For years, industry pundits and optimists have insisted that the
home medical equipment industry is primed to serve the needs of the
aging baby boomer population. Has that time come? Many in the HME
industry believe it has — and the respiratory and mobility
markets are leading the way.
The medical devices industry as a whole is expected to grow at a
rate of 9 percent annually, according to San Jose, Calif.-based
market research firm Frost & Sullivan. Frost's research shows
that the respiratory market is expected to grow at a rate of 8
percent per year from 2002 to 2005. In addition, baby boomers are
expected to lead to revenue growth for the wheelchair and scooter
markets in the coming years. Industry sources also report
off-the-chart growth for the sleep market at 18 to 20 percent per
year, and an increase in home oxygen of 13 percent.
Marc Rose, a partner with Paragon Ventures, a merger and
acquisitions firm in Newtown, Pa., says both markets are
profitable, but in different ways. “Despite reimbursement
cutbacks, the respiratory market has remained very profitable
because of a combination of demographics and the demand for
products and services,” he says.
Although the mobility market is sales-driven — in contrast
to the oxygen-heavy respiratory market that is reliant on rentals
— Rose says mobility is not only a profitable market, but
also is catching the attention of those in the acquisition
arena.
RESULTS-DRIVEN DEVELOPMENT
Technology is playing an important role in the optimism
expressed by providers and manufacturers alike. Whether
manufacturers are offering new, revolutionary products or making
positive changes to existing products, providers and consumers are
reaping the benefits.
“Manufacturers must continue to develop products that help
home care providers service their patient population in the most
cost-efficient way possible,” says Earl Yager, president of
Chad Therapeutics in Chatsworth, Calif. “However, the
emphasis should not be solely on cost-containment or reduction.
Product innovations should capitalize on new technologies available
and provide patients with devices that allow them to be as
ambulatory as possible.”
Competition also plays a role in innovation, according to Bob
Fary, director of respiratory therapy for Apria Healthcare in Lake
Forest, Calif.
“A lot of product development is simply an attempt by the
developers of the products to differentiate themselves from their
competitors,” he explains. “It is a competitive world
out there, and as products work their way towards becoming
commodities, manufacturers are coming up with new features and new
modes and so on in order to differentiate themselves.”
| Rank | Market | % of Providers |
|---|---|---|
| 1 | Respiratory | 47.9 |
| 2 | Mobility* | 27.2 |
| 3 | Beds/Mattresses/Pads | 7.0 |
| 4 | Sleep Disorders | 6.7 |
| 5 | Seating and Positioning | 5.3 |
| 6 | Bath Safety | 2.9 |
| 7 | Women's Health | 1.6 |
| 8 | Pediatrics | 1.3 |
| *Includes Manual Wheelchairs, Power Wheelchairs and Scooters |
||
| Source: HomeCare 2003 Forecast Survey |
||
A POSITIVE OUTLOOK
Even amid new threats of national competitive bidding and
ever-present reimbursement challenges for high-end rehabilitation
products, the HME industry is gaining momentum.
According to David T. Williams, director of government relations
for Elyria, Ohio-based Invacare, opportunities will be abundant
when HME providers stop being perceived as commodity brokers and
start being accepted as professionals in the continuum of health
care delivery. “There are a growing number of people who see
opportunity and know opportunity when they see it,” he
says.
Rose agrees. “If you have the right people, the right
quality control and the appropriate referral sources, then this
business can certainly be lucrative,” he says.
Rose adds that although the industry has seen many changes in
the last 15 years, opportunity exists for those who operate
efficient and streamlined businesses. “The people in this
business are incredibly resilient,” Rose explains. “The
industry has evolved and people have learned how to work with these
changes and change the way they do business.”
