Total Market Size Estimations
In determining the size of the market for our device, we must first analyze the populations most likely to invest in such a machine. As stated before, 20% of Americans age 65 or older take 5 or more medications. According to the US Census Bureau, 12.5% of Americans in 2006 were aged 65 or over and the total population was 299,398,485; thus we know that about 37,424,810 of the people in the US are over 65. From this, we further calculate that 7,484,962 people are 65 or older and take 5 or more medications, which we can also round to 7.5 million to minimize complexity. This can be considered our market size; there may be discrepancies in the numbers such as including persons under 65 years of age who require this type of device such as those with cognitive deficiencies, or the exclusion of persons over 65 years of age who do not need the device. However, we can take this number to be a fair estimate of potential buyers.
Financing Options
Purchasing and leasing are the primary two modes of financial compensation for a device of this type. If the device falls short of a retail price of $1000, the device could be marketable for private sale much like its competitors1.
What we see as the most significant barrier to consumer adoption would be costs associated with service and repair of the device. Customers would be required to pay for repairs after a limited warranty is over and be subject to the typical inconveniences inherent in getting a broken device to a repair center.
A business model that takes consumer confidence into account would have a a revenue model focused on leasing the unit both to insurance companies and directly to consumers. This would provide more flexibility in terms of cost to consumer relative to the manufacturing costs, lessening the psychological affects of seeing a large price tag. This would reduce the risk of device failure for customers by including the cost of maintaince and repair into the monthly service charge. It would also have a higher return in company income over time. Marketing consumable prescription tops to pharmacies would also provide a steady flow of income for other operational costs.
To help customers with inherited fees, Medicaid programs offer waivers for in-home devices such as medication dispensers. Currently, 31 states, including California, New York, and Iowa offer such a waiver2. In the case that Medicare and Medicaid programs do offer waivers, the customer can still be expected to pay a small portion of the cost. Requisite conditions that must be met for Medicaid waivers to apply include3:
- The member has a diagnosis indictive of cognitive impairment or age–related factors that affect the member’s ability to remember to take medications.
- The member is on two or more medications prescribed to be administered more than one time a day.
- The availability of a caregiver to administer the medications or perform setup is limited or nonexistent.
- Less costly alternatives, such as medisets or telephone reminders, have failed.
The disposable functionalized caps, leasing fees, and equipment purchase are potential revenue sources. If the cost of the device is significantly higher than that of competing devices, the leasing of the dispenser will likely be necessary in order to get it into homes.
References
1 epill.com
2 Enhanced Care Solutions. “Medicare, Medicaid, and Other Financial Assistance Programs.” 2005. <http://www.enhancedcare.com/medicaremedicaid.htm>
3 ARC 5971B. “Human Services Department: Notice of Intended Action”. 2007. Iowa Medicaid Enterprise. <http://www.ime.state.ia.us/>