Assessing the Wound Care Market
Yes, there are opportunities in wound care, but what's the market size and what are the revenue sources?
- By David Kopf
- Dec 18, 2019
As HME provider businesses hunt for avenues into new categories in order to expand their revenue and market reach, wound care keeps popping up as a key opportunity. That’s not surprising given the scale of that opportunity.
It’s substantial. The global wound care and wound management market will expand at a compound annual growth rate of 4.3 percent from $33.9 billion in 2017 to $45.5 billion by 2024, according to research from data and analytics firm GlobalData.
There are multiple patient groups that need wound care services; a varied range of referral partners; revenues sources that go beyond the Medicare model; and some core HME product offerings that providers should be able to knowledgeably support. With the right level of commitment, a provider can establish itself as an expert resource for wound care products and supplies in its healthcare marketplace.
In terms of getting paid, Medicare remains an important funding source for wound care, but it isn’t the only one. Private payer insurance, such as Blue Cross Blue Shield and others, is another solid source of funding. That said, it is important to keep in mind that most carriers follow Medicare guidelines when it comes to wound care reimbursement.
Of course, another option is retail sales of some wound care items, as well. There are patients who will purchase additional dressings and other wound care supplies out of pocket because either Medicare or their private carrier will not fund everything they need. Also, some patients might want more than what is covered just for good measure.
But whether the funding is public, private or cash, it is also important for a provider to consider how it approaches different segments of the wound care and which products it offers.
For example, if a provider wants to provide wound care items to hospice facilities, many of them buy wound care products in bulk. The provider needs to ask itself if it can trade in a high enough volume and have a purchasing model that will ensure that volume is profitable. Moreover, can that provider stand up to the competition? In those scenarios, large supply companies dealing in higher volume and with access to lower pricing can come in and take over all the good accounts.
Other high-volume competitors would include Internet sales and chain drug stores. This is especially true as reimbursement and price points have come down. It’s all about finding the right economy of scale.
Gauging the true profitability of a segment of a provider’s wound care business and projecting whether or not it will be sustainable over the long haul is a business planning skill providers must develop.
Moreover, understanding the nuances in dealing with individual consumers is critical For example, the quality and variety of dressings has evolved in recent years, which means the provider needs to have lots of stock of a wide variety of offerings. And with payers wanting to pay for lower price options, while clinicians want to obtain higher end items, providers must source products that will suit both priorities can be a tough find.
For smaller providers, this can be a tough nut to crack, especially in retail scenarios. Those providers will have customers wanting to obtain just a few items, but if they’re going to be getting them on a regular basis, then they’re going to be price shopping. But with the right product knowledge, providers can identify products that will help them buttress their revenues in the face of Medicare and other cuts. They just have to be selective.
But if providers can find the right mix, then they can tap into the “caretailing” scenario of mixing funded items with retail upgrade. With limited items being funded and the sense of urgency related to wound care, many patients are looking to extend their purchase. This is important because providers can set up a base line of value-added products that patients frequently buy or order and then heavily promote those items.
David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.