Industry disregards study

Wednesday, May 31, 2006

PALO ALTO, Calif. - Frost & Sullivan's contention that oxygen therapy device prices are falling--by up to 50%--doesn't appear to ring true to many industry sources, who aren't seeing dramatic downturns in the price of equipment.
In a March 28 release, the market research firm wrote that "some manufacturers are slashing prices up to 50 percent." One manufacturer said a rival was slashing prices that dramatically after losing a major account, which could account for such reporting. But that manufacturer said reductions on that scale weren't happening at his company.
So what is happening? Stabilization, for one thing, after the influence of Chinese manufacturing caused concentrator prices to decrease for several years.
"Our costs on units have stabilized over the last year," said Alan Landauer of Landauer Metropolitan Care in Mt. Vernon, N.Y.
Not for home transfilling units, however. Landauer has been watching his acquisition costs climb as he brings more of this techology on board.
Likewise, Tim Pontius, president of Young Medical Equipment (now a branch of Apria) in Maumee, Ohio, has not witnessed much flux in the price of equipment. But one claim from the same F&S report does ring true for Pontius, and others: They're keeping oxygen therapy devices in the field longer.
"We keep equipment in the field as long as it's in good working order and is 'presentable to the eye,'" said Jim Clark, president of Clark Respiratory and Medical Supply in Catskill, N.Y. "This standard has not changed for our company. We are keeping a sharper eye on inventory/capital equipment levels. Nickels and dimes make quarters."
Landauer is looking for the same sort of durability in his equipment.
"The only way for HME distributors to remain profitable is by the recycling of used equipment," he said.
But therein lies the rub, he said. While it's in the HME's interest to maximize the life of a product, the same is not true for the patient who may have to forego the benefits of new technology.
"It becomes a vicious circle," said Landauer.