It's as simple as this: ResMed seeks growth
SAN DIEGO – Michael “Mick” Farrell, president of ResMed Americas, likes to call the company a 22-year-old start-up.
That would explain why, earlier this year, ResMed was nimble enough to shake up its management team and business units, creating a company that Farrell says is poised to continue growth in its existing core market of sleep-disordered breathing and explore growth in new markets.
Here’s what Farrell had to say about what HME providers can expect from ResMed going forward.
HME News: Why does ResMed seek to diversify into other markets?
Mick Farrell: Sleep-disordered breathing (SDB) is really our bread and butter. But that market is growing in the 6% to 8% range in the Americas, and we’re positioning ourselves for growth of 10% or more. So we have to look at ways to expand SDB growth by working with our HME partners to market to primary care physicians and new referral sources, but also to explore new potential areas for growth.
HME: Tell me more about ResMed’s new business unit, Ventures & Initiatives, which will drive much of the company’s growth in new markets.
Farrell: It’s all about commercial alliances, commercial acquisitions and commercial partnerships to drive value propositions for our physician, therapist and HME provider customers. We need to continue to ask HME providers, what value-added services can we provide you? What do you need the most with all the flux in our marketplace?
HME: What are some of the new markets ResMed is looking at?
Farrell: Homecare and sub-acute ventilation is an enormous opportunity for us. Also, there is the dental SDB market. We made an acquisition in 2009 of a company that has a dental sleep medicine device in France. We have expanded that throughout northern Europe and now we’re just starting to bring that over to North America. How can we best partner up with physicians, sleep labs, and HME providers to allow access to this product? Additionally, there’s the cardiac market. For 10 years or more, we have been investigating and researching the heart failure markets in the United States and in Europe. We’re more than halfway through a large trial looking at 1,260 heart failure patients who have central sleep apnea, Cheyne-Stokes respiration, and/or OSA, getting these patients on treatment and turning their lives around. There’s also the perioperative care market: Models where hospitals screen and diagnose OSA pre-op and ensure that the patient is on treatment in the hospital and moves to a discharge planner to ensure subsequent sleep therapy in the home is an enormous opportunity.
HME: How do you plan to remain relevant to HME providers and your CPAP products and services, as you pursue new markets?
Farrell: Our relationship with our HME providers is incredibly important to us. When you look at the global healthcare spend in the Americas, 16% of our GDP is spent on health care and of that 84% is spent on chronic diseases. We know what providers know: Investments in home care save money and reduce the overall healthcare spend. So our job, in looking at HME providers, is how do we show that ROI to all the different players. If you think we’re not going to spend time on the $1 billion global revenue in sleep that continues to grow very rapidly, you’d be crazy. That’s a huge opportunity for us and always will be.
HME: ResMed has made two acquisitions recently: BiancaMed, a manufacturer and distributor of a non-contact device for monitoring sleep and breathing in the home; and Grundler GmbH, a developer of medical humidification products used with ventilators. Is the company on a buying spree?
Farrell: We have more than $500 million in cash, but that cash isn’t burning a hole in our pockets. We’re not going to spend money for the sake of spending money. The acquisition or partnership needs to fit with our goal of expanding the SDB market, growing diagnostic market access and ensuring short-term compliance and long-term adherence to CPAP, APAP and VPAP therapy.
HME: ResMed is positioning itself for the future; how should HME providers do the same?
Farrell: I think HME providers have to focus on patient care, as well as scale and efficiency. They have to continue to focus on new marketing opportunities. They have to look at reaching out to primary care physicians in their communities. They have to look at partnerships with sleep labs that are starting to get involved in home sleep testing (HST), so that, together, they can participate in this next wave of growth that we’re going to see in the SBD market. One critical element is that the HST model has to be one that leads to compliance and long-term adherence to sleep therapy—that way the provider, the insurer and the patient wins. And they need to be attending events and conferences to talk to their peers about what changes they’re making, because all of the good ideas are not going to come from one individual HME provider.