The odds were stacked against Nocturna Sleep Center, but hard work and an emphasis on quality turned its luck around.
According to Dun & Bradstreet reports, businesses with fewer than 20 employees have only a 37% chance of surviving 4 years of business and only a 9% chance of surviving 10 years. In short, around 70% to 80% of new businesses fail in their first year, and only about half of those that survive the first year will remain in business the next 5 years. All in all, pretty dismal statistics.
So what do you do if you are the owner of a new sleep laboratory with these already-tough odds stacked against you as well as a host of additional challenges? You are undercapitalized from the start, your new partnership quickly sours, and, to top it all off, the 9/11 terrorist attacks shut down the local economy, creating mass layoffs and a client base left without health-insurance coverage. If you are Christina Molfetta of Las Vegas’ Nocturna Sleep Center, you simply refuse to become a statistic. Instead, Molfetta planned to succeed—and by all accounts, she has.
In 2005, Nocturna generated $1.7 million in revenue. The 5-year-old sleep laboratory anticipates some $2 million in revenue for 2006. But the picture was not nearly so rosy when Molfetta and her former partner opened Nocturna’s doors in August 2001. “The early days were very, very tough,” Molfetta says. “I worked from morning until midnight, 7 days a week. I was the billing person, janitor, customer service rep, assistant technician—you name it, I did it.”
Molfetta says that she entered the sleep business because she saw that it was lucrative. Her previous career included a 7-year stint as a billing-center manager with Lake Forest, Calif-based Apria Health Care, and, later, she was an oxygen sales representative for a durable medical equipment (DME) provider in Vegas, where she found herself calling on sleep diagnostic laboratories for referral business. Ultimately, she began consulting on the billing and operations side with a local sleep laboratory and helped turn its business around to profitability. During her stint as a consultant to the sleep laboratory, Molfetta met an ambitious sales representative who also saw big potential in the sleep medicine field. The two decided to start their own game.
However, the partners were ill-prepared for the hurdles they were about to face. “Just 13 days after we opened, 9/11 hit,” Molfetta says. Vegas casino and hotel owners quickly predicted a drop in tourism and cut the majority of workers’ schedules to part-time status.
“Suddenly, no one had health benefits anymore,” Molfetta says. “People weren’t prepared to pay out of pocket for elective procedures or secondary diagnostics.”
For the first 6 months, Nocturna suffered the consequences. “Business was very quiet at first,” Molfetta says. “And the worst part was that we didn’t have 6 months’ capital, we only had 3.”
Banks refused them loans, and the partners scrambled to keep Nocturna afloat. They opened multiple credit-card accounts, Molfetta took a second mortgage out on her home, and they borrowed money from friends with a guarantee of paying back double on all loans. “We were scared to death,” Molfetta says. “But I felt like, we’re in it now and we’ll just have to persevere.”
Nocturna’s original facility was based in Henderson on the east side of town. However, it soon became evident to the partners that they had made a mistake about location. “In retrospect, I realize that you must know your market and know your geography,” Molfetta says. “People would not drive more than 10 minutes away from their homes.” Just 7 months into the new venture, Nocturna took the plunge and opened a second laboratory on the west side of town.
A second facility meant an additional financial investment and additional pressure on the company’s strained budget. Eventually, however, business at Nocturna began to pick up. “When we first opened, we had just one lab and we were open just 4 to 5 days a week,” says Nellie Duran, RN, RPSGT, clinical manager and one of Nocturna’s first employees. “Back then, we did about four sleep studies a night.” Today, Nocturna is open 7 days per week and conducts more than 70 sleep studies during that time.
Even as patient demand grew, Nocturna continued to face obstacles that threatened to put it out of business. Early on, the previous employer of Molfetta and her partner filed suit against them. It took nearly 4 years—and hundreds of thousands of dollars—to settle the suit.
“The lawsuit nearly cost us the business, and it definitely cost us the partnership because of the stress,” Molfetta says.
The partners had different management styles to begin with. While Molfetta was a risk taker by nature, her partner was more cautious. Things went from bad to worse as the pressure of the lawsuit brought them to differences of opinion on how to steer Nocturna to success. In October 2004, Molfetta bought out her partner.
Now free to run the business according to her singular vision, Molfetta was suddenly forced to spearhead the sales effort as well. Managing both operations and sales was a tall order. Despite their differences, Molfetta credits her former partner with a knack for the sales process. “My former partner was excellent at generating referrals and building relationships,” Molfetta says. “She was an integral part of Nocturna’s early success.”
With no partner to help or hinder her, Molfetta now had only herself to hold accountable for Nocturna’s success or failure. For an entire year, she worked double-duty—handling sales during the day and administrative aspects of the business at night. After all the hurdles—financial nightmares, 9/11, an ugly legal battle, and a broken partnership—going it alone would be the biggest test of all.
A New Dawn
A self-described maverick and college dropout, Molfetta has managed to turn Nocturna into one of Nevada’s largest sleep laboratories. According to Molfetta, out of approximately 10 to 15 sleep laboratories across the state, Nocturna is the biggest and has the largest market share.
“Christina undoubtedly is the cornerstone of this lab. She runs the lab like a well-oiled machine,” says the center’s medical director, Thomson K. Chemplavil, MD, who has been with Nocturna for 4 years. “She built it from scratch and has made it the busiest sleep lab in town.”
Indeed, these days Nocturna is running at full capacity. The 20-person staff conducts upward of 3,200 sleep studies per year. Presently, Nocturna’s two laboratories have a total of 10 beds. Moreover, Nocturna conducts sleep studies both day and night, because Las Vegas shift workers—of whom there are many, since casinos and hotels stay open around the clock—often prefer to have their sleep studies done during the day when they normally sleep.
While some patients suffer from insomnia, restless leg syndrome, and narcolepsy, 95% of Nocturna’s studies center on sleep apnea. Most patients are adults, though Nocturna does see pediatric patients from time to time. And like many sleep laboratories, the patient demographic is diverse, leaving Nocturna’s team with challenges such as conducting studies on bariatric patients and the elderly.
Molfetta and her staff pride themselves on the comfortable environment they have created for patients. “We’ve made the facility inviting by decorating [the testing rooms] like lavish bedrooms,” Molfetta says. The rooms feature cherry-wood sleigh beds and armoires along with state-of-the-art technology. According to Molfetta, some in the business even refer to Nocturna as “the Bellagio of sleep labs.”
“Patients feel homey at our facilities,” Chemplavil says. “I have not seen a patient who did not want to recommend Nocturna services to friends and family.”
However, it takes more than a cushy setting to be as successful as Nocturna has become. Molfetta and her staff strive for superior customer service and fast turnaround times, too.
Despite how busy the laboratory may be, patients wait just 2 weeks to have a study done at Nocturna. “I believe one key to our success is that we do what we say we’re going to do, and we do our studies within 2 weeks’ time,” Molfetta says.
Chemplavil adds that Nocturna has raised the bar when it comes to patient care. “We work on a very short turnaround time,” he says. “I personally review sleep studies epoch by epoch and give a customized report and recommendations for each patient, in an easy-to-read format.” Chemplavil also credits Nocturna’s technologists with doing a fantastic job that keeps patients coming back. “Patients often want the same tech when they return, which is a testament to the fine job they are doing,” he says.
Building a Superior Staff
“It’s hard to find good employees in Vegas,” Duran says. “Out here, it just seems like so many people lack a strong work ethic.”
Maybe it is the transient nature of the population or the lures of gambling, nightlife, and partying. Whatever the cause, with a bit of ingenuity, Nocturna has managed to circumvent the problem of finding and retaining dedicated employees.
Duran, who is responsible for recruiting and training technicians, is herself a registered nurse and a self-described “stickler” when it comes to high-quality patient care.
“At most labs, those who apply for technician positions simply think it sounds like an interesting field,” Duran says. “But they have absolutely no medical background; they just learn on the job.”
Duran and Molfetta wanted to attract higher-quality candidates, so Duran contacts medical-assistant schools and asks them to spread the word about open positions to their top graduates. The strategy has worked for Nocturna. “We get candidates who come to us with an understanding of various diagnoses, hands-on patient care experience, and knowledge of basic medical terminology,” Duran says.
Both Duran and Molfetta conduct interviews, and, once hired, a new technician never works alone for the first 6 months. Instead, Duran employs a buddy system where a new technician teams up with a seasoned one. Presently, Nocturna has seven senior technicians and two trainees on staff at the two laboratories.
To train technicians, Duran uses a report card that evaluates each of their studies. “When a technician is new, I use the report card all the time,” Duran says. “The goal is to point out what they’ve missed during a study so they can see their mistakes and grow.”
With excellent training and a collaborative, team-oriented work environment, it is no wonder that Nocturna has a relatively low employee turnover rate. Molfetta and Duran take great pride in their technicians. “Our techs attend to no more than two patients at a time,” Molfetta says. “And they score the studies at night.” Most laboratories send the studies off to a scoring lab or use a scoring technician who handles it later. At Nocturna, technologists handle the entire job so that physicians will get results back within 2 to 3 days.
Moreover, unlike many laboratories, Nocturna’s technologists are not expected to do housekeeping chores like changing bed linens. The focus is strictly on patient care and executing results. One of Duran’s goals is to see to it that all of Nocturna’s technologists are eventually registered. To help encourage this, Nocturna pays the Board of Registered Polysomnographic Technologists (BRPT) examination fee once for every staff member interested in taking the test to become a registered polysomnographic technologist. If some staff members do not pass on the first try, they need not pay Nocturna back, but they must pay for the next test themselves if they choose to try to retake the exam.
“Four of them are taking the test this year,” Duran says. “We want to be the best team in the business.”
Building the Business
So just how did Molfetta turn a start-up nightmare into a thriving sleep laboratory? In addition to insisting on a top-notch medical and technical team, Molfetta is a savvy marketer. Her strategy for building the business is focused on generating sales, building relationships with insurance companies, and delivering first-rate customer service.
A year after parting ways with her partner, Molfetta hired two sales representatives with strong connections in the community to generate the 80 to 90 referrals per week needed to keep the laboratory at its goal of 70 sleep studies performed per week.
Gina Hinricksen, account executive, is responsible for generating sales for Nocturna’s west side facility and is proud that she does not need to rely on gimmicks and fancy lunches to capture referrals from physicians. “I don’t base my business on treats, but on the service we deliver,” she says.
Hinricksen can afford to be so confident because of the excellent customer service she says the entire Nocturna team delivers. “I’m on the front line, but I know I can count on my colleagues taking care of things on the back end,” she says.
Nocturna goes the extra mile by obtaining authorizations for the physicians’ offices, faxing reports that physicians misplace, and personally picking up referrals if a physician’s office staff is too busy to fax them in.
And when it comes to building new relationships, Hinricksen is all business. “When you get a first-time referral, you’re in the hot seat because you have one shot at making the right impression,” she says. “I immediately call our customer service people and alert them that this is a golden opportunity to expand our business.”
While the sales team has been busy building relationships with physicians, Molfetta has worked diligently to ingratiate Nocturna with insurance carriers. “When you’re a new lab, if you can’t get any insurance contracts, you can’t run the business,” she says.
Molfetta made it her business to get friendly with contract managers and be included on insurance panels. Today, Nocturna is a preferred provider with the majority of insurance companies, she says.
Still, competition in the field is mounting. “When I visit a physician’s office, I know there are six other sleep centers knocking on their door,” Hinricksen says. “So I make sure all the offices have my cell phone number. I’m very relationship-oriented, and I want them to have access to me.”
Hinricksen even makes herself available to patients who occasionally call her to discuss the ins and outs of the administrative process.
A Bright Future
As Nocturna continues to thrive, the company is focused on future goals and expansion. “We definitely want to get accredited by the American Academy of Sleep Medicine,” Molfetta says. “It will only add to our credibility, and when it happens, we’ll be the only freestanding lab in Nevada to have accreditation.”
Medical Director Chemplavil concurs. “Our goal is to meet and serve sleep-medicine needs for the community in the best possible manner,” he says. “We hope to get accredited, and we’re trying to form a network of physicians [with different specialties]—ear, nose, and throat; cardiology; neurology; psychiatry—to have an integrated system to evaluate and treat all kinds of sleep disorders.”
In the meantime, Nocturna’s two laboratories are bustling. “We’re outgrowing our labs,” Duran says. “In fact, we’re bursting at the seams.”
Molfetta is presently expanding both facilities. The Henderson laboratory will be rebuilt to 4,000 square feet and increase from four to eight bedrooms. The west side lab is moving to a totally new facility that will allow it to grow to 2,300 square feet and increase from six to eight beds.
For Molfetta, Nocturna has turned out to be her dream job. “I love my business,” she says.
Marianne Matthews is a contributing writer for Sleep Review.