Do You Need More Sleep?

While the industry's focus — and most of its headlines — were on the mobility sector last year, providers told HomeCare they are pinning their hopes on continued growth in the respiratory/sleep market when forecasting business prospects for 2005. That's despite worries over oxygen reimbursement cuts, and despite the switch this year to an Average Sales Price (ASP) plus-6-percent reimbursement formula for Part B respiratory drugs.

In fact, most providers participating in the magazine's Respiratory/Sleep Survey said they plan to expand further into the respiratory segment, particularly the still-strong sleep market.

Fielded in November, the survey drew responses from 266 home medical equipment companies from across the country. With median annual revenue of $2.8 million (52 companies reported revenue of $10 million or more), respondents told us their respiratory/sleep business accounts for an average 46 percent of revenue. Of the respiratory/sleep products these HMEs said they provide most often, nebulizers, CPAPs/bi-levels, oxygen concentrators, cylinders, portable oxygen systems and conserving devices top the list, followed by pulse oximeters, compressors, humidifiers and aerosol therapy.

Sleep Market Still Growing

The sleep business alone, respondents said, makes up an average 17 percent of their revenue, and three-fourths (75 percent) expect company revenues from sleep disorder products to increase over the next 12 months, with an additional 15 percent predicting same year-over-year revenue. Only 1 percent of those involved with the sleep disorders market said they anticipate income from those products to decrease.

The fact that most HMEs still do not derive a large percentage of total revenue from the sleep market has not changed over the past several years. Providers say, however, that part of its value comes from accommodating physician requests, making sleep an essential component of a competitive respiratory program.

And with both physician and consumer awareness of sleep disorders on the rise, the market continues to show double-digit gains. One recent industry report projects an annual growth rate for OSA (obstructive sleep apnea) products of 15 percent through 2007.

Survey respondents were primarily independent providers (91 percent). Fifty-one percent said they have one location, while 40 percent said they operate multiple branches. The median number of respiratory/sleep clients among these providers is 208, although 116 companies indicated they have 250 or more clients in this area.