American Diabetes Association
Mary Ellen Conway, president, Capital Healthcare Group, Bethesda, Md.; Claudia Graham, vice president of global therapy access, Medtronic, Northridge, Calif.; Carolyn Hughes, director of sales and marketing, Palco Labs, Scotts Valley, Calif.; Edward Letko, managing director, US Diagnostics, New York; Raul Lopez, director of operations, BayShore Dura Medical, Miami Lakes, Fla.; Cathy Pereira, manager of national accounts and government relations, Home Diagnostics, Ft. Lauderdale, Fla.; Frank Suess, president, Pharma Supply, West Palm Beach, Fla.
