Medical Device Link.

Originally Published MX November/December 2004

MARKET ANALYSIS

Medtech industry experts expect that the trend toward home healthcare will continue to grow over the next five years, but significant challenges loom for companies that want to develop products for the home-use marketplace.

Those conclusions were among the key results of a recent survey conducted by the Massachusetts Medical Device Industry Council (MassMedic; Boston) and Tiax LLC (Cambridge, MA). Entitled "Healthcare in the Home," the survey was e-mailed to 200 MassMedic members, who include suppliers, product developers, research institutes, and academic health centers as well as manufacturers. The survey's response rate of nearly 20% yielded comments from 37 respondents—a meaningful group, but one not intended to be a robust statistical sample of the entire industry.

The purpose of the survey was to understand the potential for medical device manufacturers to play a role in developing solutions to the enormous challenges of home healthcare. As the adjacent article suggests, however, medtech manufacturers may have a long way to go before they have sufficient understanding of those challenges and are in a position to realize the business potential of the home-care marketplace.

Figure 1. Trends driving the move toward home healthcare, according to respondents in the 2004 Tiax/MassMedic survey on healthcare in the home. Multiple answers were permitted. Source: Tiax/MassMedic. (click to enlarge)

Asked to identify the factors that are driving the trend toward home healthcare, most survey respondents attributed the move to rising healthcare costs and the aging population (see Figure 1). However, respondents also credited improving technologies—in the form of new electronics and microprocessors and advances in durable medical equipment—with having a relatively strong influence. On the low end, only 4% of respondents indicated that government mandates were a driving force for home healthcare, perhaps reflecting the relative lack of government involvement to date in setting standards or providing reimbursement for such care.

Figure 2. Among respondents to the Tiax/MassMedic survey, 50% indicated that their companies had developed medical devices for home use. Many develop more than one type of home-use device. The types of products being developed by respondents are shown here (multiple answers permitted). Source: Tiax/MassMedic. (click to enlarge)

According to survey respondents, the types of medical devices currently being developed for home use cover a broad spectrum (see Figure 2). Products for emergency care and for the treatment of chronic diseases top the list, followed by products for postacute care and recovery, and products for preventive and wellness care. Products designed for rehabilitative care occupied the bottom of the respondents' list. Such a low ranking may not be surprising given the existing reimbursement environment, which offers little support for such products in spite of the fact that long-term rehabilitation is frequently carried out in home settings. Although medtech companies are clearly involved in creating a wide range of products for home use, it is less clear that such products correspond to the actual needs of caregivers or their patients.

Figure 3. The greatest challenges to medical device manufacturers seeking to develop products for use in the home, according to respondents to the 2004 Tiax/MassMedic survey. (click to enlarge)

Responses to the survey suggest that medtech manufacturers are struggling with some of the fundamental issues raised by the trend toward home healthcare (see Figure 3). Asked to identify the biggest challenge in developing devices for use in the home, for instance, respondents ranked cost of product development (8%) and lack of regulatory guidance (11%) on the low end of scale. But lack of information about patient needs was named by 16% of respondents, suggesting that medtech companies may still be in the earliest phases of exploring the potential of the home-use marketplace.

By far the biggest challenge identified by survey respondents is reimbursement, which was named by 41% of those answering the survey. The response suggests that unresolved coverage and payment issues for home healthcare are key stumbling blocks for traditional medtech manufacturers, who are unlikely to enter the field without some assurance that they can recoup their investment.

Private-party payers may have a role to play in demonstrating the cost efficiencies that can be attained through the greater use of home healthcare. But since a great deal of home healthcare is devoted to elderly persons whose primary coverage is through Medicare, it seems inevitable that government involvement in the field will emerge rapidly. Over time, respondents may find that government mandates will become a far stronger driver for the field than the respondents to this year's survey indicated.

Alternatively, medtech manufacturers may end up left behind, following the lead of consumer-product companies that have long lived outside the reimbursement environment. Such companies understand the need to deliver demonstrable value to consumers. And they could well be among the first to seize on the opportunity to provide needed products to home users, whether they are the ultimate users or concerned parents or children struggling to provide care for a family member.

Copyright ©2004 MX