The Growing Market in ‘Personal Emergency Response Systems’ In developed economies around the world, the home healthcare market is growing rapidly, driven in part by aging baby boomers and a growing trend of shifting some types of healthcare away from the hospital and into the home. These trends are helping make home healthcare an attractive market for Philips. According to the U.S. Census Bureau, the number of people over 65 in the United States is set to jump from approximately 34 million today, to 74 million in 2025. And worldwide, that number is expected to double from some 550 million to over 1.2 billion seniors. Many of these seniors will want to keep living independently at home and will be technology-savvy consumers of healthcare, who want to play an active role in managing their health and well-being. Increasingly, they’ll look to technologies that help them gain access to medical care while being able to remain independent and outside the hospital. One of these technologies is Personal Emergency Response Systems (PERS) – otherwise known as medical alert services. These services, offered by companies like Philips Lifeline and Health Watch, involve subscribers wearing a personal help button. In an emergency, subscribers simply press the button and are immediately connected to a caring, specially trained operator. These operators have instant access to the caller’s health history and personal history, and will ensure appropriate action is taken – whether notifying a family member or neighbor, or calling the emergency services. In 2004, Forrester, a healthcare industry analyst firm, estimated the PERS market in the United States would grow at double digit rates, from approximately USD 350 million in 2004 to USD 2 billion in 2012. Philips Lifeline’s and Health Watch’s customer base is mainly persons over the age of 75, who are predominantly female and live alone. However, often it is customers’ children who purchase PERS. Currently, the large majority of customers pay out-of-pocket, with government reimbursement for PERS varying from country to country. In 2004, 25% of PERS sales in the United States were government reimbursed, versus 35% in Germany, just over 50% in France and close to 100% in the United Kingdom. It is estimated that after 2010, government reimbursement for PERS will ramp up in a number of countries, further fuelling demand for these products. Health Watch is a major provider of Personal Emergency Response Systems in the United States. The company employs approximately 325 people, and is headquartered in Cherry Hills, New Jersey, with call centers in Boca Raton, Florida and Woburn, Massachusetts. Health Watch has approximately 1,200 distributors and wholesalers – who market and sell the Health Watch service in their local communities. These distributors and wholesalers actively market to and build awareness with approximately 9000 so-called “healthcare referral sources” – discharge planners, social workers, and private-duty nurses. These healthcare referral sources are in direct contact with a large majority of the hospital patients Health Watch is interested in targeting for its service. Such patients may have suffered a fall or other incident, which resulted in them being admitted to the hospital. Therefore, these healthcare referral sources are very influential in consumers deciding to acquire the Health Watch service. The relationship Health Watch has with it distribution network, which often includes co-branding of literature and other marketing material, is tightly weaved and represents an important competitive advantage, helping Health Watch reach some 100,000 subscribers. Through this acquisition, Philips can build on Lifelines’ network of 2,500 distributors and wholesalers in the US and Canada, through which it markets and sells to approximately 130,000 healthcare referral sources, reaching its roughly 650,000 subscribers. |