The last several decades have shown monumental advances in home
oxygen therapy. Remember the original concentrators? One former
provider recalls a unit that weighed 170 pounds and took two
technicians to deliver. Imagine that!
Product designs have changed dramatically, too. Early versions
resembled console-style television sets, complete with faux wooden
Skip a few decades to today, and the market is focused on
portability, with lightweight versions that encourage mobility,
ease of use and sleek styling. Most notable, the move to a
non-delivery model continues to take hold, and experts say the
benefits both to patients and providers are unparalleled.
New Model Gains Interest, but There Are Challenges
"Home oxygen providers are moving in greater numbers to portable
oxygen concentrators to meet their patients' ambulatory needs, as
these products represent a more cost-effective solution by
eliminating the ever-rising costs associated with delivering
oxygen," says Robert K. Jacobson, vice president and general
manager of medical products, target="_blank">AirSep Corp.
"In the past year, due to growing sales and acceptance and
subsequent manufacturing efficiencies, these devices have shifted
from expensive, luxury items to affordable standard offerings under
the Medicare paradigm."
Adds Ron Richard, CEO of
target="_blank">SeQual Technologies, "Providers are embracing
non-delivery. They understand they cannot continue to do business
as usual. Even with the economic issues and financing and credit
crunches we are experiencing, providers are pushing ahead with
non-delivery systems and understanding they need to make changes
sooner than later."
Kimberly Snyder, Philips Respironics' U.S. marketing manager for home
respiratory, says, "Home care providers are closely looking at ways
to reduce the rising operating costs associated with oxygen
"For that reason, non-delivery technology is very attractive for
providers, since those systems can significantly eliminate
recurrent delivery costs. And, with rising fuel and salary costs,
delivery costs continue to increase," says Snyder.
New product development efforts also continue to refine
operationally efficient equipment that delivers freedom and
independence to patients and reduces total service costs for
"The number of new portable oxygen concentrators that have been
introduced to the market in the past 18 months is evidence that
manufacturers realize they need to deliver lower total cost
solution oxygen equipment options to secure any future market share
for themselves," says Scott Wilkinson, Inogen's senior vice
president of sales and marketing.
Kristin Mastin, director of marketing, DeVilbiss
Healthcare, agrees there is a growing acceptance of limited
delivery and non-delivery models.
"With the pending reimbursement cuts, reduction of operational
expenses is top priority for many providers," she adds.
According to Joe Lewarski, vice president, respiratory group,
Corp., the trend to move ambulatory patients to some form of
non-delivery oxygen technology is increasing, but there are still
"Some providers continue to operate their businesses based
primarily on traditional oxygen technologies, such as concentrators
and cylinders, and some are still using liquid, although many are
widely embracing the various non-delivery solutions," he says. "For
many companies, the challenges to changing their oxygen models are
based in the combination of several things."
Lewarski explains those challenges include:
- Overcoming "sunk" costs on existing technology and
infrastructure, even when it is fully depreciated and
- Confidence in cash flow and ability to fund the change;
- The common obstacle of simply changing behavior.
While providers understand they must embrace a more efficient
model, they continue to struggle as most are fully invested in a
delivery model, notes Wilkinson.
"Knowing that they need to change does not make change easy. If
you have built a business to efficiently deliver ice, it is
difficult to adopt the refrigerator, and this challenge faces home
care providers today," he explains. "I think the majority of
providers know that a non-delivery model is the only one that will
exist over the long term, but they struggle with changing their
current model to the future model."
Mastin acknowledges that up front capital costs can be
intimidating, but points out providers can look at "spreading that
cost over years and weighing it against the operational costs
associated with delivering cylinders."
According to AirSep's Jacobson, "the challenge for the HME
provider is deciding on the system that meets the patient's
clinical, size, weight and ambulation time requirements while
proving economically prudent [products] given today's reimbursement
"Although providers are now seeing more choices in the
non-deliverable portable arena, POCs have the undeniable advantage
over all other portable oxygen systems when factoring in travel,"
he continues. "The Federal Aviation Administration recognizes seven
POC models total that can be used onboard passenger aircraft.
"POC users enjoy unrestricted travel and love the liberating
feeling of coming and going as they please, including doing
unscheduled overnight stays. "They embrace the new concept of
managing power instead of contents."
Because of this, Jacobson says, HME providers, in addition to
benefitting economically, "have discovered the power of marketing
portable systems that command and attract attention."
Matching Equipment to Need
Regardless of innovations and convenience, however, it is
important to match the equipment to the individual oxygen patient's
Dan Easley, president and CEO of Inspired
Technologies, says providers need to understand patient needs,
become the patient's advocate and partner to help them improve
their quality of life.
"When you understand that, you are able to accomplish it as your
starting point, which is where alignment occurs," says Easley.
"The provider has a responsibility to be both their service
partner and their clinical advocate," he continues.
"You need an advocate to partner with the patient to help them
understand what is best for them. If you only look at it from an
equipment standpoint, you won't be able to have the vision to see
what the market opportunity is and be able to react to it. It has
to start with the patient."
The concept is taking hold.
"A number of providers are putting formal systems in place to
match equipment to the unique characteristics of each patient,"
informs Snyder. "For example, a patient who leaves home or travels
frequently may be an ideal candidate for a combination stationary
and portable oxygen system, which gives the patient the ability to
produce oxygen as needed while eliminating recurrent delivery costs
for the provider."
Wilkinson agrees, and adds that from a clinical perspective,
providers need to understand which products are appropriate for
"There isn't a single oxygen product that works for every
patient. Understanding conserving devices and the differences
between conserving devices is critical for providers. All of the
new non-delivery equipment employs conserving technology, and they
are all different," he says.
"Some work at night and some don't. Some have a fixed bolus and
some have a fixed minute volume. Some trigger slowly but deliver a
large bolus, while others trigger quickly and deliver a smaller
bolus. All of these devices work if they are put on the right
patient, and they will all fail if they are put on the wrong
DeVilbiss' Mastin encourages providers to consider individual
needs. "Each patient has different clinical requirements, so there
really isn't one solution that will work for everyone," she
Easley of Inspired Technologies stresses that the most critical
component is to determine what is going to offer the optimum
outcome for the patient, referral sources and payers.
"What device is compatible with the person's need for a
lightweight product that keeps them mobile? Ease of use is
important for the patient and data and measurements are equally
important," he says.
"Can you collect data on these patients that allow you to make
better decisions? If providers can segment the risk of
exacerbations of their patients and understand what the patient is
doing in the home, they can begin to understand the data and
segment the risk of patient based on the clinical data."
Easley advises providers to use this information to inform
physicians and payer sources to demonstrate which patients need
"Data and measurements give you an insight that allows you to
react with a service that can potentially impact the most costly
part of COPD, which is hospitalization. This is the opportunity for
the provider," he says.
Likewise, as patients get used to using the newer devices, they
have the potential to become more compliant.
"When products that match their lifestyle are easier and more
convenient to use and produce good results, patients are going to
want to use them. This will also result in a positive result in
health care costs," says SeQual's Richard.
Plenty of Challenges All Around
Although product innovation remains strong, HME providers face
continual decisions regarding the financial, clinical and service
aspects of their businesses.
"There are challenges on all fronts," says Mastin. "However, I
feel manufacturers are stepping up to ease this pain.
"Not only have we expanded the preventive maintenance schedules
for oxygen equipment but we are also offering competitive leasing
programs that can help soften the capital cost associated with
transitioning to a non-delivery model."
Although providers may be cautious about increasing expenses,
the credit crunch has not hit the health care sector as hard as it
has other businesses, Richard points out.
"Health care is still a good, solid investment," he says.
And Inogen's Wilkinson adds that providers' financial challenges
are not going away. They are "easy to understand, but not easy to
solve," he says.
"Reimbursement has been falling for the past 10-plus years, and
it's going to continue to fall with time. So, providers must adopt
lower total-cost oxygen therapy solutions," he reasons.
"From a service standpoint, the newer technologies allow for
more self-service by the patients. Some providers think that
self-service is poor service, but I don't agree. Sometimes the best
service occurs when you can do things yourself, and I think that is
true for oxygen therapy."
Richard advises providers to educate their patients on
"As you start to move to non-delivery, patients have to be more
aware of issues such as battery life and capability. Also, if there
is an alarm indicated, they need to know to call," he says. "If
they are not doing the traditional every-other-week delivery,
providers may consider going to appointment-style preventive
As reimbursement declines and operational costs continue to
increase, providers will continue to be faced with the need to
drive cost out of their business, agrees Lewarski.
"Efficiency and the elimination of non-value added processes are
central to this. Oxygen equipment is a very small part of the total
cost of providing home oxygen therapy, so the gains are captured in
improving operational efficiency and cash flow, which is typically
associated with streamlined and efficient billing and collection
processes," he says.
COPD patients are increasingly becoming connected through
support groups, online groups and consumer publications and appear
to be taking more control of their disease. As they become more
aware of their choices in oxygen equipment, HME providers must work
with them to ensure they receive not only what they want, but what
they need, manufacturers say.
"There is certainly a trend known as ‘the consumerism of
health care’ that is growing with time," says Wilkinson.
"Patients have more access to information regarding their disease
and treatment and equipment options through the Internet,
advertising and their physicians."
He notes many of the newer oxygen patients are baby boomers, a
group that is more demanding and affluent than their
"Many are beginning to ask for specific products by name after
doing their own research or seeing a product at a support group
meeting. Providers can help patients by explaining the pros and
cons of a product they request, and by ensuring the product is
appropriate for the patient through proper evaluation," Wilkinson
Richard cites a recent USA Today article that stated more
than 60 percent of people with a chronic disease get a second
opinion over the Internet. "People are looking for different
options, and the Internet plays a large role," he says.
He also notes there is a "big push to create awareness of the
benefits of using oxygen earlier as well as the use of a
combination of medication, exercise and oxygen."
According to Snyder, another focus area is on retail
opportunities. "Aging baby boomers, in particular, have greater
disposable income and are used to product range of choice. Oxygen
providers are increasingly focusing on retail opportunities in the
sale or rental of portable oxygen concentrators," she says.
"Patients are certainly much more savvy today," adds Jacobson.
"They are eagerly learning about the choices in technology and are
much more participatory in seeking out product offerings. As
expected, they research and compare different devices, and the POC
becomes an overwhelming first choice due to its oxygen-making
Size and weight, ambulation time, and sound level continue to be
the most important factors.
"Not surprisingly, as they consider important features of the
POC, the same considerations continue to surface. Understanding
these desires, HME providers are presented with opportunities.
Those willing to break the old model and offer the most desirable
and sought after equipment in today's market can satisfy the
patient's requirements while actively promoting and marketing their
products and services in an expansive way to gain greater market
share," he explains.
"An educated health care consumer is part of the future of
medicine. This has been evidenced by the pharmaceutical companies'
direct-to-patient advertising and its impact on drug choice and
utilization," says Lewarski.
"I think health care consumerism is going to change demand for
products, particularly as consumers become more responsible for
copays and deductibles. They are going to want choice and products
that meet their clinical and lifestyle needs. That stated, a little
information can create havoc if the patient is seeking choices that
are not clinically appropriate, so providers will benefit from good
communication and open discussions about products and choices."
Although it is not always easy to make changes, there are
rewards for those who are focused on innovation.
"This is an opportunity for providers, but it is also a
challenge. It is a growth market, and in any growth market you are
going to fight change. It is the innovative folks that will
emerge," says Easley. "Innovation comes from realizing the problem,
thinking of a new way to do it and adopting it. It is incredibly
fun. There is no one besides a home care provider who is capable of
delivering these types of services to this patient population."
He stresses that the most important thing for providers is to
create that vision of how they are going to grow. "Yes, the
operational difficulties will force you to think about how to
better utilize your resources. How do you take advantage and
improve your share of the patient demographic that is coming?
Ultimately, it is about a better patient story," he says.
"Providers are very capable of attacking and addressing
operational issues, and they have proven this year after year. What
they need to get clear on is what their growth strategy is. The
challenge is to visualize the growth and not get hung up on the