There’s no denying that the sleep landscape has transformed dramatically in the last ten years—nearly 30% of in-lab tests have been replaced by home sleep testing and reimbursements have shrunk at the same rate. While value-based care imperatives bring new opportunities for the sleep business, they also present new challenges.
As a result, many sleep labs across the country that were once buzzing with activity are now closing their doors. To succeed in this challenging marketplace, providers must understand the new sleep business and build a program that can harness these changes to grow.
As hospitals move from a fee-for-service structure to one of comprehensive care that emphasizes disease management, the number of patients who will use sleep services will increase.
Sleep disorders are highly co-morbid with several chronic conditions, such as heart failure, hypertension, COPD, and obesity, and will therefore be an important component of chronic disease management.
While the demand for sleep will continue to grow, providers are facing mounting pressure to provide these services at a lower cost. The proliferation of home sleep testing (HST) allows providers to conduct diagnostic testing at a fraction of the cost—HST costs about $300, while hospital-based lab tests run up to $1,500. Scrutinizing payers further encourage this shift as they often require preauthorization for more costly in-lab polysomnography testing.
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As a result of these reimbursement changes, hospital based labs are seeing increased competition from lower cost sites of care, such as freestanding facilities. The Advisory Board Outpatient Estimator shows that while the overall sleep market is poised to grow 19% in the next five years, this growth is entirely concentrated in the freestanding space. Private physician offices and independent sleep labs are expected to see a 44% increase in volumes, while the hospital outpatient department will decline 15%.
National projected sleep volumes
2014-2024, by care setting
Building the sleep program of the future
In order to succeed in this transforming market, sleep centers must reconsider how to organize their sleep business. Here, we’ve identified three strategies that sleep labs should employ to not only compete right now, but also prepare for the future of sleep medicine:
- Develop program infrastructure to increase access and efficiency
Strategically defining programmatic structure is necessary to ensure seamless, efficient care. Standardizing care pathways, managing a sleep physician’s schedule, and allocating sleep services across a system ensures appropriate resource utilization.
- Adopt rising technologies
While HST is still highly contested, the reality is that it’s here to stay. Providers must embrace HST and integrate it into their portfolio of services to continue tapping into the sleep market. And, it can even grow in-lab testing volumes by serving as an avenue for identifying eligible patients.
- Build strong referral network
Physician referrals are the crux of the sleep business, so clinics must hone their outreach strategy to maintain referring physician satisfaction and a steady stream of business