On average, Sleep providers reported their sleep patient volume grew 5.2 percent in the last 12 months and expected 6.1 percent growth in the next 12 months, according to the latest survey of seep providers conducted by HME Business and Needham & Company LLC
Conducted during the fourth quarter of 2014, only 17 percent of respondents experienced a decline in their sleep patient volume over the past 12 months, and 12 percent said they expect a decline in the next 12 months.
Another key finding was that follow-up was an essential revenue driver. Nearly all — 78 percent — of respondents said they follow up with sleep patients to drive resupply sales. Of the methods used, live phone calls topped the list of follow-up techniques, being used by 69 percent of respondents; followed by automated calls, which was used by 59 percent; email, which was used by 34 percent; and regular mail, which used by 13 percent.
In terms of re-supply equipment, sleep providers said they expect mask use to increase. Respondents reported that patients used an average of 1.95 masks per year in the last 12 months, and they expect this to increase to 2.10 masks per year in the next 12 months. Needham estimated that this could increase mask market growth by 8 to 9 percent.
However, as patients are now using almost two masks per year, the effect of increased replacement rates is probably slightly diminishing since Needham estimated this measure will hit its ceiling at roughly 2.5 masks per year. (This was calculated based on 2 masks per year for privately insured patients, multiplied by 75 percent of payor mix, plus 4 masks per year for Medicare patients, multiplied by 25 percent of payor mix, which equates to 2.5 masks per year.)
Of course, the reason for driving revenue is declining reimbursement, not due solely to Medicare, but also private payor insurance. Respondents indicated that, on average, 51 percent of commercial incurrence carriers had reduced reimbursement as a result of Medicare competitive bidding. This corroborates the anecdotal reports that private insurers have been cutting reimbursement rates.
According to the Round Two winners responding to the survey (roughly 30 percent of respondents), the most common strategy for coping with lower reimbursement is negotiating lower prices with existing suppliers. To that end, the respondents indicated that some major manufacturers had reduced prices in the last three months in response to bidding.
Other respondents, including those that didn’t get Round Two contracts, indicated that flow generator prices declined 5.8 percent over the last 12 months (vs. a 5.4 print decline in our prior survey), while mask prices declined 5 percent over the same period (vs. a 4.8 percent decline in prior survey). These marked the largest declines in the eight years of our survey.