No Caffeine Required: Wide Awake in the Sleep Market
- By Deborah Cooper
- Sep 01, 2006
If it’s not already a cliché, it soon will be: The sleep segment of the DME respiratory market is booming. According to a Wachovia Securities survey published in January, 2006, brand-specific prescriptions for flow generators were up from 29 percent to 47 percent of prescriptions in the current survey. Market analysts predict an overall 20 percent growth in the sleep apnea market through 2007.
Manufacturers recognize the surging growth trends in the sleep market. “I think the market is more robust now than it has ever been,” says Ron Richard, senior VP, Strategic Marketing Initiatives, ResMed Corporation. “The general overall awareness of sleep disorders accepted by the media has been overwhelming. There’s a lot of interest in it, and it’s a crucial part of people’s lives.”
One of the biggest boosts to awareness of sleep disorders has been publication of several clinical research studies, which have shown the association between sleep apnea and other co-morbidities, such as hypertension, cardiovascular disease, stroke, obesity, and diabetes. “Debilitating chronic disorders are costing billions of dollars each year to treat. Connecting these dots...has been a major breakthrough,” says Richard.
A key factor in the growth of the industry has been the utilization of developments in CPAP devices. “CPAP is the primary treatment. It’s unlikely there will be an alternative management approach on the near horizon,” says John Frank, VP and general manager, Home Respiratory Care, Respironics. “CPAPs have become more consumer-oriented, much more user friendly, small and compact. This allows patients to travel with their devices without feeling attached to a piece of medical equipment.”
It is not just on the clinical side that recognition is rising. Two leading sleep manufacturers united to help raise the general public’s awareness of sleep disorders. ResMed and Respironics jointly launched a Web site, SleepApneaInfo.com to serve as an objective online resource for obstructive sleep apnea (OSA) sufferers and their families. Now, the combination of clinical and consumer awareness has reached the point where, according to John Frank, “the sleep apnea market is probably one of the leading businesses for a home care provider, second only to oxygen delivery.”
Hi-Tech Medical is a high-end manufacturer for hoses in the respiratory industry. “Sleep is the largest part of our business…We’re growing at about 15-20 percent annually,” explains Bill Mack, General Manager. He is optimistic about the state of the sleep market since every CPAP has a hose, and there is also a need for replacement about every three months.
While other areas of the DME industry have already felt the weight of reimbursement cuts, there appears to be a feeling that the sleep market has come away relatively unscathed—at least until now. One recent significant change occurred on Jan. 1, 2006, with new guidelines for Respiratory Assistive Devices (RAD). The oxygen desaturation requirement was eliminated from the documenting criteria for central sleep apnea and complex sleep apnea.
“Previously a patient with healthy lungs wouldn’t necessarily qualify for a RAD device. You could end up putting them on a CPAP that was not correct. Then you would have to change the device or have them undergo another sleep study,” explains Christen Pettit, marketing initiatives coordinator, ResMed Corporation. “But now, with the elimination of this requirement, patients can get the right treatment the first time. This change came about because the industry had worked with some physicians, and they recognized a need.”
The sleep market has not escaped the rental cap and transfer of ownership on CPAP and bi-level devices, after 13 months. However, there is one bright spot about the new rules, according to Pettit. There is some compensation in the accompanying change in accessories reimbursement. Previously, accessories were included in the monthly bill. Now, accessories such as masks, filters and tubing can be billed individually.
Competitive BiddingWhile it seems inevitable that competitive bidding will impact all areas of the respiratory market, the sleep portion may weather the changes more easily than other parts of the industry. “The reality is that most of the sleep apnea business is for patients that are pre-Medicare, and so although there will be some impact on our CPAP business, our oxygen and ventilation arenas are likely to be challenged more than sleep,” says John Frank, Respironics. Sleep disorders primarily affect people under age 65 and about 80 percent are reimbursed through private pay, with only the other 20 percent paid through Medicare.
In fact, some compare the onset of competitive bidding to the way that the home care industry already bids for business with private-pay companies, and predict there will be an equalizing effect: “This is taking a system where anyone could come in and provide products and services to Medicare, and now it is coming more in line with the overall market. It’s leveling the playing field,” says Ron Richard, ResMed. Additionally, another potential positive aspect is that the new rules will enforce greater quality standards, says Richard, and that can only mean better levels of care for the patient.
But, all agree that providers are going to feel the pinch more than anybody. The lack of details and clarity on exactly what is involved in the competitive bidding process makes for a frustrating time. Manufacturers are supporting providers in several ways, most commonly through lobbying efforts and by offering programs to directly support the provider in their day-to-day operations. “As a manufacturer we invest in our legislative and regulatory lobbying efforts. We participate in AAHomecare and other coalitions and councils…We help to lobby the same points that we hear from our providers,” says John Frank, Respironics.
Competitive bidding will dramatically affect patient compliance, according to Bob Messenger BS, RRT, senior clinical manager, Sleep Products, Invacare. He predicts that providers will have to look closely at the level of support and follow-up they can offer. “CPAP requires good follow-up and good education for a patient…We’re going to see compliance rates in that Medicare population sliding way backwards.” The result is a vicious cycle of spiraling health care costs, since, “if patients are not compliant, they are going to encounter problems of obesity, diabetes, strokes and so forth, and it’s ultimately going to cost so much more than the relatively few dollars [CMS would] save with competitive bidding.”
Patient ComplianceCosts aside, the issue of compliance is in the forefront of many manufacturer’s minds.
“Compliance is really coming into its own right now,” says Ann MacGregor, VP and category manager, Sleep, Invacare. “All manufacturers are looking at how to take patients to the next level in wanting to use these [CPAP] units.” One of the problems currently is that not enough scientific data has been generated on exactly which methodology will get the best compliance results. But, MacGregor is optimistic that compliance levels will rise as manufacturers continue to work on putting in features on their machines that will advance the field.
More work is needed on the patients’ side to make them fully aware of how their devices function. Their general lack of knowledge leads to assumptions about the proper care of the unit; for example, “I’ve heard of people who have taken the hose on the CPAP device and washed it in the dishwasher so they can reuse it. Hoses should actually be replaced every three months,” explains Bill Mack, Hi-Tech Medical.
The Sleep Manufacturers’ AllianceThe sleep industry now has its own voice. The Sleep Manufacturers’ Alliance consists of nine members who produce and sell equipment to treat and diagnose sleep disordered breathing. These members are: Embla, Fisher & Paykel Healthcare, Invacare Corporation, Pro-Tech Services, Puritan Bennett, ResMed, Respironics, Sunrise Medical, and VIASYS Healthcare.
In July 2006, the Alliance presented a letter to CMS, commenting on the notice of proposed rule making (NPRM) for competitive bidding. The Alliance stated that CPAP was “not an appropriate category for competitive bidding.” The letter also included seven specific items for CMS to consider.
The Alliance grew out of humble beginnings from an ad hoc meeting in a hallway at a trade show, explains Ron Richard, ResMed. The group, which consists of both therapeutic and diagnostic manufacturers, is focusing on issues such as what constitutes good aftercare and reimbursement, but the number-one goal, at least in the short term, is getting CPAPS excluded from competitive bidding.
“By putting one voice to the manufacturers of sleep products, putting one voice into a lobbying effort, we’re stating with strength how topics like competitive bidding can affect the whole industry,” says Ann MacGregor, Invacare.
For more information about the Alliance, please email: Phillip Porte, GRQ LLC,
[email protected]
This article originally appeared in the Respiratory Management Sept/Oct 2006 issue of HME Business.