Oxygen

Change Is in the Air

Oxygen providers continue move to non-delivery models to reduce costs, better patient outcomes.

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
exteriors.

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
therapy.

"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
providers.

"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,
Invacare
Corp.
, the trend to move ambulatory patients to some form of
non-delivery oxygen technology is increasing, but there are still
hesitations.

"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
    inefficient;
  • Confidence in cash flow and ability to fund the change;
    and
  • 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
structure.



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