Home Infusion Industry Emerges as Lucrative but Elusive Cleanroom Market
By John Haystead
According to industry estimates, at a 15 percent annual growth rate, home infusion therapy is one of the most rapidly expanding markets in healthcare today1, but how this translates into business opportunities for the cleanroom industry is a much more complex question.
That`s because, according to Steve Farrow, vice president of Triad Medical`s Pharmacy Design and Equipment Group (Laguna Hills, CA), a home infusion industry consulting and services provider, “A lot of (home infusion) providers simply don`t understand cleanroom technology and what it actually takes to implement a cleanroom.” Farrow sees a lot of confusion in the home infusion marketplace regarding cleanrooms and what future requirements will dictate.
One aspect of the industry is not in question, however. The home infusion market is driven by the large health insurance companies, HMOs and other managed-care organizations who pay the bills. Some observers believe this will inevitably lead to a strong and growing preference toward working with a limited number of nationwide home infusion companies that provide comprehensive, cost-effective services. If so, the incorporation, or franchising, of independent and small providers could potentially lead to much more clearly-defined and lucrative business opportunities for well-positioned cleanroom and other contamination control companies.
Working in a sterile environment, home infusion providers prepare (compound) bulk pharmaceuticals and other materials into finished products for administration to patients in their home. Some of the primary products are intravenous antibiotics, chemotherapy, total pain management (TPM) medications, parenteral and enteral nutrition products, growth hormones, and aids-related therapies.
The home infusion business began in earnest in the early 1980s when numerous public companies were formed hoping to take advantage of the emerging business opportunity. Pressures on reimbursement from payers led to consolidations and downsizing between companies so that today only 8-10 national companies remain. This in turn opened up the market to hospitals, home health agencies, and independent providers. Today, the vast majority of home infusion companies are owned by independent pharmacists employing one or more registered nurses who actually administer medications, provide home care and train patients to care for themselves. In the neighborhood of 4-6,000 home infusion providers operate in the U.S. today.
According to Robin Richardson, executive director of the National Home Infusion Association, NHIA (Washington, D.C.), the precise number of home infusion providers is difficult to determine because of consolidations, new entrants and integrated service companies, but various estimates have placed the number between four and six thousand. Similarly market size estimates range from as low as $4 to $9 billion. A recent analysis by Medical Data International estimated the market at between $5-6 billion.
Although the NHIA does not itself officially endorse or define standards, according to Richardson, contamination control standards are a crucial issue for the association. “Contamination control and quality product is not an option in the home infusion industry. We won`t tolerate unsafe or risky environments or procedures, and sterility is a key component.” Richardson, however, balances this endorsement of rigid contamination control practices with concern that an appropriate and reasonable approach be taken to developing them. “The highest standards should be in place but done for the right reasons with the right information based on thorough research work and studies.”
Although individual state boards of pharmacy are responsible for actually licensing home infusion providers, there are a number of organizations involved in establishing and measuring performance standards.
One such organization is the American Society of Health Systems Pharmacists (ASHP). ASHP cleanroom guidelines reference three risk levels based on the amount of time between medication preparation and administration. Risk level 1, the lowest level of risk, recommends only a Class 100 hood, while risk level 2 is a hood plus a Class 100,000 cleanroom and risk level 3 is hood plus a Class 10,000 cleanroom. New ASHP guidelines currently being evaluated may recommend a Class 10,000 cleanroom with a Class 100,000 anteroom. Another organization is the National Association of Boards and Pharmacies which has set standards adopted by some individual states.
Although not a regulatory or standards-writing body, the Joint Commission on Accreditation for Health Care Organizations (JCHO; Chicago, IL), has become the de facto accreditation agency for the home infusion industry. Accreditation is not a legal requirement, but the marketplace has for all intents and purposes made it a requirement of doing business. In order to be reimbursed, or even to bid on a contract, most, if not all, health insurance carriers require providers to obtain JCHO accreditation.
“We look at all of the groups in terms of their legal capacity and authority to enforce standards and recommendations,” says Richardson. In fact, NHIA has participated in the development of many of these standards, but as pointed out by Richardson, “legal enforcement is another thing, until they become an accepted standard of practice by the providers.”
The NHIA has also looked into developing its own set of standards which according to Richardson is “not out of the realm of possibility.” The association is keen to avoid duplicating effort, however, and is examining the question from the point of view of filling any holes in the existing standards. “We haven`t yet decided whether that need exists, but if the members want us to, we will step in.”
Although the JCHO was originally established to provide accreditation to hospitals, its Home Care Division is now the largest within the organization. JCHO accreditation was first solicited by home infusion providers themselves who saw endorsement by an independent review body as a marketing and sales advantage. Gradually, however, the JCHO requirements and recommendations gained greater industry and government acceptance, and today, many state licensing boards, follow or accept these same standards.
The JCHO reviews home infusion facilities throughout the U.S. and its territories. According to JCHO inspector (“Home-care Surveyor”), Jim Tucker, providers must have been in business for at least four months and have patients enrolled to receive full accreditation, but newly formed companies may apply for preliminary accreditation prior to opening by arranging for an “early survey.”
To be accredited, providers must conform to and meet the scoring guidelines established for each standard in the JCHO manual. The JCHO updates its “Pharmacy Survey” manual every two years with a new version scheduled for the fall of 1997. If a requirement is not fully met, a provisional accreditation still may be granted with what is called “type 1 recommendations.” This requires the provider to follow-up with a written plan of action to correct the failed items. Alternatively, the JCHO will arrange for a follow-up “focused survey” to verify that the deficiencies have been corrected. Accreditation is valid for three years, although the possibility exists for an unannounced re-survey after 18 months. Five percent of accredited organizations are selected for these surprise inspections.
JCHO standards specifically reference contamination control considerations, mostly outlined in section TX-7.5 (Care, Treatment, and Service) of its procedures manual. According to Tucker, a lot of emphasis is placed on processes and outcomes.
The JCHO requirement relating to cleanliness and procedures etc. reads that proper conditions of sanitation, temperature, light, moisture, ventilation, segregation, safety and security are maintained for medication preparation. According to Tucker, “the intent is to make sure organizations minimize errors associated with the preparation environment and processes.”
Preparation areas must be functionally separated from areas used to prepare non-sterile products to minimize particulate or microbial contamination of products, and adequate safety equipment such as Class II biological safety cabinets must be used when preparing cytotoxic medications or using hazardous materials.
Although the JCHO does not require a cleanroom, an increasing number of facilities now have full Class 100 laminar flow rooms. As a minimum, providers must have a Class 100 hood area and all work surfaces must be clean, disinfected and free and clear of “unrelated materials to the preparation of medications.” JCHO requires and reviews reports from independent certification companies to verify compliance with stated specifications and standards such as Class 100 environment, etc. Providers are required to keep a log of certifications and sanitation procedures for the room and hood.
Surveyors also observe procedures during the preparation process to ensure that appropriate standards, such as ASHP, for aseptic technique are followed. According to Tucker, “depending on what they (the provider) reference or specify (usually ASHP), we look to ensure that these are followed.” Such standards specify items as masks, caps, protective barrier, goggles, double gloving for chemo, etc. JCHO also evaluates training levels and competencies relative to conducting aseptic procedures under a hood.
Home infusion providers are licensed and regulated by individual State Boards of Pharmacy. Although there is considerable variation from state to state in the level of contamination control mandated, the State of New Jersey is generally regarded as having implemented the strictest requirements to date.
H. Lee Gladstein, R.P., executive director of the New Jersey State Board of Pharmacy, believes “this means that our consumers are well protected.” He points to the fact that the NJ Board invited input from industry experts to help make their determinations and that the end result is “the regulations prevent someone from just going into a pharmacy, putting up a hood and saying I`m in the intravenous business.”
In fact, since the new regulations were adopted, the number of licensed home infusion providers has dropped. According to Gladstein, the number of intravenous permits in the field has been reduced from about 80 to approximately 45, illustrating that “the new regulations have had the effect of getting the people out of the business who shouldn`t have been in it in the first place.” The new regulations were officially adopted in September 1994, but existing providers were given a year to come into compliance.
Among the more significant and controversial contamination control requirements in the new regulations is the mandate that in addition to providing a cleanroom, “the cleanroom shall be a minimum of 100 square feet in size and shall be compatible with the volume of compounding being conducted,” that the cleanroom meet Class 1,000 conditions, and that there be an anteroom meeting Class 10,000 standards. According to Gladstein, there hasn`t been a lot of inquiry or reaction so far from other state`s boards regarding their requirements, other than “some people have applauded us for taking a step in the right direction.” The New Jersey Board is currently in the process of developing a similar set of regulations aimed at bringing hospital pharmacy guidelines into conformance with those of retail providers.
At present, no federal regulations govern the home infusion market, except for federal government reimbursement issues related to Medicare payments, and additional national oversight does not seem likely. Says NHIA`s Richardson, “most health organizations are regulated by the individual states and that is the way we think it should be. The FDA has looked in our direction, in terms of compounding guidelines relative to sterile products, but that is also in our opinion a state issue. We would question their involvement in regulating our industry which we see as better done at the state level.”
Although the number of national companies providing home infusion therapy has been dwindling, they still represent a major force in the direction of the industry. Option Care Inc. (Chico, CA) promotes itself as the nation`s largest nationally-franchised home infusion provider, and Michael Prime, vice president of Franchise Relations (as well as Chairman of NHIA), estimates they are probably fourth in terms of revenues. The company targets medium-rural (50,000-100,000 population) communities around the country, establishing franchises with local pharmacies.
Relative to contamination control, Option Care requires its franchisees to operate their facilities according to JCHO procedures and standards as well as individual state requirements. According to Prime, contamination control facility requirements don`t generally involve that much additional overhead for the provider, with the biggest expense being a laminar flow hood. “Our company policies and procedures require a Class 100 environment, including head-to-foot gowning, but we don`t require a full cleanroom. We do, however, recommend that they purchase both a laminar flow and chemo hood at the same time.”
Prime is not convinced that widespread mandating of rigid cleanroom requirements makes sense for the industry, referencing the “full-bore” New Jersey requirements as “unrealistic.” “We shouldn`t be held to a higher standard than hospital facilities,” says Prime.
Both Option Care, as the franchiser, as well as the individual pharmacy owners, would have input into purchases of contamination control equipment and reusables. Prime adds, however, that the company is working hard to increase its purchasing power and reduce costs by consolidating contracts among fewer vendors. “There`s no question that this industry will continue to grow. It`s a payer-driven market, and insurance companies and HMOs are encouraging patients to leave hospitals earlier, but margins have also been compressed. The payers also usually dictate who the provider of care will be, meaning the bulk of our business comes from HMO and other payer referrals. While there`s a lot of business out there, we have to be smart managers to succeed.”
Apria Health Care (Costa Mesa, CA), one of the larger national home infusion companies, was formed through several recent acquisitions and company consolidations. Currently, Apria wholly owns and operates 60 home infusion pharmacies in the U.S. and is building 10 additional facilities.
Apria has adopted Class 1,000 cleanrooms and Class 10,000 anterooms as a minimum standard for all of its pharmacies. Says Dave Melikian, corporate director for Pharmacy Operations, “We see several states, Maine, Massachusetts and New Jersey, already requiring these levels, and we believe it just makes good sense to guard against problems. The cost ($10,000-15,000) is minimal compared to the potential problems.” Apria looks for flexibility from its cleanroom builder, because, as explained by Melikian, “each one is built a little differently, based on the specifications and demands of the location.”
Although Apria currently works regularly with one cleanroom vendor, Melikian is quick to point out that this does not imply an exclusive arrangement. “In cases where we can leverage a large amount of business, we do prefer to set up a primary vendor. But, we will then view that primary vendor as the standard, and look to other companies to provide a competitive bid at equivalent quality levels.”
Melikian predicts more consolidation for the home infusion industry. “We see the managed care institutions moving more and more toward “one integrated provider” where home infusion providers will also incorporate a strong nursing component for certified home healthcare, as well as offering respiratory services and home medical equipment. Perhaps more significantly for the cleanroom market, however, Melikian also sees managed care institutions tending away from the use of local independent providers and toward nationwide home infusion companies. “For the sake of efficiency and cost effectiveness, national managed care institutions will want to work with just one or two national home infusion providers.”
Cleanroom vendor perspective
Like the size of the industry itself, the business potential for contamination control vendors in the home infusion industry is difficult to get a handle on. As described by Ellen Bona, international sales & marketing manager at Servicor Inc. (San Carlos, CA), although Servicor pays a lot of attention to the home infusion market, it doesn`t currently account for a significant part of its business. “It`s still too new, with no clear direction for contamination control yet. In many cases, pharmacists are resistant to the idea of a cleanroom, and in many states, you can still get by with just a hood.”
Ross Barrick, president of Modular Cleanrooms (Denver, CO) believes new requirements, such as those set in New Jersey, are beginning to drive people to at least a minimum Class 10,000 requirement with upgrade capability, but adds that “interest levels tend to vary from state to state and demographic makeup. Interest is higher in Florida, for example, where healthcare needs are greater.” Triad Medical`s Steve Farrow agrees. “The state boards (of pharmacy) will ultimately drive the market for cleanrooms,” but he also believes “we`re just touching the tip of the iceberg as far as cleanroom applications for home infusion providers.” Farrow guesses that less than 10 percent of today`s providers have a true cleanroom environment.
Pharmacies that do decide to install a cleanroom for their compounding operations must first decide whether they will go with permanent drywall construction or a modular cleanroom. That decision, says Farrow should be based on the customer`s growth expectations. Some cleanroom vendors can build a “budget cleanroom” by converting existing drywall construction using special paints and flooring materials, cleanroom ceiling tiles, light fixtures, HEPA filters etc. “But drywall is not the way to go if short-term relocation is in the plans,” says Farrow.
Alternatively, although generally costing somewhat more, modular rooms allow more flexibility for growth. They also, as pointed out by Servicor`s Rich Bona, don`t require shutting down business while the cleanroom is being constructed.
Whatever their choice, “pharmacists should be knowledgeable about the level of facility they are actually buying,” says Barrick. He cautions that cleanrooms are frequently marketed to infusion providers together with bulk chemicals and other supplies and services as part of a complete package, which could mean the cleanroom carries a considerable markup from the original manufacturer`s price. Barrick advises that written policies and procedures manuals are available for each state`s requirements and standards, so “the small independent pharmacist, thinking about getting into home infusion or intravenous packaging, doesn`t need to become part of a large group to acquire a cleanroom. The information is out there.”
Given the newness and the dramatic changes that have occurred in the home infusion industry since its inception, it`s perhaps not surprising that its contamination control requirements are not uniformly defined or implemented. For example as noted by NHIA`s Richardson, “In the days of higher reimbursement, the cleanroom wasn`t an issue relative to cost. Guaranteed quality was the only driver. Today, however, the industry must examine benefit vs. cost much more closely.”
At the same time, the shape of the industry continues to change as new players emerge, and old hands such as hospitals begin experimenting with expanding their operations into home infusion care–facing the same contamination control issues as their established counterparts. The size and shape of cleanroom business coming from the home infusion market may be difficult to pin down just yet, but it`s definitely out there.n
1. National Association of Independent Retail Druggists (NAIRD) in Association with National Home Infusion Association (NHIA).