Much maligned TENS will continue to sell – transcutaneous electrical nerve stimulators
Suppliers of transcutaneous electrical nerve stimulators (TENS) see continued growth in their products despite continuing federal reimbursement cuts, reduced payments for TENS by private payers, declining TENS prices and a high-profile study questioning the efficacy of TENS that had manufacturers up in arms. With all of these factors against the TENS industry, why are manufacturers projecting rising TENS sales? The answer is that the alternatives to TENS therapy are more costly and risky.
“I see TENS growing over the next four to five years because (it) hasn’t been replaced,” said Donald Maurer, chief executive officer of Empi Inc., St. Paul, Minn., one of the leading TENS manufacturers.
More than 85 million people in the United States, 35% of the population, suffer from chronic pain, according to Middlefield, Conn.-based Theta Corp. Financial losses from chronic pain amount to $65 billion or more annually, the firm reports.
The alternative methods to TENS for treating chronic pain, notably lower back pain, are narcotics or surgery. In 1972, when TENS was developed, drug treatment was the only alternative. Both drugs and surgery are riskier and significantly more costly than TENS. As a result, the outlook for TENS sales, at least in the short term, is promising.
TENS works by providing electrical stimulation. The user carries a small, portable, battery-powered stimulator that is connected with wires to electrodes. The electrodes are self-adhesive or are applied to the skin with adhesive tape and a layer of conductive gel. The electrodes are placed on or around the area of pain or near the area’s nerves. The user can adjust the unit’s output by adjusting the electrical current intensity and pulse frequency.
TENS product sales are expected to reach $286.6 million in 1993, from $155.2 million in 1988, according to Frost and Sullivan Inc., a New York-based market research and consulting firm. Prescriptions of TENS have increased annually, according to Theta.
Medtronic Nortech Division, San Diego, has more than 30% of the market, followed by Empi, with between 10% and 15% and Staodyn, Longmont, Colo., with 8%. Medical Designs, Medical Devices, Inc., and 3M have the remaining market share, according to industry sources.
Price pressures, resulting from cuts in Medicare reimbursements and the influx of foreign imports, willlower TENS prices to $366 retail and $147 wholesale by 1994, Theta reports. TENS systems manufactured by the top three retailer or wholesale manufacturers, considered to be high-end TENS,cost $500 to $600 on average. Low-end TENS’ price pressure is said to be responsible for the overall price declines. Low-emd TENS will increase in unit sales to 40% or more of the TENS market by 1994, Theta predicts.
To combat foreign imports and improve their TENS sales, manufacturers are looking into reusable electrodes, which will lower patient cost. Medtronic has reusable on the market and Empi is developing them.
Companies also are re-evaluating their sales channels; the trend appears to be toward direct sales rather than distribution through durable medical equipment dealers. Medtronic and Empi have direct sales operations and Staodyn is looking into direct sales or a partnership arrangement in the U.S. market.
The major trade show for the TENS industry is the meeting of the American Physical Therapy Assn.
Study raises concerns
Whether TENS provides or does not provide relief for chronic pain has always been at issue. A number of studies have been performed addressing the efficacy of the therapy, reaching various conclusions.
But it was a study published in The New England Journal of Medicine last June and a subsequent story on the front page of The Wall Street Journal reporting the study’s findings that caught the public’s eye and outraged TENS manufacturers. Richard A. Deyo and colleagues of the Seattle Veterans Affairs Medical Center conducted the study using Empi’s TENS products and concluded that TENS is ineffective for the treatment of lower back pain.
TENS manufacturers, particularly Empi, were extremely concerned at this time about losing sales, especially because the study’s conclusion was published in a widely read newspaper. Maurer and others blasted the study for the methodolgy it used.
The study, though, has not hurt Empi’s or Medtronic’s sales, according to the manufacturers. Empi claims its sales are up and Medtronic reports its sales have not been affected.
Staodyn, which sells through dealers, has been hurt, according to Bayne Gibson, chief executive officer. He believes that as a result of the negative publicity, many dealers opted out of TENS business or were bought out.
“Our sales are off 18% because dealers left the business and Medtronic and Empi took some of them over,” he said.
All three companies believe the study damaged the TENS industry by raising concerns about the value of TENS, especially among insurance providers. Reimbursements for TENS are down from private payers, which the company attributes to the study.
But this may change in the wake of an editorial in the February issue of The Lancet that endorsed TENS therapy for patients with intractable back pain. “If a small percentage of patients can lead a useful life, return to work, control their therapy at home, and avoid further expensive treatment, this represents excellent value for money,” the article stated.
Manufacturers work with HIMA
The leading TENS manufacturers are taking action to challenge the findings of the study and the methodology that was used. The TENS subcommittee of the Health Industry Manufacturers Assn., chaired by Maurer, is selecting a biostatistician to evaluate the study. The subcommittee was scheduled to meet April 25 in Chicago. It also plans to sponsor a study comparing TENS, surgery and drugs, Maurer said. Staodyn plans to underwrite severl studies organized by HIMA, Gibson said.
Manufacturers also are working through HIMA to influence Health Care Financing Administration’s reimbursement policies on durable medical equipment. They claim that HCFA has made it difficult for people to get TENS by requiring doctors to complete a certificate of medical necessity before prescribing the treatment.
Medtronic sees a slowdown in sales caused by the CMN requirement, according to Dick Reid, a spokesperson for the company. Staodyn reports similar findings.
“Doctors aren’t taking the time to fill it out,” he said. “The industry is working with HIMA to reduce overutilization of the products and to enable a doctor to prescribes TENS within a reasonable amount of time.” It takes about 20 minutes to fill out the CMN form, Gibson noted.
Medtronic focus is deduction
Medtronic Nortech Division uses predominantly direct sales in the United States and at one time used dealers. Dealers are employed in 80 countries. The majority of the company’s sales are in the United States.
Medtronic switched to direct sales from distributors to better educate its customers on how to properly use TENS.
“In the TENS area, a responsible company has to furnish a level of education that requires it to maintain a close relationship with the user,” Reid said. “Performance depends on placement of the electrodes and tailoring treatment to the individual patient. An untrained therapist may not be delivering the necessary level of relief.”
Medtronic’s primary customer is the physical therapist working in hospitals or clinics, a key referral source to TENS patients. Other customers include physicians that deal with chronic pain, physicians that specialize in treating back pain, neurosurgeons and anesthesiologists. The company predicts anesthesiologists will become increasingly interested in TENS therapy.
Medtronic leases TENS to patients on a 30-day trial period. If the patient is dissatisfied with the product, the company takes it back.
Because patient satisfaction depends to a large extent on proper usage of TENS, Medtronic reps provide in-service training consisting of product demonstrations and showing the patient how to place the electrodes to get the most effective results, Reid said.
The average patient cost for a Medtronic TENS unit is $500, which is at the high end in the industry, Reid said. He noted that training and service are rolled into the price.
The company sees a growing TENS market and increased sales of all devices for pain control. Medtronic also manufactures neuromuscular stimulation devices used to bring back muscle tone. It predicts the number of pain clinics across the country will rise.
Low reimbursement for TENS is the company’s biggest concern because it supplies a large number of Medicare patients.
Empi touts TENS
Maurer is at the forefront of challenging The New England Journal of Medicine study and is aggressively working to promote TENS by working with HIMA and talking to the meedical press. His message is that TENS therapy is the most cost-effective and least risky way to treat chronic back pain.
“It’s important to get beyond the efficacy issue for back pain,” he said. “We can show a substantial savings of TENS over alternative narcotic treatment, which runs $200 a month.”
The initial cost for an Empi TENS unit is about $600, plus the electrodes, which can range from a low of $25 to a high of $75 annually if they are disposable, Maurer said.
Empi switched to direct sales in 1983 after evaluating its financial situation. “Our earnings looked like grandma’s teeth–we were losing profits,” Maurer said.
As a result. the company implemented a direct operations system costing between $2 million and $3 million, Maurer said. This cost includes a sales force and accompanying training program, a national distribution center, an automated mailer system for customer purchases and direct insurance billing.
Empi’s 35 reps market TENS on consignment primarily to physical therapists and hospitals, clinics and rehabilitation centers. A small number of licensed chiropractors also are customers.
Telemarketing, conducted by its Patient Care Services reps, is used to market to patients’ insurance companies.
Empi strongly emphasizes customer education and believes it is better conducted through direct sales than distribution.
“A critical part of TENS efficacy is training and (proper) use of TENS by the clinician and patient,” Maurer said. “TENS specialty dealers were good at training but DME dealers didn’t give it the attention it needed. (And) dealers were selling other companies’ units.”
Empi provides product literature, inservice demos, and videotapes and has a physical therapist on staff that is available at its 800 number. Empi reps also provide patient follow-up at his or her home.
Reimbursement by private payers is the company’s major concern. Maurer believes third party payments have declined because of The New England Journal of Medicine study and competing cheaper, foreign imports and other types of devices that are classified as TENS that do not meet industry standards.
(In May 1986, the Assn. for the Advancement of Medical Instrumentation set performance and safety requirements for TENS known as the AAMI standard.)
TENS comprises 60% of Empi’s business, Maurer said. The company also sells neuromuscular stimulation devices.
Staodyn looks at direct sales
Although Staodyn is a dealer-oriented company, it is evaluating direct sales, according to Gibson. “We’re looking at whether our dealers are doing proper education and training,” he said.
The company uses 60 independent manufacturers’ reps to sell to about 500 home care dealers, who in turn sell to physical therapists (the majority in private practice) and their dealers. Staodyn telemarkets to its small dealers. Its TENS units range from $100 to $300 for dealers and between $200 and $700 for patients.
To promote its products and the TENS industry, Staodyn is sending literature disputing The New England Journal of Medicine study and videotapes to its customers and is talking to insurance companies, Gibson said.
Gibson believes the market will grow and that TENS prices will stabilize following the 10% to 15% price decline in 1990. Companies will continue to enter the market but most will not last, he said.
Along with TENS, Staodyn sells neuromuscular devices and traction products and will soon hit the market with wound healing products.
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