HME Companies Grapple with Sudden Supply-Demand Swings of COVID-19

The public health emergency has resulted in higher demand for home medical equipment (HME).

Several factors are contributing to the trend, including the rise of hospital-at-home programs, the diversion of patients away from skilled nursing facilities (SNFs) and individuals generally voicing a preference for home-based care.

As an industry, HME is fairly diverse when it comes to the types of organizations working within the space. There are some companies that provide ventilators and respiratory equipment, then others that offer more supply-driven goods, such as supplies for incontinence, ostomy and wound care.

For context, the U.S. market size of respiratory devices and obstructive sleep apnea devices was an estimated $6.2 billion and $2.2 billion, respectively, in 2018. The U.S. market for negative pressure wound therapy devices was an estimated $2.1 billion in 2018.

With hospitals shifting high-acuity patients into the home and SNFs facing outbreaks of the COVID-19 virus, HME companies have played critical roles. Yet some HME groups saw more demand due to their specialties, Jason Morin, president and CEO of the Home Medical Equipment and Services Association of New England, told Home Health Care News.

“For our respiratory providers early on, they were very instrumental in freeing up space in the hospitals and getting patients home as quickly as possible,” Morin said. “Since then, the second wave of COVID has hit even harder — to the point that we actually are in a nationwide oxygen shortage.”

Founded in 1988, the Home Medical Equipment and Services Association of New England is a Woburn, Massachusetts-based trade association that represents members in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

Morin noted that health care providers are having a difficult time getting access to oxygen concentrators for use in the home. Some providers are even having difficulty getting compressed-gas cylinders that are used for backup systems and some portability.

In turn, the HME companies working in the sector are busy.

Corner Home Medical knows this firsthand. Since the onset of the public health emergency, the company has spent over $750,000 on oxygen equipment, Corner Home Medical President Jesse Neumann told HHCN.

“We’re partnered with several hospitals in the area,” Neumann said. “We’re the primary go-to when it comes to helping people discharge from the hospital and into their home. We’ve seen a significant increase from that.”

Corner Home Medical is a New Hope, Minnesota-based HME company that provides oxygen and ventilation equipment, as well as supplies for hospice or palliative care agencies. The company operates in Minnesota, North Dakota, South Dakota, Iowa and Wisconsin.

Likewise, Apria Healthcare Group Inc. (Nasdaq: APR) — fresh off the heels of an IPO announcement last week — experienced very high volumes when it comes to its oxygen therapy business last year.

Specifically, Apria saw a 50% increase in demand from normal levels, Daniel Starck, the company’s CEO, told HHCN.

Lake Forest, California-based Apria is an integrated home health care equipment provider that offers a wide range of products and services mostly focused on respiratory equipment for care in the home. As one of the largest providers in the HME arena, the company has roughly 275 locations across the U.S.

In 2019, Apria generated $1.1 billion of net revenue. About 80% of the company’s revenue was generated from home respiratory therapy and obstructive sleep apnea treatment, financial filings show.

While some subsets of the HME industry saw a spike in demand, other areas suffered comparatively, according to Morin.

“We’ve actually seen providers that have just recently announced they’re going out of business because their demand was cut so low,” he said.

Early on in the public health emergency, HME providers saw high demand for ventilators. For some providers, this demand has since slowed down.

“We worked with three different facilities that had anywhere from 10 to 20 ventilators … waiting for the big surge,” Neumann said. “When that didn’t happen in our area to the extent of what they thought it would, some of those vents have come back and have been decommissioned since then.”

For Apria, it was the company’s sleep apnea equipment that took a hit during the public health emergency.

“Many of the sleep labs in the United States were either shut down or operating at a lower capacity than normal,” Starck said. “The normal patient flow didn’t come through the health care system throughout the year, so there was lower volume there than historically.”

Additionally, providers that rely on elective procedures saw a serious decrease in their business when the U.S. Centers for Medicare & Medicaid Services (CMS) first reduced non-essential medical and surgical procedures last March.

“If a patient goes in and has an elective procedure, whether it’s a hip replacement, knee replacement or anything like that, once the procedures are over, they’re discharged to their home or to a rehab facility, where we would then provide the rehab equipment for them,” Morin said. “It could be anything from a walker, manual wheelchair, or cane, all the way to a high-end wheelchair or a power chair — depending on the patient’s condition.”

Overall, the public health emergency has been a time when HME providers have stepped to the forefront of the larger health care continuum.

Neumann hopes that this recognition garners attention from federal officials and policymakers.

“I really hope that the powers that be — our legislators and the folks that work for CMS — have a better idea of the value that our industry brings to the health care community,” he said.