The home infusion therapy market continues to grow. For many
patients, the convenience of having therapy outside of an acute
care setting is preferable. And for some payers, the cost savings
are similarly attractive. As the market matures and more therapies
are proven to be safe and effective in the home setting,
opportunities will continue to increase for providers.
“Home infusion therapy is currently an $11 billion market
with projected growth to approach $16 billion by 2012,” says
Jonathan Sadock, managing partner and CEO of Paragon Ventures.
According to Sadock, there are many factors contributing to this
growth, including cost savings to the health care system, a
changing reimbursement environment, an increase in new intravenous
drugs and biologic products and impending health care reform.
“Compared to the costs of treatment in a hospital, home
infusion therapy represents significant savings in excess of 80
percent. Administering these medications at home generally costs
$150 to $200 a day, far below the cost of a typical inpatient
hospital stay, which is $1, 500 to $2,500 each day,” explains
Sadock. “Home infusion therapy also eliminates the risk that
patients will be exposed to infections caused by hospital bacteria
that can invade through IV lines and catheters.”
Erik Graaf, director of marketing for B. Braun Medical, says
that while the market continues to grow, it has slowed somewhat due
to the economy as well as market consolidation and reimbursement
challenges. However, he stresses that the baby boomer population
and an overall interest in quality of life for patients continue to
make a positive impact.
“One of the biggest struggles for exponential growth is
the way the reimbursement is currently structured in this country.
A lot of therapies that are delivered by home infusion companies
are not reimbursed by Medicare,” points out Graaf.
“From a business perspective, it doesn't make a lot of sense
because there are a number of benefits from a payer standpoint,
including quality-of-life issues and reduction in overall
costs.”
Sadock adds that growing numbers of patients needing intravenous
medications are getting their treatments at home, but “the
current gap in Medicare coverage is making it harder for older and
sicker patients to swap hospital stays for home care. There are a
number of legislative issues on the horizon that not only support
the home infusion sector but can substantially propel its
growth,” he says.
“If passed, they would cover the infusion-related
professional services, supplies and equipment under Medicare Part
B, while continuing coverage of the infusion drugs under Medicare
Part D, the prescription drug benefit.”
If enacted, this legislation (see sidebar) would provide
Medicare beneficiaries with the same access to home infusion
therapies to which most privately insured and Medicare Advantage
patients have had access.
“Currently, home infusion providers generate the majority
of their revenue from third-party insurers and other payers,”
explains Sadock. “For the provider, this legislation
represents the opportunity for accretive revenues. Leveraging the
existing pharmacy and infrastructure, these revenues will also
improve operating margins and increasing profitability.”
Market Opportunities
The home infusion industry is making strides in product
development in terms of pharmaceutical products and home infusion
therapy delivery devices and supplies.
“Hundreds of new intravenous drugs and biologic products
have come on the market in recent years to treat maladies such as
infections, cancer and chronic diseases,” says Sadock.
“Many of these medications require clinical care that can be
administered more effectively and at lower cost in the patient's
home.”
Likewise, home infusion therapy pumps are getting
“smarter.”
Graaf says the trend is to create products that have a strong
focus on safety and ease of use. Specifically, products are
designed to increase dosing accuracy, decrease usage errors and
promote efficiencies.
One of the obvious benefits of home infusion therapy is to keep
patients out of the hospital, which is why safety, particularly the
prevention of infection, is critical.
Randy Ealy, RPh, BCNSP, vice president of clinical services and
corporate compliance for Barnes Healthcare Services, says he has
seen an increased use of products that are applied directly to the
skin to reduce the potential of infection.
“You don't want secondary infections in terms of patient
care,” he says. “Additionally, when you have a patient,
you want to hang on to them. If they are admitted to the hospital,
it interrupts the flow of service.”
Ealy adds that in terms of product acquisition, there are
favorable options.
“The distributors have done a good job in seeking out a
variety of manufacturers for some of the ancillary products, such
as tubing and dressings,” he says. “There is a fairly
respectable effort from distributors in terms of keeping costs in
line so we can continue to maintain a high level of service with
cost-effective products that do what they are designed to do
without a reduction in quality.”
Ealy notes, however, there are challenges in the market.
“There are some pressures in the home infusion industry
where we see reduced reimbursements in the face of rising costs,
and that certainly lowers margins and forces providers to be
incredibly efficient,” he says.
For HME providers with a pharmacy component, home infusion could
provide an attractive business opportunity.
“Home infusion therapy is a growth opportunity. There are
both synergies and differences for the HME provider as many
back-office functions are similar and can be adapted and scaled to
existing systems,” explains Sadock. “There are also
hurdles to enter the market. These include the need to establish a
pharmacy along with regulatory, licensure and specialized clinical
resources such as pharmacists and nursing staff.
"Before expanding into the home infusion market, the HME
provider needs to fully understand the costs and market
opportunities in their local service areas. One way to quickly
expand into the home infusion therapy business is through
acquisition."
According to Ealy, expanding into the home infusion market may
offer an opportunity for HME providers to offset the losses the
industry faces due to competitive bidding and other reimbursement
reductions.
"Opportunities exist for HME providers who are involved in home
infusion if they put a stronger emphasis on and increase their home
infusion business," he says. "That is what we are doing at Barnes
by adding staff to sell it and adding expertise where we can to
expand our market and offset some of the HME losses."
Ealy explains that many payer sources are looking for providers
that can cover a broad geographic area, which is good for regional
providers. But this is not necessarily a negative trend for
independent providers. "We are seeing a lot of smaller pharmacies
working together to create service networks to be competitive," he
adds.
When looking to enter into the home infusion market or to expand
service capabilities, Ealy offers the following advice on how to do
this efficiently and effectively:
Do a market analysis that includes examining your hospital base
and home nursing services to determine the potential for
referrals.
Educate referral sources, including physicians, on the benefits
of home infusion in terms of cost and patient convenience.
Create a highly efficient model that quickly moves referrals
through process.
Remember that to have revenue growth, you have to have volume
growth.
Prepare your pharmacy to adapt to that volume.
Conduct an efficiency study that can enable you to map out
procedures.
Look at personnel and determine their capabilities and their
appropriate role in the company.
Ensure employees are productive by giving them the tools they
need.
Expand your service area and research ways to deliver products
effectively at the lowest cost, including the use of geographic
zoning, national delivery services, such as UPS and FedEx, and the
use of local couriers.
Educate patients and get their buy-in on new types of delivery
methods.
Reduce costs of supplies by getting distributors and suppliers
to compete for your business.
Do not cut corners on patient care even while searching for
less-costly products.
Read the "Cover Equipment,
Too, Says NHIA" sidebar for information on the
inadequacy of the "Medicare Home Infusion Therapy Act of
2009."
Experts Interviewed
- Randy Ealy, R.Ph., BCNSP, vice president of
clinical services and corporate compliance, Barnes Healthcare
Services, Valdosta, Ga. - Erik Graaf, director of marketing, B. Braun
Medical, Bethlehem, Pa. - Jonathan Sadock, managing partner and CEO,
Paragon Ventures, Philadelphia.
Cover Equipment, Too, Says NHIA
Introduced earlier this year in both the House (H.R. 574) and
the Senate (S. 254), the "Medicare Home Infusion Therapy Coverage
Act of 2009" would close a gap under which the medications used in
home infusions are covered, but not the services, supplies or
equipment needed to deliver the therapy.
When CMS opted to cover the therapy under the Part D benefit in
a way that did not include the equipment, the home infusion
community warned its decision would limit and, in many cases deny,
access to home infusion for Medicare patients.
"The situation is now reality," according to the National Home
Infusion Association. "The result is that Medicare beneficiaries
are being forced back into hospitals and nursing homes for
treatment at greater cost to the program and significant
inconvenience to the patients and their families."
At a health care reform hearing in June, Rep. Eliot Engel,
D-N.Y., who introduced H.R. 574 in the House, testified that the
proposed legislation "addresses an anomaly in the Medicare program
that forces patients into hospitals and nursing homes to receive
their multi-week infusion therapy when the same care could be
delivered safely in the patient's home.
"For decades, private health insurance has covered home infusion
therapy," Engel told the hearing panel. "It is used extensively by
Medicare Advantage plans. Medicaid programs cover it. But Medicare
fee-for-service stands alone in the failure to cover the services,
equipment and supplies needed for home infusion therapy."
According to NHIA President Russell Bodoff, "If health care
reform is to be successful, our country can no longer support the
Medicare practice of utilizing limited health care dollars to keep
patients in hospitals and nursing homes when it is not medically
needed and when it is contrary to the physician's advice and
patient's preference."
