It's a first: Sleep surpasses oxygen

Saturday, December 31, 2005

PITTSBURG, Kansas - For the first time, beginning this fall, Mt. Carmel Medical Equipment saw its sleep referrals jump ahead of oxygen referrals--a trend that doesn't surprise some industry watchers, who say it could begin to play out nationally.
General Manager Gary Miller suspects a pulmonologist who recently moved from New Jersey to sleepy Crawford County (population 40,000) tapped into an undiagnosed population of patients with potential sleep disorders and sent many of them his way for CPAPs and Bi-PAPs.
"It's had a dramatic effect on our business," he said. "I ran a report on revenues by item group, and 32% is oxygen concentrators. But, boom, the next thing is CPAPs (masks, tubing and associated supplies) at 10%. That's a huge jump. It used to be at less than 4%."
From its single location here, the 15-year-old Mt. Carmel earns about $1.5 million in revenues per year. Its growth rate is 6% to 7%.
Mt. Carmel plans to leverage a new home sleep screening tool this month to boost its sleep business even further. The tool--ApneaLink from the Poway, Calif.-based ResMed--records a patient's breathing patterns in his own home using a cannula-type device hooked up to a machine the size of an iPod. The provider downloads the information the next day and assigns the patient a sleep score, said Ron Richard, vice president of marketing for ResMed.
At least initially, Miller envisions using ApneaLink as a marketing tool (rather than a billable tool) to garner additional sleep referrals for therapies like CPAPs.
"In the past, when we've approached referral sources, they've said, 'Oh, you're the guy with the oxygen. Yeah, I know because we just saw two other guys. Why are you better?'" he said. "It's tough to set yourself apart. Everyone says they offer the best service. Now we can say, 'We have a unique tool that can help your patients. And by the way, we can also help them manage their disorders.'"
More "savvy" providers think like Mt. Carmel: They try to figure out a way to "play off their oxygen business to sleep," said Michael Thomas, president and CEO of the Pasadena, Md.-based Sleep Solutions.
"Reimbursement isn't as good with CPAPs, but there are a lot more units being turned over," he said.