Invacare 2007 Annual Report Download - page 9

THE HOME MEDICAL EQUIPMENT INDUSTRY
North America Market
The home medical equipment market includes home health care products, physical rehabilitation products
and other non-disposable products used for the recovery and long-term care of patients. The company believes
that demand for domestic home medical equipment products will continue to grow during the next decade and
beyond as a result of several factors, including:
Growth in Population over Age 65. Globally, overall life expectancy continues to increase. Recent
reports from the U.S. Department of Health and Human Services (DHHS) state that the average life
expectancy in the United States for men and women who reach the age of 65 is now 82 and 85, respectively.
Furthermore, life expectancy in the United States at birth is now an average of 78 for men and women
together, a record high. The DHHS also reports that people age 65 or older represent the vast majority of
home health care patients and will increase from 12% of the population in 2005 to 21% of the population by
the year 2050.
Treatment Trends. The company believes that many medical professionals and patients prefer home
health care over institutional care because home health care results in greater patient independence,
increased patient responsibility and improved responsiveness to treatment. Further, health care
professionals, public payors and private payors appear to favor home care as a cost effective, clinically
appropriate alternative to facility-based care. Recent surveys show that approximately 70% of adults would
rather recover from an accident or illness in their home, while approximately 90% of the population aged 65
and over showed a preference for home-based, long-term care. In addition, the number of hospital beds per
capita has fallen over the past twenty-five years in the United States, from 4.4 beds per 1,000 population in
1980 to 2.7 in 2005, a trend which is expected to continue. This decline has coincided with the reduction in
average length of stays in hospitals.
Technological Trends. Technological advances have made medical equipment increasingly adaptable
for use in the home. Current hospital procedures often allow for earlier patient discharge, thereby
lengthening recuperation periods outside of the traditional institutional setting. In addition, continuing
medical advances prolong the lives of adults and children, thus increasing the demand for home medical
care equipment.
Health Care Cost Containment Trends. In 2005, health care expenditures in the United States totaled
$2.0 trillion dollars or approximately 16% of the GDP, the highest among industrialized countries, and were
paid by private health insurers (36%), the federal government (34%), state and local governments (11%),
consumers (15%) and other private funds (4%). In 2014, the nation’s health care spending is projected to
increase to $4.1 trillion, growing at an average annual rate of 6.9%. Over this same period, spending on
health care is expected to increase to approximately 19.6% of GDP. The rising cost of health care has
caused many payors of health care expenses to look for ways to contain costs. The company believes that
home health care and home medical equipment will play a significant role in reducing health care costs.
Society’s Mainstreaming of People with Disabilities. People with disabilities are increasingly a part of
the fabric of society, in part due to the 1991 Americans with Disabilities Act, or the “ADA.” This legislation
provides mainstream opportunities to people with disabilities. The ADA imposes requirements on certain
components of society to make reasonable accommodations to integrate people with disabilities into the
community and the workplace.
Distribution Channels. The changing home health care market continues to provide new ways of
reaching the end user. The distribution network for products has expanded to include not only specialized
home health care providers and extended care facilities but retail drug stores, surgical supply houses, rental,
hospital and HMO-based stores, home health agencies, mass merchandisers, direct sales and the Internet.
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