The HME market: Much bigger than most people think

Sunday, March 8, 2009

YARMOUTH, Maine - The U.S. stock market may be a bear, but there's no shortage of bulls when it comes to HME.

In the past few months, three reports have come out estimating the size of the HME market and forecasting its future growth. Who would have guessed: It's exploding due to an aging U.S. population.

The Freedonia Group expects that the U.S. HME market will grow by 5.5% annually to $10 billion by 2012. estimates that it will expand by nearly 6% annually to $7.9 billion in 2012. Medtech Insight pegs the 2007 market at $4.7 billion and expects it to swell to $5.2 billion by 2012.

There's only one thing wrong with these reports: They woefully underestimate the size of the HME market. 

In 2008, HME News used the Freedom of Information Act (FOIA) to solicit spending data from CMS. We learned that the 2007 Medicare HME market (fee-for-service, managed Medicare and patient co-pays) totaled $12.9 billion. By calling state officials across the country, we learned that Medicaid DME spending in 2007 approached $2 billion. Add in retail sales and private insurance expenditures--courtesy of CMS's National Health Expenditure Projections 2007-2017--and the 2007 total jumps to $24.5 billon.

That's a heck of a lot more than Freedonia, and Medtech report.

When it comes to annual growth rates, however, CMS's estimates are a bit more conservative. The agency expects total HME spending to average 3.5% through 2012 and 4% through 2017.

The forecasts by Freedonia, and Medtech provide few surprises, but they do offer third-party support for what many providers know intuitively. For example, products expected to see the highest annual growth rates include patient monitoring equipment for blood pressure, heart rate and sleep apnea; portable oxygen concentrators; CPAP products; home infusion services; and home alert systems.

Likewise, an aging population will drive growth in mobility assist devices and products that help people maintain independent lifestyles, including bath safety products, scooters, wheelchairs, rollators and canes.