Stark laws scare away some HMEs

Friday, March 31, 2006

YARMOUTH, Maine - With the sleep market booming, HME-owned sleep labs would seem to be a dream fit for CPAP providers, but that's not always the case.
Don White, president of Associated Healthcare Systems in Amherst, N.Y. operated a successful sleep lab for nearly 10 years but sold it in 2000, despite it running at a three-month backlog.
"The lab made money every year it was open," said White.
But the company didn't want to run afoul of Stark laws prohibiting self-referral from lab to company for treatment.
"We were diagnosing these patients and not treating them," said White. "I'd rather be on the treatment end than the diagnostic end. We grew up on this."
Alan Kirk, vice president and general manager of Elgin, Ill.-based Total Home Health, ran a profitable two-bed sleep lab for eight years before closing it in 2005.
"We closed it because so many doctors in our area were involved in their own sleep labs--our referral base was declining," said Kirk. "It seemed wiser to close it and pick up more CPAP, which is what we did."
Michael Thomas, president and CEO of Sleep Solutions in Pasadena, Md., said physicians may be picking up where providers are leaving off.
"Physicians are running at this like it's the gold rush of the new millennium," said Thomas. "Everybody wants to open a sleep lab."
But Kirk and White both said their energies were better directed elsewhere.
"It really is a matter of focus," said White. "If people are looking to get into labs, my idea would be to get out of treatment and focus on being really good at it."