Sleep Labs: Friend or Foe?

• By Deborah Cooper
• Sep 01, 2006

The Wachovia Securities survey of 2006 showed that sleep centers have experienced a 21 percent increase in total bed capacity in the last year. In addition, 15 percent of sleep centers are currently selling CPAP devices and masks, and another 15 percent are forecast to retail sleep products in the next 12 months. One thing the industry is strongly in agreement about is that the proliferation of sleep labs and their entrée into the DME sector cannot be ignored.

“Sleep labs are fundamental to the success of the industry,” says John Frank, Respironics. “They identify and help diagnose the problem of OSA and establish a care plan for that patient.” The provider, he adds, plays a vital role in helping to educate the physician about the latest therapy options.

The relationship among manufacturer, provider and sleep lab is symbiotic. “It’s extremely important that we all work together,” explains Ron Richard, ResMed. He views sleep centers as positioned at the front line of patient care, performing testing, managing patients and getting results that turn into prescriptions. The sleep centers are able to take advantage of the latest technology to produce better outcomes, which in turn trickles down to the patients and ensures they receive the proper treatment. The DME’s, manufacturers and sleep centers should work together he says, for an integrated approach.

“Right now we have a situation where the providers and sleep labs are not together yet,” says Ann MacGregor, Invacare. “There’s been a feeling over the years that providers aren’t providing the needed care that keeps patients running back to the sleep labs after they have been titrated. Only so many people can give this care, and they have other pieces of the business to attend to. This [relationship] is a huge and a growing topic at meetings.”

On the other side of the coin, sleep labs may be deluding themselves about entering the DME arena. “The grass is always greener,” says Bob Messenger, Invacare. By the time the sleep lab has performed all the education, follow-up, equipment replacement, and other general legwork, they may not get much back for it. As it currently stands, providers themselves are putting in a ton of work and are not getting paid for it very well, especially when the unit is turned over to patients after 13 months.

One shift that is happening is that more patients are going to the provider for care. “We’re seeing fewer RTs driving around for an hour to get the patient,” adds Messenger. Providers can have patients show up and they do not even necessarily need to set appointments.

Some acknowledge that the picture may not be that rosy, depending on which side of the fence you sit. “The HME provider is facing challenges because of sleep labs doing CPAPs,” says Tom Pontzius, president, National Respiratory, VGM. “There are a number of HMEs wanting to get into the sleep lab business. We help them manage it… for example, we’ve created some direct-to-consumer media that, in conjunction with a sleep lab, can run print and television ads to capture the patient on the front end. This generates referrals to sleep labs, which helps labs grow, which in turn helps providers.”

Innovations Through Technology
One of the primary factors fueling the growth of the sleep market is the technological developments that have occurred in the last couple of years. Heated humidification has allowed users to adapt to their CPAPs better because it is closer to breathing ambient air.

Patient comfort has taken great strides forward. Machines have become smaller and therefore more mobile so patients can travel more easily. “it’s nothing to see two or three patients get on an airplane with a CPAP machine,” says Ron Richard, ResMed.

Better designs in sleep masks have also contributed to greater patient mobility, as well as better compliance. “Sleep apnea technology only continues to get better,” says John Frank, Respironics.

Improving Outcomes Data
There was a time, about 20 years ago, when CPAP was considered an experimental therapy. In that context, the industry has come a long way in terms of acceptance, but there is still more to be done. Awareness is increasing but, “it takes a long time and the efforts of many people,” says Ann MacGregor.

The need for outcomes data has grown along with the sleep market itself and apparently, manufacturers recognize the need and vital importance of having more clinical data by investing in studies. “The industry needs to get very serious about clinical outcome studies to convince clinicians and payors that the therapy has a purpose,” says John Frank, Respironics. Data collection benefits the provider as well as the manufacturer, as the more clinical evidence that exists to support the therapy, the better reimbursement could be.

There is also widespread support for a large industry study to look at what constitutes good care for follow-up patients on CPAP, according to Ron Richard, ResMed. “If we can get that info together by a third party who is respected by CMS and payors, it will carry a lot of weight, and it’s something a dealer can present to an insurance company or doctor.”

Future Trends and Cautions
Optimism abounds about the future of the sleep market in the next couple of years, regardless of changes to reimbursement and the competitive bidding environment. “I think things are headed in the right direction,” says Bill Mack, Hi-Tech Medical. “People know the issues are compliance, good use of the therapy, and comfort. Within the industry people are very much attuned to the needs of the end users out there.” The National Institutes of Health estimate that 12 million people are currently diagnosed with sleep apnea, but that there are millions more who remain undiagnosed. There exists a vast, untapped market. The potential remains for everyone involved to continue to grow, improve, and discover new avenues of research—and reimbursement—in the sleep industry.

This article originally appeared in the Respiratory Management Sept/Oct 2006 issue of HME Business.