Join the Club: Sleep Nation scales up

Friday, December 28, 2012

FRANKLIN, Tenn. – Sleep Nation in December rolled up the CPAP business of five HME providers—and that’s just the beginning, says CEO Richardson Roberts.

“We feel like we’ve got a good chance to have strong growth and be a significant player in the industry,” he said. “It’s a great goal to be one of the top four or five companies in any industry, so essentially, that’s our goal and we have a five-year plan to get us there.”

The acquisitions are the first since Sleep Nation acquired CPAP Care Club from Simplex Healthcare in May to create a platform to roll up sleep businesses. CPAP Care Club, which operates as a national mail-order company, focuses primarily on resupplies, with Medicare comprising about 40% of its business.

Having scale will enable CPAP Care Club to weather changes like an expanding competitive bidding program and increased documentation requirements from Medicare and commercial payers, says Roberts. The provider submitted bids in Round 2.

“We are buying thousands and thousands of the same supplies that smaller DME providers have been buying, so our buying power gives us better pricing,” he said. “We are hopeful that we’ll be among the winners.”

The move doesn’t surprise industry analysts, who say they’ve seen similar activity in diabetes and other disposable supply markets.

“There are companies that are moving into what they call the supply side,” said Don Davis, president of Duckridge Advisors. “Basically, it’s any kind of disposable type of supply that can be shipped without the traditional HME provider.”

Whatever changes are in store for the CPAP industry, it’s still a good place to be, says Roberts.

“The awareness of not getting a good night’s sleep has become much greater over the past few years,” he said. “It’s not just that you’re tired the next day, it’s that it leads to so many other comorbidities: diabetes, heart disease. The public is finally waking up to that side.”