Discussions of technology investment opportunities in healthcare often overlook a key sector: DME. DME encompasses the equipment/supplies used to cope with physical limitations that frequently accompany aging and/or chronic illness, accounting for $11.4B of Medicare payments in 2012. Five trends support the claim that DME will take on new importance as hospitals respond to healthcare reform's "Triple Aim: "
1. Baby boomers are hitting the age of 65 at a rate of 8,000 per day.
2. The number of people needing care will outpace the number of people available to provide it ("the caregiver gap").
3. Hospital-based acute care is expanding to incorporate continuous, post-discharge follow-up with patients.
4. To support that continuous follow-up and to extend the number of patients each doctor can "touch," governmental regulations are being relaxed to support innovative telemedicine/telehealth interventions.
5. Investment dollars are flowing into development of point-of-care, remote patient monitoring devices that can capture and transmit important biometric data to alert clinicians to important changes in functional status.
A key element influencing the success of such investments is the capacity of patients and caregivers to comply with new protocols and use unfamiliar technical equipment. One way to increase the probability of success is to embed the technology in the DME routinely used by patients in the normal course of their day. The introduction of this type of technology will create "smart" DME, defined as assistive equipment that, due to the addition of technology, has the capacity to collect and transmit information about its use. For example, BAM Lab's Smartbed converts a traditional hospital bed/mattress into a platform for collecting temperature and heart /breathing rate, as well as detecting motion. Neither the patient nor the caregiver needs to do anything special: the patient's health information is automatically collected. The Proteus ingestible sensor is another great example of passive information collection/transmission.
This same approach can be adopted for other pending point of care/remote patient monitoring innovations. Why can't Clinitek's urinalysis strip be placed inside a bedside commode to collect important information about kidney function for someone who would otherwise struggle to get to an MD office or a clinic? Such an innovation could be made possible via the Ucheck application. Properly trended, clinicians will be alerted to important changes in a patient's kidney function, giving them an opportunity to intervene BEFORE the patient starts to fail.
Through such smart DME, hospitals can solve the critical "last mile" challenge of the Triple Aim: optimizing the health of elderly and chronically ill patients so they can stay at home. Because they use the DME to accomplish the basic activities of daily living, they won't have to remember new protocols or learn to operate a device; their biometric data will be gathered as they go about their daily routines.
Secondary benefits: Smart DME also provides an opportunity to improve assistive equipment design, creating a cascade of secondary benefits. User-friendly assistive equipment design will make caregiving more appealing, making it easier for home health providers to recruit and retain paid caregivers, already a major challenge which will only get worse as the caregiver gap grows. Smart DME will also be more likely to reduce the extremely high healthcare injury rate arising from musculosketal disorders (249 per 10,000 workers versus 34 for all workers), while making the life of unpaid informal caregivers such as spouses, daughters and sons more manageable.
Undervalued now: The potential of DME to serve as a technology platform is currently underappreciated because it is "below the radar" screen of hospitals. Most DME is purchased by the elderly and billed by suppliers under Medicare Part B, and thus not considered to be a controllable hospital cost. The DME that is purchased by hospitals is treated like a commodity and is usually bundled at nominal pricing with other more expensive products via group purchasing contracts. The lowly stature of DME is further compounded by the fact that much of it is sold directly to consumers via mail catalogues filled with pictures of items that make the provision of physical care easier on both caregivers and care recipients but hold little interest for medical personnel. Furthermore, DME companies have traditionally shied away from improvements in DME: they fear that Medicare, considering such improvements as a matter of convenience for caregivers, will refuse to cover innovative products. Finally, major DME companies have not done the industry any favors by airing TV commercials at 2am in the morning, promising everyone a power wheelchair at no cost. It is no surprise that DME innovation has not been on anyone's investment radar screen.
Strengthened DME position: Yet, health reform is changing the way in which DME should be viewed. With hospitals now "on the hook" for maintaining patients' health, the effectiveness of assistive equipment will grow in strategic importance.
Fortunately, the DME industry is experiencing a round of consolidation as the impact of Medicare's competitive bidding program takes effect. While some DME companies are attacking that program, others are centralizing distribution channels, enhancing technical and service support, clinical medical necessity documentation protocols and billing/accounts receivable systems.
Such companies will make good partners for hospitals seeking to maximize the impact of remote patient monitoring devices and solidify the effect of telemedicine innovations.
What has to happen: There are a number of DME industry trade groups that have been challenging their sector to think out of the box. But the market has to express interest first: hospitals need to signal their willingness to buy such products. If they do, the strong players with manufacturing know-how and deep distribution channels will make good partners for incorporating health information technology solutions. Talk to healthcare purchasing professionals and they will lead you to untapped and potentially valuable investment opportunities.
Lesson for investors: Don't let failure to innovate DME become a "single point of failure" for all the Health IT investment already committed: make sure the last mile of healthcare delivery is as strong as the first for the elderly and chronically ill!
Peg Graham is the founder of QUA INC, a small consulting company that assists organizations seeking to optimize people's ability to age at home. Peg's company emphasizes the importance of including the physical demands of caregiving as a strategic consideration in successful transformations of healthcare delivery, with a particular focus on the benefits derived from improving the design of durable medical equipment. Peg holds an MBA from Pace University and an MPH from Yale University.
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