Sleep Centers of Excellence

A guide to determining sleep diagnostic demand, payer mix, accreditation requirements, and other key issues involved in creating a sleep center.

Executive Summary

Assessing the sleep medicine opportunity

At first glance, the neuroscience service line presents a wide a range of opportunities for a hospital, from chronic movement disorders like Parkinson’s disease to the treatment of back pain through spine surgery. However, there are some conditions which, when translated into products, present a greater opportunity to the majority of hospitals. Sleep diagnostic centers are a prime example due to robust demand for these services and the significant amount of unmet need in many markets.

The barriers to entry into the sleep diagnostic market are relatively low and hospitals report strong contribution profits from this book of business. In addition, hospitals can leverage their sleep center as a feeder for other service lines and hospital-owned durable medical equipment (DME) companies. Hospitals willing to make a principled investment in sleep medicine are likely to profi t from their efforts.

Building a market-leading sleep center

Hospitals wishing to take advantage of this opportunity are encouraged to begin with an assessment of unmet sleep diagnostic demand within their own market. However, sizing the opportunity is not enough. The savvy hospital will also consider the payer mix within its market, whether accreditation is required for full reimbursement, and the ability to attract technicians and specialized physicians. These barriers are by no means insurmountable, but they are significant enough to require advanced planning.

This publication is intended as a guide for addressing these and other issues involved in creating a sleep center. It will address the revenue opportunity, provide insight as to how much capacity to add and where it should be located, discuss operational guidelines, and end with how to best position the center to maximize volume. In addition, the Council has created a sleep center pro forma which calculates the net present value and internal rate of return of this investment using data customized to the organization. Members are encouraged to use this tool, available at www.advisory.com, in addition to the material presented within this volume to aid their planning process.

Sleep diagnostic centers present a lucrative opportunity for many hospitals because of robust demand and large unmet need in many markets. This publication is a guide to many of the common obstacles faced when developing a sleep center.

Members who read this study will:

  • Learn about the reimbursement landscape
  • Gain advice on determining the sleep center's scope and size
  • Consider the accreditation process and its implications on reimbursement rates
  • Understand the patient pathway to best orient services to attract new patients

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