VGM gets plenty of SLEEP

Friday, March 31, 2006

WATERLOO, Iowa - The booming market for products and services to treat sleep disordered breathing hasn't been lost on The VGM Group.
In January, the company's Nationwide Respiratory division began helping members set up their own sleep labs as a way to diversify and offset Medicare reimbursement cuts. The new program is titled, appropriately, SLEEP (Sleep Lab Establishment and Empowerment Program).
"We've been getting a lot of calls on this," said Nationwide President Tom Pontzius. "The market for independent sleep labs has been growing probably 1.5 times faster than home care, and there are not enough people to take care of everyone who needs a sleep test."
Nationwide has about 30 active sleep lab projects and expects to set up about 50 this year, Pontzius said.
Nationwide offers providers a turnkey or a la carte option. With the turnkey option, the company will set up the entire lab and then turn it over to the provider. With the a la cart option, providers can pick and chose the componets--design, lab management, etc.--they want. The group also offers financing. A standard four-bed sleep lab setup costs about $400,000, Pontzius said.
In addition to setting up labs for providers, opportunities exist to partner with doctors and to manage existing labs, Pontzius said. But while the sleep lab business holds tremendous potential (see sidebar), Nationwide won't set up just anyone.
"We have told some people no," Pontzius said. "If they are in Chicago and there are 50 sleep labs already, for example, well, what are they going to do different? Or maybe they don't have physician relationships. If we think there is the possibility someone could fail, we won't do it."
In January, Harold Davis, a Nationwide consultant and former provider, worked with Nationwide to set up his own lab in Searcy, Ark. As of early March, the two-bed facility had performed about 40 sleep studies. One key to success, he said, is marketing to area physicians and residents and letting them know who you are and what you do. He's also found other Nationwide DMEs to be a big help. In his area, the local hospital has a sleep lab and also provides CPAP and related equipment. Providers cut off from the hospital's sleep referrals have encouraged their physician referral sources to send patients to Davis. In turn, he refers equipment rentals to them.
"If you have strong support from DME companies, they can help you expand your business," Davis said. "They see oxygen patients every day who may need a sleep study."