The products you carry reflect upon your corporate image, and your image is enhanced when you offer new and innovative technology. Providing cutting edge technology can give you a valid business reason to talk with referral sources and increase your referrals. It can also improve patient outcomes and reduce your costs.

Conversely, your reputation can be hurt if products you purchase and provide repeatedly fail. When a product fails in a patient's home, it costs you money. However, there are ways you can protect yourself and your business, while still incorporating new oxygen delivery technology.

AVAILABLE TECHNOLOGY

In the last several years, the oxygen delivery market has undergone a metamorphosis. Steady declines in oxygen reimbursement have led to an accelerated introduction of new technology, particularly that which does not require repeated home deliveries. There are two types of oxygen technology that do not require home delivery after the initial equipment setup.

Thomas J. Williams

1) Transfill devices: The most commonly used transfill devices are those used with concentrators. They allow a patient to refill an oxygen cylinder of various sizes for portable use. This technology has been around since 2002, and has the largest installed base of units.

A newer technology has evolved that allows patients to refill a liquid oxygen device from a stationary unit. It uses a 5 lpm or above oxygen concentrator to bring oxygen into a cooling device that liquifies concentrator gas to an oxygen concentration level of 90% (+/- 3%) and sends it to a portable LOX device that has been specially adapted to accept the lower oxygen purity level. Although this technology is promising, it has not yet gained widespread market acceptance due to its size, delivery weight, purchase price, and limited accessibility.

2) Portable oxygen concentrators (POCs): The "pulse-dose-only" devices are the most common products in this class. All of these devices weigh less than 10 pounds and deliver 90% +/- 3% oxygen. There is a raging debate as to whether these units should be used with patients during sleep. HME providers who are concerned that patients may desaturate during nighttime use of a POC should test their overnight blood oxygen saturation levels by oximetry before placing patients on the specific device.

Robert L. Chatburn

At present, there is only one device that provides both pulse dose and continuous flow oxygen. This device weighs about 18 pounds because it has a larger internal compressor and sieve bed to provide a continuous flow of oxygen. This device can be used by the patient while awake or asleep, for routine portability, and for travel.

Additional transfill and POC products are in development from various manufacturers. HME providers will see these devices within the next 18 months. Transfill devices and POCs cost HME providers more to purchase than a stationary concentrator and cylinders, but decrease the total cost of operation over the life of the product, because routine deliveries of oxygen are no longer required. Transfill and POC devices also benefit ambulatory patients in many definable ways. Patients no longer need to wait for deliveries, they can be gone from home for extended periods of time, and with POCs they can travel anywhere in the world because the units operate from AC, DC, or battery power. This new wave of technology has given oxygen-dependent patients the ability to enjoy life while on oxygen. Some of this new technology, however, is unproven. It has not withstood the test of time in the market.

With a steady stream of new oxygen products being introduced (Table 1), we were curious to see how important product quality and reliability are to HME providers, and to determine their key purchase criteria for buying new technology. To answer these questions, we conducted telephone interviews with a geographically dispersed sample of HME providers that were independently owned and that operated one or more multiple branch locations. Our findings are listed below.

Table 1

SELECTING A DEVICE

When you buy an oxygen delivery product, you have the right to expect it will work as designed and function according to the manufacturer's specifications—at least through the warranty period. Does any business owner or consumer expect anything less? Such reliability is especially important for a business owner who is providing equipment to an oxygen-dependent patient. Within the home oxygen market, providing a product that fails repeatedly or requires frequent repairs/updates is not an option.

HME providers have a choice to make. What technology should they purchase that benefits patients and referral sources, and still allows them to be fiscally solvent?

PROVIDER CONCERNS

When buying new technology for the first time, HME providers have the following concerns:

1) An elegant solution: HME providers often have to provide one or more oxygen delivery devices to meet the patient's clinical requirements. Each device costs money, and each device must provide a return on equity. Providers are looking for new oxygen technology that can reduce their total cost of ownership. They define cost of ownership as the initial purchase price of the equipment, plus the ongoing operational costs for routine delivery, and maintenance for each piece of equipment the patient requires. Devices that manufacture their own oxygen within the patient's home—or those that allow the device to be used within the home, outside the home. and for travel—eliminate the need for routine delivery of oxygen, and save the HME provider money.

2) Out-of-box failures: These are the occasional failures that occur right after the product is unboxed and run through an operational check, before it is used with a patient for the first time. Out-of-box failures most often occur with new products because the shipping container may not be sturdy enough to withstand the shock of shipping, or because of initial manufacturing problems.

3) Undefined product failures: An undefined product failure is any situation that results in a product having to be picked up from the patient's home and returned to the manufacturer or repair center for a specific, identified problem. Many undefined product failures cannot be verified by the manufacturer when they receive the device from the HME provider, despite repeated testing. When this occurs, the internal report reflects "no problem found" or something equivalent, and the unit is returned to the HME.

4) Mandatory repairs/updates: These are the required repairs mandated by the manufacturer to fix or prevent a future product problem. Usually these repairs emanate from the internal quality assurance data collected by the manufacturer. This often leads to a component change, which requires an update to all devices in the field to prevent future product problems. Most manufacturers have some initial problems despite rigorous internal testing. No manufacturer can test internally for every conceivable product usage under varying conditions.

5) Nuisance problems: These are the typical "preventable" design problems that should have been foreseen and designed out before the product was released. Most often, these problems occur with new manufacturers that have not had experience designing similar products. For example, HME providers are less likely to have product problems with a new concentrator from a manufacturer that has other concentrators in their portfolio, as opposed to a new entrant with no experience. New entrants often don't know what they don't know. An experienced manufacturer has a wealth of data and experience from which to design the new product.

KEY CRITERIA FOR PRODUCT SELECTION

HME companies are looking for oxygen delivery products that exhibit the following characteristics:

1) Performance is defined as a product's key performance characteristics. For an oxygen delivery product, it includes the number of mL/minute of oxygen delivery, usage during sleep and exercise, battery run time, and OCD characteristics. Performance is objective, and it can be tested. For example, one thing that all HME providers can agree on is that oxygen-dependent patients must be able to get enough oxygen from their devices during exercise, and while asleep. Performance characteristics can be defined and compared against others in its class before purchase.

2) Features are the "bells and whistles" of the device that supplement basic operation. Many of these are subjective, such as ease of use, ability to carry or lift the device, size, and shape. Device features can be compared to patient/referral source requirements prior to purchase. Others such as noise level are objective. The noise level can be measured in decibels, and is either irritating or not.

3) Reliability is the probability that the product will malfunction during a specific time period. While manufacturers typically define this as the "mean time to first failure" or the "mean time between failure," HMEs are much more objective. To them, reliability is product downtime and the amount of time required for maintenance. HME providers look at product reliability as a motion picture of the day-to-day operation of the device they purchase. They expect oxygen equipment to operate 24/7, 365 days per year. It takes a long time for a manufacturer to build a reputation for "product reliability," and a short time to be branded as "unreliable" if it ships a flawed product. HMEs learn about a product's reliability over time. It is often an expensive lesson. Manufacturers that offer reliable products earn repeat business and increased market share.

4) Conformance is the degree to which a product's design and operating conditions meet established industry standards. During design, all manufacturers conform to a set of design characteristics and specifications, such as ISO 8359 oxygen concentrators for medical use-safety requirements and others. All manufacturers design their technology to operate reliably under typical patient usage conditions (and these data can be made available to you) such as:

• weather, temperature and humidity;
• altitude;
• voltage variations;
• vibration and durability;
• electromagnetic compatibility; and
• fluid ingress.

5) Durability is a measure of product life. It is how long the product will function before it deteriorates. Every product reaches a point where repair is impossible. For every product purchased, the HME provider must decide the point where the repair expense exceeds the investment in a new device. Useful life is defined as the number of years the depreciable asset is expected to be productive and in use. Providers typically want a minimum useful life of 3 years for portable oxygen delivery devices and 5 years for stationary devices.

6) Serviceability is the speed, courtesy, competence, ease of repair, and quickness of repair of a product by the oxygen manufacturer for an HME provider. This can be measured objectively by tracking the mean time to repair for a particular problem, and your satisfaction with the service.

7) Aesthetics: Although subjective, this is important because it is important to patients. Aesthetics deal with how a product feels, looks, and operates. For example, is it easy for the patient to use the device? Is it difficult to replace the external battery or charge the device? Can patients refill the cylinder and move the device across different types of surfaces? Is it aesthetically pleasing and does it blend into the home environment—or does it look like a medical product?

8) Perceived quality: In the end, HME providers develop a subjective "perceived product quality." This is an aggregate of all of the aforementioned characteristics. Future purchases are then driven by this level of confidence that they have for the product and the manufacturer.

9) Low cost: In today's tough reimbursement climate, each product must deliver a reasonable return on investment. Savvy providers look beyond the initial purchase price and calculate the total cost of ownership over the life of the product.

RECOMMENDATIONS

1) Don't be bashful about asking the manufacturer for third-party test data, internal test data around the design, or quality/statistical data on units shipped. Such data are readily available.

2) Develop your own test protocol and test one or more products before you purchase. This gives you hands-on experience with the product before you purchase it.

3) Purchase "newly released" products from a manufacturer that has a reputation for developing quality products.

4) Purchase new products that are supported with a reasonable product warranty. In a competitive market, the longer the products' warranty, the more confidence the manufacturer has in its design. Remember, however, a long warranty helps you only to a degree. If the device fails during the warranty period, you still incur the costs of pickup/delivery, checkout of the unit, packing, paperwork (warranty claim, service order creation), and freight. This can be a significant cost in labor and involve one or more of your personnel.

5) Develop an economic model that tracks the cost of poor quality for each of your manufacturers and the products you purchase. Meticulously track your cost per event. Share the data with the manufacturer.

6) To avoid undefined product failures, maintain the equipment to the manufacturer's specifications. Keep meticulous records on nuisance issues and educate your staff to prevent them from becoming problems and costing you money. View the manufacturer as your business partner, and communicate openly and honestly about problems and solutions with each of them. Remember, they want to earn your trust and confidence so you will keep purchasing their products.

7) Train caregivers carefully to eliminate known operator problems. This will eliminate nuisance telephone calls and unnecessary repair visits.

8) If you are buying new technology, negotiate an even exchange or money-back guarantee for a product that repeatedly fails or requires excessive updates during the warranty period—or ask for reimbursement for your warranty-related costs.

LONG-TERM SUCCESS

New oxygen delivery technology costs more to purchase, but ultimately it can help you decrease your total cost of operation. New technology is designed to rigorous international standards and is usually reliable. Purchase equipment from reputable manufacturers that have engineering expertise, and are financially solvent. Treat the manufacturer as a business partner. Remember, you make more money renting the device than the manufacturer makes selling it to you.

Thomas J. Williams MBA RRT, is managing director of Strategic Dynamics, Scottsdale, Ariz. Williams assists clients in strategy formulation, market research, sales training, and clinical and benchmark studies. Williams can be reached through his Web site: www.strategicdynamicsfirm.com. Robert L. Chatburn, RRT-NPS, FAARC, is clinical research manager, Section of Respiratory Therapy, Cleveland Clinic; associate professor of medicine at Lerner College of Medicine, Case Western Reserve University, Cleveland; and vice president of Research and Clinical Services for Strategic Dynamics Inc.