Provider plans big expansion
CARMEL, Ind. - Sleep provider Dormir in July raised $12 million in venture capital to help fuel its expansion from 14 to 20 states in 2010.
"We picked the right time to do it," said CEO Tim Miller. "There's been some changes in the marketplace and we saw an opportunity."
Those changes include a 9.5% reimbursement cut that went into effect Jan. 1, along with accreditation, documentation and surety bond requirements. Add in the high cost of providing sleep services and many smaller companies--those in the $500,000 to $2 million range--simply can't survive, said Miller.
"The challenging thing with sleep therapy is you have the whole service aspect," he said. "We don't get paid for service, or for putting on a better piece of equipment or touching that patient multiple times."
Enter Dormir, which plans to use its capital to grow through acquisitions.
The four-year-old provider operates through its subsidiaries: MD Sleep, which manages 32 sleep centers; and CardioSom, which offers CPAP and related respiratory equipment in 31 locations.
When expanding into a new market, Dormir typically acquires a sleep lab--either standalone or hospital-owned--followed by a DME. The model evolved in response to physicians who wanted comprehensive care for their patients, said Miller.
"They wanted to make sure the (patients) are followed up with and are compliant," said Miller. "Most DMEs focus on oxygen and the sleep therapy gets left behind. We are focused on more than just selling a device."
New patients are seen several times in the first 30 to 60 days of treatment.
"The way to get a patient compliant is through hands-on touching," said Miller. "Usually the reason a patient is not compliant is the mask. It leaks, it blows air in the eyes, it's noisy or it hurts, so it ends up in the corner."
Dormir also tracks what is happening with any existing co-morbidities.
"If we are looking at a patient with CHF we can educate that patient on why it's important to wear the device, get compliant and (show them) the outcome benefits," said Miller. "It's a real clinically integrated approach."
The company's compliance rate is at 94%, and Miller says the company is in it for the long haul.
"You can get them set up the first time, but the body changes, the neck size increases or decreases, or the airway changes," he said. "We are looking at long-term results for the physician and patient."