The 2014 HME Handbook: Sleep

How to Expand Your Sleep Business via New and Existing Patients

Three key considerations providers should study as they shape their growth strategies.

Sleep BusinessWhile sleep providers don’t depend on Medicare as much as other providers (many have as few as 25 percent Medicare CPAP business), they are in many ways facing same kinds of pressures as traditional HME businesses. In addition to competitive bidding Round Two’s forcing of bidding for national mail order services, the change in Medicare reimbursement is influencing private payors to reduce their reimbursement. As a result, these effects are creating additional competition among sleep providers.

That said, providers know the business is there. Respondents to the survey Fourth Quarter 2013 HME Sleep Survey that was conduced by HME Business and Needham & Company LLC said they saw their sleep patient volume grow by 6.7 percent in the last 12 months, and expected their sleep patient volume to grow by 5.4 percent in the next 12 months. Moreover, U.S. shipments of auto-positive airway pressure devices will jump a considerable 70 percent over 2013 levels by 2017, according to a report from IHS Technology. The IHS report added that shipments of Auto-PAP devices in the United States will increased at a compound annual growth rate of 14.2 percent over the next four years.

This means that providers need to determine how they can maximize the revenue that they have, while also looking into how they can tap into new market opportunities. Let’s examine three key things they should be studying as they shape their growth strategies:

Sleep Resupply

If anything, when it comes to expanding sleep revenues, the name of the game is resupply. In order to capitalize on the reimbursement and retail opportunities available in providing mask liners, wipes and other key replacement and cleaning items. However, sleep resupply means more than just selling products. In order to grow resupply into a lucrative, integral revenue driver, providers must integrate other aspects of the business, such as education, maintenance, inventory control and marketing, in order to make sure the entire organization is driving sleep revenue.

Communication is essential in resupply success. A plan must be in place and followed on an on-going basis. There are a variety of ways of doing this: phone calls, postcards, email marketing, social media, and interactive voice response system. Providers will have to determine which communication method works best for which patient, but the key is that the provider is regularly letting patients know they have resupply items available.

Another key part of the resupply process is getting the team on board. Provider staff must be trained to suggest additional items that the patient might want on every resupply order. While taking an order from a patient on a replacement mask liner, the staff member could ask if they are interested in getting a CPAP pillow or cleaning products.

Home Sleep Testing

While resupply is a slam-dunk, home sleep testing (HST) represents a big question for many providers, when it comes to expanding sleep revenues — should they, or shouldn’t they. Certainly, HST has become more appealing to HME providers, with several private payors requiring pre-authorization for in-lab testing. HST is a less costly alternative to in-lab testing. Some providers are also finding that many insurance companies are requiring in-home studies prior to traditional in-lab studies.

At the core of the process, a home sleep test involves the use of a portable-monitoring system that you wear as you sleep in your own bed. It consists of a small recording device, sensors, belts and related cables and accessories. And, the method has been shown to help detect obstructive sleep apnea (OSA) in some adults.

But, should providers offer it as a regular service? The answer is that it depends. Providers might wind up competing for the same patients that their referral partners are serving, and that would mean big problems. So, if a sleep provider can offering HST without burning bridges with sleep labs and other key partners, then this could be a key opportunity.

Marketing and Education

Education and marketing play essential roles in expanding a sleep business. On a basic level, patients must be informed about their condition, and informed about their care, so that they can take control of managing their condition and complying with therapy. This is going to mean successful outcomes and long-term relationships with both patients and referral partners. Moreover, providers should focus on using various “platforms” on which to deliver their education, such as community events, email campaigns and social networking.

And this is because education and outreach eventually overlap into marketing. By offering all sorts of useful sleep therapy information to both current and prospective patients (remember, OSA is heavily under diagnosed), they will provide the sorts of value that creates new business. That said, provider marketing must adhere to HIPAA and, in the case of Medicare beneficiaries, CMS regulations when contacting patients. For instance, there are types of information providers cannot leave on a voicemail; confidentiality rules for mailings and maintaining confidentiality; and specific rules on the times when providers can contact patients.

Points to Remember:

  • While competitive bidding has turned the Medicare sleep market upside down, and private payor reimbursement rates for sleep products will follow suit, there is still incredible market demand.
  • Providers must maximize the revenues they can derive from existing patients while reaching out to new ones.
  • Resupply is an obvious revenue driver, but providers should use it as an opportunity to up-sell other products, as well.
  • Home sleep testing services could drive new revenue, but providers should take care to determine if it competes with existing referral partners.
  • Education is key, not only in patient success, but as a means to market the business.

Learn More:

  • HME Business and its special Respiratory & Sleep Management publication regularly cover and conduct studies on the sleep marketplace. Make sure to check out our compendium of sleep news and articles.

This article originally appeared in the June 2014 issue of HME Business.

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