When we set out to find the top 10 HME niches to watch in 2008, our goal was to uncover the truth, the whole truth and nothing but the truth — which means these 10 product categories (listed in random order) were chosen for a variety of reasons.
Many were selected because of their growth potential: HME suppliers, industry experts and manufacturers are optimistic these categories will perform well in 2008, a year expected to be shaped by the implementation of competitive bidding’s first round, the start of the program’s second round, and the threat of reimbursement reductions.
In some cases, the categories are expected to grow because demand is expected to rise. In other cases, the categories are expected to grow because your peers have said they want to expand into a new field.
Other categories were deemed “worth watching” because major policy or funding changes are expected — changes that could impact the way you do business day to day, and the way your customers live their everyday lives.
In addition to our “Top 10,” we’ve included some quotes from industry insiders who tell you, in their own words, what they’ll be watching.
In-Home Sleep Testing
• CMS’ December proposed rule gives green light to home sleep testing; final rule due in March.
• National Sleep Foundation: 85 percent of sleep-disorder patients currently undiagnosed.
• Could open new revenue stream for HME suppliers.
Last month, the Centers for Medicaid & Medicare Services (CMS) issued the highly anticipated proposed rule that gave the green light to in-home sleep testing to diagnose obstructive sleep apnea (OSA). The public comment period is ongoing, and CMS is scheduled to issue the final rule in March.
The basic content of the proposed rule had been widely expected among industry insiders. But many physicians, researchers, statisticians, HME providers and CMS officials continue to debate the accuracy and reliability of in-home sleep testing. The topic has maintained a high profile in the respiratory care sector since 2004, when a physician at the University of California, San Diego, School of Medicine formally asked CMS to permit Medicare coverage of portable, multi-channel home sleep testing devices as an alternative to traditional sleep-lab tests (polysomnography).
If it elects to reimburse for in-home sleep testing devices, CMS could clear the way for an HME provider to operate as a one-stop shop for both diagnostic products and therapeutic products. A potentially huge market is at stake: Currently, 85 percent of all people with OSA are undiagnosed, according to the National Sleep Foundation. Making in-home sleep tests more accessible could lead to many more OSA patients being diagnosed and could lead to an increase in the number of people prescribed CPAPs.
The American Association for Homecare and the HME industry favor in-home testing reimbursement and recognition, as do many physicians and some medical associations, such as the American Academy of Otolaryngology-Head and Neck Surgery. But other medical organizations, such as the Sleep Research Society and the New England Polysomnographic Society, remain opposed.
Both proponents and opponents of in-home sleep testing cite published research studies that support their positions.
Polysomnography advocates worry that in-home studies use too few of what sleep specialists call “channels” — data inputs from sensors, such as airflow, heart rate, ventilation, ECG and oxygen saturation — to positively diagnose OSA.
Sleep labs use more than 10 channels; many in-home tests use only four. Proponents of in-home testing say four is enough.
CMS has made it clear in past statements that it sides with in-home testing skeptics, saying, “The evidence is not adequate to conclude that the use of unattended portable multi-channel sleep testing with a minimum of four monitored channels including ventilation or airflow, heart rate or ECG, and oxygen saturation is reasonable and necessary in the diagnosis of OSA, and these tests will remain noncovered for this purpose.”
But following a formal request from the American Academy of Otolaryngology-Head and Neck Surgery, CMS decided to reconsider its reimbursement policy for portable multi-channel in-home sleep testing devices. The American Academy of Sleep Medicine has also opposed in-home sleep testing in the past, but recently approved portable testing for adult patients.
One of the main arguments of proponents of in-home sleep testing is that the American OSA population is enormous and largely undiagnosed. The logistics of testing the potentially thousands of people who could benefit from CPAP therapy could overwhelm sleep labs. In-home testing proponents also contend that many patients suspected of suffering from OSA aren’t identified because they don’t want to sleep in a medical lab while being monitored by strangers… so they don’t bother to get tested at all.
All the more reason, some experts say, to allow testing to be done in patients’ homes.
“Polysomnography… is an expensive test that can only be done in a sleep center that accommodates overnight testing,” argues the American Academy of Otolaryngology-Head and Neck Surgery. “In addition to requiring an overnight stay, some patients may be limited by geographic accessibility to an appropriate sleep lab.”
And CMS is poised to officially agree.
• Power chair manufacturers have new testing requirements.
• First-month purchase option changes and rehab carveout are issues to watch.
• Manufacturers strive for product longevity.
After the tri-sided CMS tempest this segment has recently endured — new coverage determinations, new HCPCS codes and resulting allowables — power wheelchairs certainly seem to deserve a break. The truth, however, is that this segment is one to watch in 2008 because of unresolved issues.
New testing requirements for power mobility devices, including wheelchairs, go into effect Jan. 1. From that day forward, if a power chair (or POV) doesn’t meet the testing requirements, it won’t receive a HCPCS code. And if there is no code, says funding expert Claudia Amortegui of The Orion Group, “There will be no reimbursement by Medicare.” That could affect the power chairs you choose to supply.
“Keep in mind that this change is for all new code applications,” Amortegui said. “It does not affect products already coded unless a manufacturer makes any name changes, model number changes, etc. — any change at all to a previously coded item.”
Last year, the Congressional struggles over the State Children’s Health Insurance Program (SCHIP) led to the threatened elimination of the first-month purchase option for power chairs, which would have forced clients to rent their chairs for 13 months — regardless of their long-term need or the specialized state of their seating systems. Simultaneously, assistive technology advocates fought to get complex rehab equipment excluded from the upcoming competitive bidding program — a proposal called a “rehab carveout.” Those remain issues to track for the long-term.
On the technology front, power chair manufacturers have two main trends on their minds and in their products: growability and adjustability. Today’s “pediatric” power chairs are likely to feature seating systems that grow in width and depth, atop high-performance power bases with adult weight capacities. Adjustability, meanwhile, can be seen in everything from a new generation of programmable electronics, to modular components that conveniently fit multiple models to reduce supplier inventory, to colored shrouds that can change as often as a client’s mood.
• Portability continues to get a lot of attention.
• Overall demand for oxygen expected to continue to grow.
• Reimbursement threats still loom.
Whether it’s a debate over the merits of portable oxygen concentrators vs. at-home filling systems, which company makes an oxygen device with the highest clinical efficacy, or the proposed 36-month capped rental, there is always controversy in the oxygen therapy segment. And that’s before we see the full impact of competitive bidding on oxygen, one of the categories involved in the upcoming program.
“Oxygen is never going to go away,” says David Lewis, owner of Carolina Medical Equipment in Lexington, S.C. Although the oxygen segment of the industry has been recently hit with such challenges as reduced reimbursement rates, competitive bidding and a proposed capped rental at 36 months, Lewis, who has been in this industry for 12 years, says he likes supplying oxygen because “it is black and white on whether a client qualifies for it or not.”
Statistically, the future demand for oxygen seems quite similarly cut and dried, judging by recent medical studies. For instance: Currently the fourth-leading cause of death in the United States according to the American Lung Association, Chronic Obstructive Pulmonary Disease (COPD) is expected to become the third-leading cause by 2020. It affects at least 12 million Americans, but an additional 12 million may have COPD and be unaware of it. That’s a huge number of potential patients who could benefit from oxygen therapy and related services.
While manufacturers tout the ambulatory benefits of portable oxygen concentrators (POCs) and how several POCs are now approved for patients to use onboard commercial aircraft, the efficient concentration and delivery of oxygen continues to be an issue among therapists and industry experts.
“While everyone is excited about portable concentrators, they’re still hampered by high cost, relatively short battery life, and lack of a meaningful continuous mode, which limits their clinical attractiveness in the marketplace,” says Dr. Robert Hoover Jr., the chief medical officer at DeVilbiss Healthcare.
Still, POCs will be a category to watch closely, especially as manufacturers introduce products with improved clinical efficacy and a greater ability to keep clients saturated, particularly when they need it most, such as when exercising or engaging in other strenuous activities. In addition, POCs will continue to make headlines because of their ability to maximize independence and mobility for their users.
Kathy Sanchez, director of marketing at AirSep, says, “We predict that portable oxygen concentrators will be just plain ‘hot’ into 2008, as soaring fuel prices make non-delivery models for oxygen even more cost effective. Also, with greater choices and greater access to POCs by providers and patients, the heightened awareness of these compact, lightweight devices will even more significantly impact the home health-care marketplace.
“As there’s now no constraints on an oxygen patient’s mobility, tempered by their own medical limitations, more and more patients will be taking to the skies to meet their travel desires, and POCs… are the only oxygen products that the commercial airlines allow patients to bring on board for in-flight use.”
Lighter Automotive Access
• Suppliers can expand into this niche with a relatively modest investment.
• Manufacturers are eager to help with marketing materials, displays and fixtures.
• This is another baby boomer-inspired growth segment.
In much the same way that baby boomers will drive home accessibility because they want to age in place, seniors also will strengthen the lighter automotive access markets because they want every opportunity to maintain the independence a driver’s license affords.
“Lighter” automotive access — portable or permanent wheelchair/scooter ramps and lifts, turning automotive seating, wheelchair/scooter carriers and adaptive automotive equipment that helps compensate for range-of-motion loss or slower reflexes — is an expansion opportunity requiring a relatively low initial investment by the supplier. Manufacturers have been stepping up their marketing efforts, so ask about display racks, fixtures, hang tags, signage and literature that can help do some of the selling for you. In fact, if you sell wheelchairs and scooters, you can combine your existing demo models with an automotive ramp or lift and make your existing sales floor space serve double duty.
For rehab technology suppliers, lighter auto access items offer natural add-on sales opportunities. RTSs should ask, as part of their seating and mobility assessments, if wheelchairs need to be transported within motor vehicles.
And since auto access is a cash sales niche, you can add to your bottom line without adding documentation or reimbursement hassles.
• Increasing consumer awareness of sleep apnea will drive growth.
• Approval of in-home sleep testing could further expand sales.
• Look for smaller companies to enter the market.
If in-home sleep testing is approved for Medicare reimbursement, it will be good news for the sleep therapy/CPAP market… but the market is already sitting pretty. With an estimated 85 percent of all people with obstructive sleep apnea currently undiagnosed and awareness of sleep apnea rapidly increasing, the CPAP market has almost become synonymous with the term “growth.”
Due in part to major public relations campaigns by companies such as ResMed and Respironics, sleep apnea has become a widely recognized consumer term and a popular health-care topic in local and national media coverage. That coverage has clearly ramped up awareness. Adding to consumers’ motivation to get screened for sleep apnea: Research indicates correlations between sleep apnea and diabetes, obesity and other medical conditions. A recent check of the consumer-focused American Academy of Sleep Medicine Web site, www.sleepcenters.org, featured the headlines “Sleep Loss and Sleep Disorders Are Linked to Diabetes” and “Lack of Sleep Disrupts Brain’s Emotional Controls.”
“CPAP systems will also continue to grow as awareness of the consequences of untreated obstructive sleep apnea improves in the medical community,” says Dr. Robert Hoover Jr., chief medical officer at DeVilbiss Healthcare. “Growth will also spur innovation as smaller companies move into the market and compete with the larger, established players.”
Home & Environmental Accessibility
• Baby boomers will increasingly drive the market.
• Opportunities also abound for rehab suppliers to expand into this niche.
• Universal design partnerships are possible.
Think of home and environmental accessibility as a single term encompassing three different business opportunities.
First, there is basic accessibility that makes a current home more comfortable, safer and easier to navigate via relatively non-invasive renovations such as installing grab bars in bathrooms, ramps at entryways or thresholds, and lifts in stairways or on porches. This portion of home accessibility will be strongly driven by baby boomers with increasing strength and stamina issues, such as mild to moderate arthritis or hip/joint replacements, but few serious medical conditions.
For rehab technology suppliers who already go into their clients’ homes as part of seating and mobility evaluations, there is the natural opportunity to expand into more involved types of home and environmental accessibility that can include widening doorways to make room for wheelchairs, installing or building permanent ramps and elevators, removing doors and walls to create bathrooms and caregiving areas with more user-friendly workspace, and installing adjustable kitchen appliances and lowering countertops and sinks. For structural work, a supplier may elect to partner with a homebuilder or home renovation expert so referrals can be shared both ways.
And finally, universal design is also gaining momentum, thanks to wealthier baby boomers who elect to build ground-up dream houses that will age gracefully right along with them. The challenge here: to be part of the universal design team so HME needs, present and future, are incorporated from the very beginning. Universal design architects and builders frequently seek input from occupational or physical therapists who don’t necessarily know much about how HME works or fits into a home. Now is the time for HME suppliers to make themselves valued players on the team, while universal design is still an evolving idea.
• Capitalizes on the growing demand for oxygen therapy.
• Low price points enable customers to pay cash for these purchases.
• Clinicians and patients need accurate blood/oxygen readings to prove medical need for oxygen therapy.
Pulse oximeters are getting a boost because here’s a product category positioned between two strong trends in the HME industry: cash sales and a dramatic spike in COPD, leading to greater demand for oxygen therapy.
While oxygen products enable clients to breathe, pulse oximeters indicate whether the therapy that clients are receiving is enough. Pulse oximeters are the constant gauge of how clients are doing while relaxing or while exercising, when oxygen needs might be higher. It is critical that clients know what their blood/oxygen levels are — not only for the obvious reason that a lack of oxygen starves all the vital organs in the body, but also because failure to get accurate blood/oxygen readings can make it difficult or impossible for clinicians, patients and caregivers to prove a legitimate need for oxygen therapy and equipment.
“It’s not just business as usual for pulse oximetry anymore,” explains Masimo Corp.’s Dana Banks. “The ability to detect and capture true hypoxic events, in real time, is essential in the administration of overnight oxygen saturation sleep tests.
“Home-care providers use pulse oximeters to assess the oxygen saturation of a patient during overnight sleep tests in order to determine whether or not the patient meets established Medicare or private insurance guidelines for home oxygen therapy. False and inaccurate readings due to motion and low perfusion are keeping patients from getting the home oxygen therapy they need for the life-saving oxygen intervention they require at home. If your pulse oximetry is inferior, so are your oxygen saturation readings!”
But if that’s not a good enough reason to get excited about pulse oximeters, there’s more: Not only is pulse oximetry a critical component of oxygen therapy, but it’s also a cash sales item. Expect this category to grow alongside the oxygen market.Manual Wheelchairs
• CMS will redefine coverage criteria to determine who qualifies for a manual chair.
• New HCPCS codes will be created and assigned.
• New allowables are the final piece of the reform puzzle.
Remember the upheaval when CMS reformed power wheelchair and scooter policy? Well, brace yourself: Manual wheelchairs are next on the list.
Industry experts say 2008 is the year CMS will turn its attention to overhauling coverage criteria, HCPCS codes and allowables for all types of manual wheelchairs, from the standard models pushed by caregivers all the way to the minimalist, ultralightweight chairs self-propelled by very active users. There is some hope that what we’ve all learned from the power wheelchair experience, which stretched on for years, can be applied to the manual wheelchair segment. But we will have to wait and see.
• Popularity will grow as suppliers look for sales opportunities outside Medicare.
• Retail will increasingly become a focus instead of an afterthought for suppliers.
• Includes lifts, ramps, bath safety, home accessibility equipment.
While 2008 will go down in history as the year CMS finally implemented competitive bidding, it may also be remembered as the year that retail HME boomed. Expect suppliers to seek expansion opportunities that don’t involve CMS, reams of medical documentation or months of waiting for reimbursement.
“I think one category that is finally getting more attention is retail or cash sales,” says Joe Groden of JG Consulting. “With the climate as it exists now — lower fees, competitive bidding, etc. — the value of diversifying and being less dependent on third-party payments, this category becomes more important.”
Chad Williams, president of Harmar Mobility and Harmar Access, agrees. “Anything that sells for cash and the bigger-ticket items will be the focus due to the huge profit potential,” Williams predicts. “We are seeing a major surge in new dealer inquiries and current dealer demand since the reimbursement fiasco. (These dealers) are all looking for vehicle lifts, portable ramps, vertical platform lifts, stair lifts and even items such as bath lifts. These big-ticket, cash sales items are going to be the ones to watch in 2008.”
Once thought of by most suppliers as afterthought or impulse purchases, retail HME is increasingly being seen as a niche in its own right. More suppliers are actively promoting add-on sales and trying to anticipate which retail items their current customers could benefit from using — for instance, when a rehab provider builds a pediatric power chair with complex seating system, he might also ask the parent if a bath lift could be helpful.
Says Jack Evans of Global Media Marketing, “Retail itself is no longer an add-on category, but a dominant part of many businesses.”
• Demand for equipment will continue to grow as obesity statistics rise.
• Demand should rise in all bariatric product segments.
• Obesity is being correlated to a growing number of medical problems.
The list of medical conditions linked to obesity is staggering: sleep disorders, diabetes, cardiovascular disease, osteoarthritis, high blood pressure, certain cancers, stroke, asthma, depression. Even worse: The list of co-morbidities seems to keep growing.
The obesity rate for adults in the United States did not significantly change in 2005-2006, says the latest study from the Centers for Disease Control & Prevention (CDC). But the report says obesity rates for adults age 20 and older are still alarmingly high at 34 percent. Adults age 40 to 59 were most likely to be obese, the CDC stated.
A recent RAND Corp. study found the number of severely and morbidly obese Americans is growing faster than the number of slightly and moderately overweight adults — a significant fact, since severely and morbidly obese patients are most likely to need HME to safely and effectively carry out activities of daily living.
Manufacturers, meanwhile, are responding by increasing some “standard” weight capacities to 300 pounds or more, and by offering additional, specially designed bariatric or heavy-duty models of standing & walking aids, scooters, wheelchairs, beds, bath safety equipment, support surfaces, etc., to meet the unique needs of bariatric consumers. A bariatric scooter, for example, needs more than just an increased weight capacity; it also needs more legroom so its driver can maneuver onto and off of the vehicle. Battery range and motor capabilities must also be considered.
A June 2007 Harris Interactive study conducted by the National Consumers League reported that only 12 percent of American adults had ever been told they were obese by a health-care professional, such as a physician or nurse. As obesity education and awareness continue to improve, the bariatric HME segment may benefit as Americans and their caregivers come to better understand not only the health effects of obesity, but also the HME available to help obese patients stay safe and active.