Sleep Industry 2008: Outlook Good

If the third HME sleep survey by Wachovia Capital Markets is any indication, 2008 will continue to be a strong year for the sleep industry. The results of the survey, a partnership with Respiratory Management's sister publication, HME Business, were released Nov. 28. On average, respondents estimated 11 percent growth for sleep over the next 12 months.

Michael S. Matson, senior analyst of Wachovia's Medical Device Equity Research, says increasing awareness and increasing prevalence driven by the obesity epidemic are the two main factors driving growth. "We estimate, even without the market growing, only about 30 percent of the patients are currently being treated with CPAP that could possibly be treated with CPAP," he says.

Though estimates are lower than the two previous studies — which showed 15 percent growth in the fourth quarter of 2006 and 12 percent growth in the second quarter of 2007 — Wachovia reports that the estimates are on par with the financial institution's estimates of 14 percent growth.

"The market's gotten bigger; it's harder to keep the same levels of growth," Matson explains. "It's natural for things to slow. That being say, I would say we expect the market to pick up back in the upper teens over the next few quarters."

Competitive Bidding
A total of 68 percent of survey respondents said they plan to participate in competitive bidding when the process is implemented in their area. Still, HMEs expect a substantial decline in reimbursement under bidding —14.9 percent on average. The survey showed that 43 and 40 percent of respondents saw no change in flow generator prices and mask prices, respectively, in the past 12 months.

Brand Satisfaction
The survey asked participants to rate select flow generators on a scale of 1 to 7, with 1 being the worst and 7 being the best. Respondents rated Respironics' M-Series highest (5.6), followed by ResMed's S8 (5.0) and Fisher & Paykel's HC200/HC600 (4.2). Respondents said they planned to increase purchases of Respironics' devices by 42 percent.

Regarding masks, the highest ratings for nasal pillows listed were ResMed's Mirage Swift II and Mirage Swift (5.4 and 5.0, respectively) and Respironics' OptiLife (4.7). ResMed's Ultra Mirage scored the highest for full-face masks at 5.3, followed by a tie with Fisher & Paykel's FlexiFit 431/432 (5.0) and ResMed's Mirage Quattro (5.0). Respondents planned to increase purchases of Respironics' (by 41 percent) and ResMed's masks (by 32 percent) over the next 12 months.

Home Sleep Testing
For the first time, the survey included questions regarding home sleep testing. Among those surveyed, 48 percent believe unattended home testing for sleep apnea is reliable and 46 percent plan to offer home tests if CMS changes its coverage policy to allow home testing.

In addition, respondents were asked to rate the importance of several factors of home testing. The results show that HMEs thought continuing to administer PSG as a means of diagnosing complex sleep apnea (5.4 on a 7-point scale) and using an auto-setting CPAP for titration (5.3) were the most important factors for HME providers.

Out of the manufacturers of home sleep tests listed, respondents said they were most likely to purchase devices from Respironics (4.6), followed by ResMed (3.5) and Covidien (2.3).

The survey included responses from 100 HMEs between Nov. 2-13, 2007.

For additional information on the Wachovia Sleep Study, read the article in the January issue of HME Business, RM's sister publication.

Disclosure: Wachovia Capital Markets is a U.S. broker-dealer with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. The company does and seeks to do business with companies covered in its research reports. Wachovia Capital Markets maintains a market in the common stock of Respironics and listed ResMed on its survey disclosures.

This article originally appeared in the Respiratory Management Jan/Feb 2008 issue of HME Business.

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