The American Academy of Sleep Medicine is promoting management of sleep apnea as a chronic disorder. Can you explain the basics of this model and give your opinion on its viability as a business model?
The premise views sleep apnea as a chronic condition requiring long-term disease management services. Clearly, the model is viable as a business model, but the revenue stream may prove considerably smaller for many sleep centers unless two key components are instituted or maintained in the system. These components involve how to use overnight PSG services in the sleep lab and how to incorporate a DME program into the overall sleep center operations.
Starting with lab services, for the next several years many opportunities to generate revenue through sleep studies will continue, especially for titrations compared to diagnostic studies. The pervasive mediocrity of DME companies insures that many patients will fail their initial attempts at CPAP. This failure rate is compounded by sleep centers that have not previously focused on CPAP compliance. We repeatedly see this scenario now, and it will continue for several years or longer: namely, the proportion of disenchanted OSA and UARS patients will attain epidemic status, necessitating higher quality services in the form of expert titrations.
Sleep labs already conducting advanced titrations (e.g. ABPAP, ASV) may see growth, because centers that ceased lab work possess no direct, objective resources to solve patients’ problems. As insurance is more likely to cover a failing patient’s return to the lab, the non-lab facilities must refer their patients elsewhere. Moreover, any sleep lab that trains sleep techs with sophisticated PAP devices to overcome RERAs and lessen expiratory pressure intolerance (EPI) will see an influx of second opinion patients beating down their doors, given the high failure rates observed with recent business models that over-emphasize home testing and unattended use of auto-adjusting PAP.
The second area involves integration of DME into the sleep center. Despite the disturbing response from CMS toward the AASM proposal for Stark law exemptions, most insurance companies will eventually own up to the absurdity which they wrought upon themselves by relying on the paradoxical arrangement of separating DMEs from sleep center operations. Although many legal and administration challenges may arise setting up a DME, a considerable revenue stream awaits those willing to pursue these additional aspects of product and service delivery. The resupply component is thought to be the mainstay and clearly fits with the chronic management paradigm. Thus, sleep centers should become viable centers for DME.
A related solution is the rise of DME companies like Classic Sleepcare that specialize only in sleep devices and other sleep health areas. These sleep-only entities are much better positioned to excel compared to broad-based DME companies, because the focus on sleep will drive them toward far greater precision in care. With this model, expect to see increasing collaborations or perhaps affiliate programs where sleep centers enter the DME side by working with sleep-focused DME companies.
Those sleep medical centers that address lab services or DME components or preferably both are likely to maintain a reasonable degree of stability and possibly some growth, until the inevitable technological advances or regulatory burdens trigger new chaos and challenges.