Don't Fall Asleep On the Job

Look before you leap. This advice may sound simple, but for home medical equipment providers who are considering opening a sleep lab, it is solid. Many providers would like to diversify their businesses — and for some, the sleep business is alluring. But it requires a careful and diligent approach.

HME providers who want to open a sleep lab must do their homework, says Ron Richard, senior vice president of strategic marketing initiatives for ResMed Corp., Poway, Calif. “[Providers] need to look at the utilization in their market, examine the backlog of patients waiting for sleep testing and do some marketing and research before they dive in,” he says. “I would advise they do it cautiously.”

For example, some markets are saturated, say experts, although there is opportunity. “There are areas of this country that are under-utilized. The Southwest and the Southeast are growing,” says Al Calfo, president of McMurray, Pa.-based Center Pointe Sleep Associates.

Michael J. Breus, Ph.D., who is a diplomate of the American Board of Sleep Medicine and chairman of the clinical advisory board for Sleep Holdings, Dallas, agrees. “There are certainly parts of the country where sleep labs are needed and some rural areas that will be needing them, but you may have a problem [keeping those in rural areas] full with patients sometimes. Whereas the more urban areas where you have got a higher population will need more sleep labs, but there will be a lot more competition,” he says.

A realistic view of the market is necessary, continues Breus. “I do not want anybody to go into this business thinking that this is a cash cow, free-for-all where we are all ready to jump in and have gobs and gobs of cash because it just does not work that way,” he explains. “There are a ton of moving parts to this business.”

Calfo, who also consults with companies starting sleep labs, says he asks these companies three initial questions. They are:

1. Where will your volume of patients come from?

2. Can you receive preferred provider status from third-party payers?

3. Where will you locate your sleep lab?

He adds that you must also consider the “politics” in any locale. “Do you have a lot of strong hospitals? Do you have strong competition? Is there a lack of sleep labs?” he asks.