Bold strategies help O2 providers breathe easier
Respiratory providers intent on being successful in the oxygen market must be assertive when pursuing business opportunities in today's environment, which can mean making tough choices, taking new risks, and changing conventional methods. With a heavy load of regulatory and reimbursement challenges blocking the path to prosperity, providers need to formulate some bold strategies to circumvent these barriers, oxygen manufacturers say.
One approach gaining favor in the marketplace, vendors say, is incorporating all modalities of oxygen therapy instead of subscribing to just one or two.
"Our experience has been that providers prefer to subscribe to a single model, though we have also learned that many providers have either refined that model or developed a different model to address their business and patient needs," said Jay Vreeland, director of marketing for Philips Respironics' North American home respiratory care and home health solutions business units in Murrysville, Pa. "Oxygen-generating models are becoming increasing popular. Because delivery and other operating costs continue to increase, finding a model to help address those concerns is definitely in the front of many providers' minds."
Victoria Marquard-Schultz, general counsel and regulatory director for Westlake, Ohio-based Applied Home Healthcare Equipment, recommends offering all modalities.
"It widens the range of solutions to the patient and patient caregivers are concerned about response time and patient care quality," she said. "This means offering concentrators, high pressure and liquid oxygen."
Offering the full range of oxygen modalities also comes with the responsibility of determining the right product for a patient, cautions Dan Bunting, president and CEO of Adel, Iowa-based evo Medical Solutions.
"You have to be able to talk to patients as consumers, show them the options they have, but making sure you walk away if they choose something non-profitable or non-therapeutic," he said.
Seeking new revenue streams is essential for boosting the respiratory business, but so is belt tightening, and manufacturers agree that oxygen delivery is one area that can be sacrificed.
"The most successful provider financially will be the one that can get patients to pick up their tanks from the provider location," Bunting said. "This is especially profitable if the provider fills their own tanks. If this model is not feasible for whatever reason, then the most logical plan will be to use home-fill and smart-dose technologies. This would ensure non-delivery and extended tank time for patients."
John Lescher, director of Elyria, Ohio-based Invacare's respiratory business unit, believes non-delivery is the best solution for the provider, referral source and end-user.
"It is efficient and cost-effective for providers, eliminating the high cost of delivery," he said. "Non-delivery also gives patients the freedom they are looking for in a respiratory modality."
The POC option
Portable oxygen concentrators have gained a lot of acceptance in the respiratory marketplace, yet the high cost has many providers skittish about adding it to their portfolios. However, with savvy marketing and judicious deployment of the devices, POCs can be a workable solution for most providers, manufacturers say.
"There is very high consumer demand for POC products," Vreeland said. "Patients love the freedom and flexibility POCs provide for their lifestyle. Even so, because they are a higher-priced technology, many providers still have not made them a larger part of their business. Others have grown their businesses substantially by marketing POCs to the consumer population. Additionally, it is often the adult child of a patient who wants the parent to be able to go to the beach with the family or go on vacation with the grandchildren, so these consumers are often willing to pay cash for a POC."
Marquard-Schultz also acknowledges that higher investment costs have limited the number of POCs providers are able to acquire, but says they also need to look at alternative methods of provision, such as POC rentals, to help offset those costs.
POC repair costs are also a concern with some providers, but Lescher says Invacare is focused on keeping those costs to a minimum.
"Obviously the more time spent on the front end to ensure a quality product is being delivered in the market, the less need for repair after launch," he said. "That said, we understand what the products go through in the marketplace and that there may be repair needs at some point. We have a center at our corporate headquarters that specializes in these types of repairs and we are competitive with charges to the provider when it is outside of our warranty claim. We are looking at other ways to expand our POC repair capabilities in the future via additional centers and internal support, such as specific repair call centers."