Sleep industry grapples with shortages

While supply chain delays have been a major choke point for the U.S. economy over the past year, the recall of Philips Respironics’ flow generators and masks has compounded the obstruction in the sleep therapy market. The ensuing vacuum created by the recall caused a ripple effect throughout the marketplace, causing various suppliers to scramble for ways to cover the shortage. 

At this point, suppliers are still frustrated by a hardscrabble supply line, but remain hopeful that product flow will improve in the near future. 

“The recall has created a tremendous backlog regarding new patients’ access to PAP therapy,” said Ray Gregg, vice president of sales and business development for Livingston, Tenn.-based Encore Health. “Regional suppliers have projected eight-to-12 months to catch up on the backlog. Even once PAP availability normalizes, backlogs of this magnitude will take some time to work through to normalize the overall referral-setup pipeline.” 

Jim Gilkison, vice president of sales for Lake City, Fla.-based LiViliti Health Products agrees. 

“The timing of the recall could not have been worse for our industry,” he said. “Just as sleep labs were reopening and new patients were being prescribed CPAPs, the providers have had to scramble to service patients with recalled CPAPs and at the same time try to move forward with new setups. It’s the perfect storm.” 

To be sure, the HME industry has been deeply impacted by the Philips recall, the pandemic and subsequent global supply chain challenges, said Tom Pontzius, president of Winter Haven, Fla.-based React Health (formerly 3B Medical) and AAHomecare board member. 

“There are thousands of patients waiting to initiate their prescribed therapies, while others are waiting for replacement of devices affected by the Philips recall,” he said. “Due to component shortages because of the public health emergency creating a volatile supply chain, the scale at which production capacities have been able to recover has been limited.” 

Manufacturers have had to source new suppliers to supplement current suppliers, price increases have been significant, with some component price increases approaching 300% or more, Pontzius said. 

“AA Homecare has been helpful in providing information to CMS, FDA and Congress to help show the impact of the challenges manufacturers, suppliers and patients are all seeing and working through,” he said. “Scaling production is only limited by supply chain and not ambition as manufacturers continue to look to provide the best available solutions available today.” 

As a company servicing and repairing CPAPs for HMEs and patients, Boulder, Colo.-based Quality Biomedical has witnessed the abrupt shift away from Philips to other suppliers, said Jim Worrell, chief commercial officer.   

“ResMed is the obvious ‘go-to,’ but they are plagued with their own supply chain issues and cannot meet the increased demand,” he said. “Even high-volume current customers have been put on allocation. Other smaller OEMs are stepping in to fill the void, including (React Health) and ResVent.” 

Jayme Rubenstein, spokesperson for San Diego-based ResMed, maintains that “ResMed remains committed to helping provide as many devices to the millions of people worldwide who need them, despite today’s challenges.” 

For the past year, ResMed has faced “an unprecedented demand for its therapy solutions” due to the void of Philips products, Rubenstein said. 

“In addition, microchips that help operate and cloud-connect our devices remain in short supply,” he said. “Plus, we continue to deal with historically high costs of chips and other critical components, as well as the cost of transporting components and finished products – both issues going back to the outset of the pandemic in early 2020.” 

Seeking solutions 

Device component and microchip scarcity has created “an opportunity for other manufacturers to step in and engage in meaningful conversations with HME customers who have previously only dealt with the ‘Big Two,’” Gregg said, pointing out that React Health “is one of those companies that could see long-term share gain by having the capacity to step in now with a very competitive product line.” 

React Health has indeed sought to increase production capacities to deliver as many devices to the market as possible, Pontzius said. 

“The company has made tough decisions to limit where these products are sold and delivered to allow for maximum production capabilities,” he said. “We understand the complexities of the rules by which the suppliers need to work while also trying to navigate the difficult messaging to patients who are seeking to begin their therapies. Shifts in mix of product along with feature and benefits creation to allow the best opportunity for suppliers and patients to maximize the necessary steps to ensure patients, physicians and payers are all informed and receiving the necessary information.” 

Irvine, Calif.-based Fisher & Paykel Healthcare’s globally diversified, strategically placed supply chains “have managed to meet the extraordinary demand in various product segments and have been able to successfully fulfill demand for OSA masks, respiratory humidifiers, high flow devices and consumables,” said Subbarao Potharaju, director of marketing for homecare. “It definitely makes sense to diversify sourcing, regardless of the pandemic. The past two years have definitely shown how important it is for the providers to not only have diversification, but also to focus on quality of products and suppliers.”  

Quality Biomedical is adding certified CPAP technicians and expanding the CPAP repair program to service centers across the country, Worrell said. 

“We see more patients sending defective units for repair and have therefore instituted a ‘Patient-Direct’ program to help providers more easily deal with patient-owned defective CPAPs,” he said. 

Regarding alternate sourcing and inventory diversification options for providers, Worrell said “Providers are scrambling to locate equipment anywhere they can. They are certainly exploring relationships with smaller OEMs. We also see them looking into their ‘bone pile’ to see what units can be refurbished at a reasonable cost and sending those units to us for service.” 

ResMed’s leaders from CEO Mick Farrell on down are “constantly talking with our direct suppliers, their suppliers and their suppliers, sometimes six or seven levels down, to ensure sustained volumes of critical components needed to build ResMed PAPs, bilevels, and ventilators – and where possible to get suppliers to increase their shipments to us,” Rubenstein said. Plus, we’re offering large orders and long-term consistency in the components we need, since our devices – which are highly regulated – don’t change nearly as often as a cell phone, home appliance, or car. These are compelling cases, which have helped us secure several long-term partners, and the parts to build the devices we’ve been able to produce.” 

Gilkison believes better communication and expectations need to flow from management to representatives in the field “to avoid unpleasant surprises.” Providers are looking for options that control costs while at the same time streamline operations, he said.  

“One popular solution with us has been using VGM Fulfillment for dropship services so providers can have a virtual inventory and only buy stock when they get an order from a patient,” Gilkison said. “Another popular request is including marketing assets with resupply shipments to advertise products and services available from the provider. These innovations go hand in hand to improve compliance and customer satisfaction.”