Like the product segment, the diagnostic segment of the sleep market is on the rise. A new Frost & Sullivan study, U.S. Respiratory Monitoring Device Market, scheduled for release this month, reports that the domestic respiratory monitoring device market had 1998 revenues of $231.1 million, with a 6 percent growth rate estimated for 1999.

Even the market for initial screening devices, such as pulse oximeters, is flourishing. Pulse oximeters generated revenues of $42.4 million in 1998, according to industry studies. Along with that, the increasing number of sleep centers and laboratories is expected to fuel demand for more sleep apnea diagnostic devices. There were 1,666 sleep centers and labs in 1998, but the projections for 2005 leap to 3,757, the study reports.

"Better reimbursement for home sleep studies is expected to appear toward the end of the forecast period and have a tremendous impact on the sleep disorders diagnostic device market," says Bernard. "Home studies allow the diagnosis of more patients while they sleep in their natural environment, and the cost is much reduced since there is no need for a medical specialist to attend to the patient."

On a related note, buying group VGM & Associates last year launched TestLink, a program to help its HME members expand into the sleep diagnostic market. Traditionally, home medical equipment providers and independent sleep labs were only referral sources for each other.

"We're not trying to put sleep labs out of business," says Nikki Owens, director of network services for TestLink, which helps provide diagnostic services to members. "We encourage developing relationships. Our providers do in-home testing; high-risk patients still would use sleep labs. We wanted to alleviate the backlog from sleep labs."

For its part, Respironics will soon release an inexpensive diagnostic device that George Dunnigan, senior products manager, says will allow HME providers to serve as an adjunct to sleep labs. -K.G.