Sleep equipment offers multiple sales dimensions

Friday, June 30, 2006

There are various veins of the sleep market that can be mined by the HME provider, but they are all bound by one important factor: establishing trust with those who use and recommend the products. By building an impeccable reputation as a knowledgeable and dependable supplier of sleep products, manufacturers say, there are limitless opportunities for HME companies to pursue.
An offshoot of the respiratory business, sleep therapy began in the mid-1980s and two decades later is reportedly poised for tremendous growth. Advancements in sleep science, combined with greater public awareness about the serious health hazards of obstructive sleep apnea are expected to dramatically inflate demand for diagnostic and therapeutic equipment like autotitration and continuous positive airway pressure (CPAP) devices.
Currently though, the sleep industry must amplify the message of sleep therapy's effectiveness to the clinical community, said Kristie Burns, director of market development for Poway, Calif.-based ResMed.
"Market growth is rather significant, but at the same time, compound growth has barely begun," she said. "The education of the average clinician is still very low. People have heard about it, but it's not something that rolls off their tongues. The first thing they do is pull out a scrip pad, believing that medicine is the answer."
ResMed's primary marketing thrust is the country's 250,000 primary care practitioners, who Burns maintains need more enlightenment about the nature of sleep apnea and the importance of early diagnosis.
"We're actually doing a good job diagnosing apnea, we're just detecting it too late," she said. "This is not a typical geriatric patient. It is a younger patient who we need to find in his 20s and 30s--before complications occur."
Burns concedes that while the sleep industry faces a daunting task in expanding physician awareness about therapeutic equipment, CPAP reimbursement is fairly stable and creates a solid foundation for building sales volume.
"When you look at the bottom line contribution, it's pretty steady," she said. "The best opportunity comes from taking ideal care of each sleep patient, ensuring they become repeat customers. That way you can follow up with replacement products and other extras."
John Miclot, CEO of Murrysville, Pa-based Respironics, agrees that CPAP patients present the best opportunity for ancillary product sales because apnea is a chronic condition and patients will always need new masks, hoses and filters. Most insurers pay for replacement products on a regular basis, so providers need to diligently follow up with patients, he said.
To be sure, replacements are "the low hanging fruit" of the sleep business, said Hillary Theakston, ResMed's director of communications.
"Although the lion's share of investment is in penetrating the market, the provider must go beyond the setup phase," she said. "Insurance will pay for a minimum of two masks per year on average and cushions, filters and hoses every 30 days. This is money that is being left on the table."
Yet, while maintaining a continuous flow of replacement products is a sound business strategy, providers still need to be judicious, said Ann MacGregor, vice president of sleep for Elyria, Ohio-based Invacare.
"My advice is to replace these products only when necessary," she said. "If insurers sense that the equipment is coming fast and furious, they will tighten their policies in order to slow it down."
Sleep study status
In addition to providing CPAP equipment to those diagnosed with apnea, Miclot recommends that HME providers look into handling remote patient diagnostics. While not considered a replacement for studies done in a certified sleep lab, it can serve as an adjunct for labs that may be overburdened.
"Autotitration technology, which automatically changes CPAP pressure, is already in common use around the world," Miclot said. "It is in predominant use in Japan and France. It provides very accurate readings and is more efficient for payers."
Indeed, the medical establishment is gradually accepting portable sleep monitoring as an alternative to lab testing, but it is unlikely that sleep labs will let HME companies handle it independently, said Steve Birch, director of marketing for sleep diagnostics and therapeutics for Yorba Linda, Calif.-based Viasys.
"There is growing acceptance because it allows the sleep lab to extend its reach--they are burdened by huge backlogs," he said. "But the jury's still out. Labs aren't comfortable with letting others take over their domain. They still want quality control. They want to make sure that the testing is done properly."
Still, remote testing can serve as a tool for the sleep lab and HME providers should be seeking ways to partner with them on this service, Birch said.
Pushing portables
Patient compliance has been a thorny issue with CPAPs and even with advancements in masks and interfaces, providers must be diligent in ensuring sustained usage, manufacturers say. This extends to portable units, which are an important bridge technology for apnea patients who spend an appreciable amount of time away from home. And while compliant patients represent the minority, they most likely will be enthusiastic about obtaining a portable system, said Holly Larkin, senior director of marketing and clinical affairs for Minneapolis-based AeioMed.
On CPAP since 1989, Larkin epitomizes the compliant user and has found the portable unit to be indispensable for traveling. Moreover, the new generation of portables can be easily packed and carried.
"You don't need a forklift to take it with you," she said.