Incontinence market: Full of challenges

Making the incontinence supply business work requires a lot of diligence, savvy and fortitude on the provider's part. There are plenty of strong headwinds to battle: low Medicare and Medicaid reimbursement and, therefore, tight margins; and competition from big-box retailers.

To succeed in the incontinence market, providers need to be multi-dimensional in their approach, carrying a diverse payer, product and patient mix; maintaining strong relationships with referral sources; and keeping overhead to a bare minimum, industry vendors say. Developing a strong retail component that combines ancillary products, such as skin care and wound care, also contributes to a healthy incontinence business, they say.

A losing proposition?

Even then, it may not be enough. Reimbursement rates for incontinence supplies--particularly for Medicaid--are varied and unpredictable, which, depending on the state, can make profitability futile. Based on the products, fee schedules and coverage policies, some suppliers may make out fine, while others simply cannot earn enough to break even. One vendor told HME News that the situation is so tight in some states that it has caused a provider exodus from the market.

"The challenge dealers have with Medicaid, especially the small dealers, is that because of the economy more people are going on Medicaid while states are getting less revenue and cutting back on reimbursement," the vendor said. "How are they dealing with it? They are leaving the business because it is a losing proposition."

Demand is strong

But the market's downward financial pressures are creating something of a paradox for incontinence providers because demand for the products is expected to steadily climb over the next five years. San Jose, Calif.-based Global Industry Analysts issued a report recently that forecasts a global market of $11.1 billion by 2015, driven by an aging population, increased life expectancy and rising incidence of incontinence.

"Rising diseases such as bowel cancer, diseased colons and other ailments that necessitate surgery are generating demand for ostomy supplies," the report states. "The need for products that allow elderly patients to benefit from improved and active quality of life is driving the demand for incontinence products."

Researchers say the market's sharpest focus is on products that "minimize maintenance, suffering and embarrassment for incontinence patients." To support that assertion, the report points to the growing popularity of pull-on undergarments and briefs as replacements for heavy absorbent diapers.

Largo, Fla.-based Genairex is seeing an increase in ostomy product demand "because people are living so much longer with their ostomies," said company president Steve Kuehn.

"We're seeing a big increase in patients with diverticulitis because where once it was a temporary surgery, it is now a permanent surgery," he said.

Raising awareness

Some products, such as external catheters, have been given a break by Medicare. In April 2008, CMS dramatically raised the allowable on catheters from four reusables per month to four disposables per day. Yet that new policy has largely gone underutilized, says Melissa Paris, director of marketing for continence for Coloplast in Minneapolis.

"We're doing a lot of awareness on that," she said. "The word is out, but while clinicians may know about it, not all agree with it. The habit of rewashing catheters is still taught. Many still haven't adopted single use."

The right product

Steve Goelman, president of Brooklyn, N.Y.-based Unique Wellness, believes inferior undergarments are responsible for widespread patient overuse and has developed a highly absorbent adult diaper that requires far less changing. The key to improving incontinence management, he says, is to raise expectations for product performance.

"The best way to promote this new and revolutionary way of managing incontinence is to get rid of the old school mentality that believes in order to maintain health and dignity, diapers must be changed five to seven or more times a day," he said. "Baby boomers are a growing market and are looking for comfort. The solution for them if they are living with incontinence is to let them be carefree with no embarrassment or hassle."