Sleep Review’s 2013 Sleep Center Survey
Home Testing Surges as Bed Growth Declines
Sleep centers report less than 1% bed growth while use of home testing rises.
Sleep center expansion has slowed to a snail’s pace. Respondents to the Q1 2013 Sleep Center Survey by Sleep Review and Mizuho Securities reported just 0.6% bed growth during the last 12 months. Meanwhile, home sleep testing use has swelled to 64% of respondents now offering the service for privately insured patients.
|Sleep Review’s Q1 2013 Sleep Center Survey|
Click here for the full survey report.
Sleep Center Use of Home Sleep Testing
Is Growing Rapidly
Currently, 50% of sleep centers offer home sleep testing for Medicare patients (up from 44% in our prior survey) and 64% offer home testing for privately insured patients (up from 51% in our prior survey). Additionally, 67% of the sleep centers expect to be administering home tests in the next 6 months. In two other questions about the impact of home sleep testing, 48% of respondents have reduced their expansion plans as a result of home testing (up from 45% in our prior survey) and 62% of respondents indicated that they expect to increase involvement in home testing (down from 64% in our prior survey).
Use of Auto-Setting Flow Generators Is Rising Steadily
According to the respondents, 13.9% of their patients use auto-setting flow generators, an increase from 12.6% in our prior survey. And 12.2% of their patients use bi-level flow generators, an increase from 10.9% in our prior survey. Looking at the trends over the longer term, auto-setting flow generator utilization has climbed slowly but steadily, while bi-level utilization has been more stable. We suspect that auto-setting use is increasing as home testing becomes more popular.
Sleep Center Expansion Continues to Slow
Respondents reported bed growth of 0.6% during the last 12 months and noted an average of 7.0 beds per respondent versus 6.9 beds per respondent 12 months ago. Respondents also expect greater sleep center capacity expansion in the next 12 months (2.3% to 7.1 beds per respondent) than the growth seen in the last 12 months. Compared with our prior survey, both last 12-month and next 12-month bed growth declined to 0.6% from 0.8% and to 2.3% from 4.6%, respectively.
We offer a few caveats about these results. First, we note that sleep center growth covers only part of the entire sleep market, as sleep center growth drives new diagnoses and flow generator sales, while mask sales are mostly driven by replacement sales. Second, sleep center growth as defined in our survey only represents organic growth (beds per center) versus inorganic growth (new sleep centers). Third, as home testing becomes more prevalent, it is possible that sleep center growth may become less correlated with the overall growth in the sleep market. Finally, we note that many respondents are indicating the total number of beds for multiple sleep centers, which pushes the average number of beds per respondent higher (ie, we doubt that the average individual sleep center has 7+ beds).
Overall, we think that the survey indicates that patient volume growth remains in the mid-single digits. In 2013, we expect US CPAP market growth of 5% to 8%.
Patient Volume Growth Dwindles
On average, respondents have seen patient volume grow 3.4% in the last 12 months and expect 5.5% growth in the next 12 months, and we note that the most common responses were for 0-4% growth in both the last 12 months and the next 12 months. The reported and expected patient volume growth rates are different from the reported and expected bed growth rates (which were 0.6% and 2.3%, respectively). We think that the difference is due to increased use of home sleep testing by the sleep centers, which allows patients to be tested without needing additional beds.
Compared with our prior survey, last 12-month patient volume growth worsened to 3.4% from 5.9% while next 12-month patient volume growth worsened to 5.5% from 7.0%.
Reimbursement Changes Are Slowing Bed Growth and Driving Increased Use of Home Sleep Testing
In November 2012, the Office of Inspector General (OIG) determined that it would not adopt the American Academy of Sleep Medicine’s recommendation for the development of a new safe harbor for sleep medicine. Respondents indicated that the lack of a safe harbor would reduce bed growth by an average of 1.5%.
According to the 2013 Medicare Physician Fee Schedule, payment for out of center sleep testing codes (95800 and 95801) will increase in 2013 by 9% to 12%. As a result, 47% of respondents indicated that they expect to increase involvement with home sleep testing, while 22% expect no impact and 8% expect to reduce their bed count.
Also according to the 2013 Medicare Physician Fee Schedule, payment for the in-center polysomnography codes (95808, 95810, and 95811) will decrease by 3% to 4%. Respondents indicated that these changes would reduce bed growth by an average of 2.1%.
A number of private payors have moved toward a care model that emphasizes home sleep testing and leaves the determination of the appropriate diagnostic sleep test to the payor. Respondents indicated that these changes would reduce bed growth by an average of 4.4%.
The Portion of Sleep Centers Selling CPAP Equipment Appears Relatively Stable
Only 15% of sleep centers report selling flow generators and 14% report selling masks. We think that some centers view equipment as an additional revenue source and a way to offset potential losses to home sleep testing. Over time, however, the portion of sleep centers selling CPAP equipment has remained relatively stable.
More Patients Receive Oral Appliances
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Medicare now covers oral appliances for patients with sleep apnea. Respondents expect this toincrease the number of their patients receiving oral appliances by an average of 2.3% (down from 2.5% in our prior survey) and to decrease the number of their patients receiving CPAP by 0.4% (up from a 0.1% increase in our prior survey).
About the Survey
Mizuho Securities USA and Sleep Review conducted a survey of sleep centers. Among the ~12,000 sleep professionals who received the survey, 496 responded to one or more of the survey questions for a response rate of 4%. None of the questions were mandatory, therefore response rates varied from question to question. Of the 496 respondents, 381 (77%) completed the entire survey. The responses were collected between January 8 and January 22, 2013.
We received responses from a range of sleep industry participants with sleep center directors/supervisors/managers (31% of respondents) and registered polysomnography technicians (28% of respondents) representing the most common titles. Responses also covered every geographic region and all 50 US states with the Southeast (32% of respondents) and Midwest (30% of respondents) being the most heavily represented regions. SR