Manufacturers Help Providers Tap Into Sleep Mask, In-Home Sleep Study Markets

It takes more than diet and exercise to stay healthy. medical research has shown that sleep is just as vital to your physical well-being. Because a significant portion of the population is unable to reap the health benefits of sound sleep, home medical equipment providers are stepping into the sleep field.

What makes the sleep market especially attractive for providers as well as manufacturers is not only its size but also that it is still relatively untapped. In 1999, according to New York-based Theta Reports, about 30 million Americans were diagnosed with obstructive sleep apnea. But that's not the end of the story. Some 28.5 million more Americans were afflicted with OSA but had not been diagnosed, the report says.

"A good thing is that this is a large and rapidly growing market," says Joe Priest, president and chief operating officer for AirSep. "So we see opportunities for growth in our business. ... And it goes back to the fact that there is a very large population of people who are going undiagnosed right now."

UNMASKING THE POTENTIAL

With continuous positive airway pressure devices continuing to be the primary mode of treatment for OSA, sleep masks have emerged as a vibrant market with high growth potential. Many manufacturers expect the mask market to increase at an annual rate of 20-30 percent. Contributing to this growth, manufacturers say, is rising consumer awareness about the importance of CPAP masks.

"Patients are truly looking for solutions," says Ron Richard, vice president of marketing for the Americas, ResMed. "They're looking for better masks, better ways to get comfortable at night. They're going to try to push that envelope as far as the manufacturers will let them. So patients will be more interactive with their treatment in order to get the best benefit out of their treatment and therapy."

Also fueling this growth, according to manufacturers, is the need to replace the masks on a regular basis. While CPAP devices can last for years, "a positive element of this market is that the masks do wear out and they should be replaced," says Paul Chiesa, chief financial officer, SleepNet. "So from a business perspective, you have the fact that providers will be replacing them at least a couple of times a year."

A bonus: Third-party payers support such replacements. Medicare, for example, reimburses for four masks per year, and several private insurance carriers have followed suit.

UNCHARTED TERRITORY

In-home diagnostic testing for sleep disorders offers providers another business opportunity in the sleep market - though what this market growth will be is not easily predicted, manufacturers say.

Rich Kocinski, president of the respiratory products division, Sunrise Medical, says it's hard to estimate growth "because it's an unpenetrated market" and few providers have entered the field. "But it seems like it will have good growth," he predicts.

Despite the expanding OSA patient population and the increasing backlog of patients at sleep centers, home diagnostic testing has a downside. The medical community has been slow to accept in-home sleep studies as legitimate, manufacturers say.

But John Frank, director of marketing, Respironics, says that with the number of undiagnosed OSA patients and the number of patients already waiting to get into sleep labs, "it's difficult to imagine that the traditional overnight stay in a sleep lab is going to be the only diagnostic method in the future. Change is desperately needed."

Another potential roadblock to growth in this market is reimbursement. The level of reimbursement for in-home sleep studies is lower than that for studies done in sleep labs. Manufacturers say, however, that changes in reimbursement are inevitable and will affect growth in this market significantly.

"Definitely, reimbursement is the main driver of growth in this market," says Maureen Kibbee, product manager for sleep diagnostic products, Mallinckrodt. "If physicians and clinics can get reimbursement for home sleep studies, then they'll be able to do more of them. If they can't get reimbursement for them, then they're going to be more likely to send their patients to the lab, where there are currently huge backlogs. If we ever actually see insurance and government support for quality home sleep testing, I think they'll be able to reach the huge number of patients waiting for diagnosis and treatment."

ENTERING THE SLEEP STUDY market is not an easy business decision. It requires a considerable initial capital investment. But while providers must spend about $10,000 to $15,000 for equipment such as the sensors, the software and the data acquisition system that records and stores data, they should be able to recoup that cost relatively soon, according to manufacturers.

"From a financial standpoint, doing in-home sleep studies is a very lucrative proposition," says Joseph Anderson, sleep product manager, Sensormedics. "If [providers] market it well and have the normal growth, they should be able to pay for their capital equipment within the first one to two years."

ONE OF THE biggest concerns in the sleep mask market is patient compliance. Manufacturers, aware that patient comfort is the main factor in determining whether patients comply with their prescribed CPAP therapy, are paying closer attention to the ergonomic designs of their masks. They've made them smaller, lighter, easier to use and more adjustable.

Despite these manufacturing advances and favorable reimbursement policies, many providers are still fitting their patients with cheaper, sometimes more uncomfortable masks - and that could put compliance with prescribed CPAP therapy in jeopardy, manufacturers say.

But Paul Chiesa, chief financial officer, SleepNet, says insurance companies are waking up to the importance of masks and are realizing that if they "spent just a little bit more money and put a good mask on patients, maybe they'll use it, and maybe they'll comply with their therapy."

Providers are catching on, too. "More providers today realize that it's essential to have a good-fitting mask," says John Frank, director of marketing, Respironics. "And it's not that it's just good for the patient and the patient is happier, but it could potentially reduce the providers' costs because they're spending less time working with that patient if they've found a good-fitting mask. People are beginning to recognize that a good mask is essential."