Home health poised for steady growth, recent report predicts

By MATTHEW HAY

HHBR Washington Correspondent

Last year, revenues for the home health industry were roughly $42.4 billion with the vast majority of that – $40.4 billion – for labor/nursing services and the remaining $2 billion for devices used in the home care environment, according to a report just released by the market research firm Frost & Sullivan (Mountain View, CA).

The firm predicts steady 5% growth over the next five years, driving total revenues to $44.6 billion this year and $54.3 billion in 2004. After that, the firm predicts that growth will accelerate to 9%, to $59.1 billion and $64.3, in 2005 and 2006, respectively. According to Frost & Sullivan, the four main revenue-generating segments of the home care industry are all projected to experience consistent sustained growth, but at somewhat different rates.

Home care respiratory products

Total revenue for home care respiratory products last year was pegged at $609 million, according to the report, but that is expected to grow at a compounded rate of 8.4%. Frost & Sullivan says three major factors will drive growth in this market segment: an aging population causing an increasing incidence of respiratory disorders, more aggressive medical treatments creating higher incidence of respiratory failure, and increased portability of devices allowing wider applications.

Meanwhile, Frost & Sullivan predicts that three factors will restrain growth: cuts in oxygen reimbursement reducing demand for therapy devices, an unclear ruling on new criteria for reimbursement creating confusion among suppliers, and a focus on disease prevention that might reduce incidence of respiratory disease in future populations.

Home health infusion pumps market

Total revenues in the home health infusion pumps market in 1999 were estimated at $195 billion, according to the report, and a compound growth rate of 9.9% is expected through 2006.

Frost & Sullivan says three major factors will drive growth in this market segment, including an expansion of the pain management market, which will help drive home health infusion therapy; the penetration rate for insulin infusion pumps that will encourage market growth; and advances in telemedicine, which will enable the provision of care outside of hospitals.

At the same time, the firm predicts the following three factors will restrain this growth: unfavorable reimbursement conditions that will discourage patients from using home health infusion therapy, safety concerns that will require additional investment in product development, and institutional pressure to cut costs that will have a negative impact on sales.

Home durable medical equipment

Total revenues in the home health durable medical equipment market last year were roughly $1.2 billion, and Frost & Sullivan predicts the compound annual growth rate in this segment is expected to be 7.3% through 2006.

The firm says the three major factors that will drive growth in this market segment include shorter lengths of stay in acute care facilities, more geriatric patients being cared for at home, and a growing need for cost-effective therapies.

Meanwhile, Frost & Sullivan predicts the following three factors will restrain growth in the area of DME: reimbursement cuts resulting from the Balanced Budget Act of 1997, fierce price competition between product manufacturers, and repairs and replacement parts that will stunt growth on new devices.

For more information about the report, contact Frost & Sullivan’s Nick Mariottini at 530/894/2136 or nmariattini@frost.com.