Cost-Containment Pressures Cause Shift in Patient Distribution in Medical Ventilators Market
Medical ventilator manufacturers are being forced to deal with new managed care reforms. Reimbursement in the hospital setting is moving from a fee-for-service (FS) arrangement to a prospective payment system (PPS), elevating costs for hospitals to provide respiratory services and decreasing payment for those services.
Under the PPS, hospitals are forced to cut costs by decreasing the length of patients' stays in the acute setting, and moving them into post-acute facilities. Frost & Sullivan has produced a new strategic Market Engineering study, "U.S. Medical Ventilator Markets", which identifies the challenges and opportunities for companies that must compete for market share in this post-acute care environment. In order to succeed in the post-acute care segment, manufacturers must understand the impact of Medicare reforms under the Balanced Budget Act of 1997.
The study addresses these issues while providing detailed market forecasts of pricing, unit shipments, and revenues for adult and pediatric ventilators, neonatal ventilators, and non-invasive ventilators across hospital, sub-acute, and home care settings. In 1998, revenues from the sale of all respiratory ventilators generated $258.7 million. While the hospital setting currently represents the largest component of the market at 61.3 percent, home care is expected to grow to just over 40 percent by the end of the 2005 forecast period.
Some of the Medicare policies raising concern in the post-acute care environment include: The financial and administrative impact that the new payment system will have on facilities, the adequacy of payment levels under the RUGS III payment system and the lack of adequate data used by HCFA in developing the rate structure, lack of reimbursement for higher acuity patients inherent in the 44-category RUG payment methodology, and the new demands placed on providers in terms of tracking and compliance with the MDS instrument and confusion caused by delays in billing consolidation.
"Depending on how these Medicare reforms manifest themselves in the healthcare environment, ventilator manufacturers will encounter either new opportunities or unwelcome challenges in the post-acute care environment," says Frost & Sullivan medical device analyst Mary Tou. "In effect, competing in the new post-acute care environment is not as cut and dry as it initially appears."