Patient volume growth continues to improve, on average 20% of obstructive sleep apnea tests are done with HSTs, 19% of patients use APAP, finds Sleep Review’s semiannual survey.

LTM and NTM Bed Growth Improved


Sleep Center Bed Growth, Time Series (click to enlarge)

Over the last 12 months (LTM), average beds per respondent decreased slightly by 0.6% to 7.4 beds. But over the next 12 months (NTM), average beds per respondent are expected to increase by 4.9% from 7.4 beds to 7.8 beds. We note that 5% of respondents indicated that they have fewer beds now than they did 12 months ago. Compared to our prior survey (1Q15), the LTM bed growth rate moderated from a 4.0% decline while the NTM bed growth rate improved from 2.8% growth.

Both LTM and NTM Patient Volume Growth Improved


Average Patient Volume Growth (click to enlarge)


Average Patient Volume Growth, Time Series (click to enlarge)

Over the LTM, respondents report patient volume growth of 7.5%. But over the NTM, respondents expect patient volume growth of 8.6%. Both the LTM and NTM growth rates improved from 6.3% and 7.9%, respectively, in our prior survey (1Q15). The historical and expected patient volume growth rates are different from the historical and expected bed growth rates (which were -0.6% and 4.9%, respectively). We continue to believe that the divergence is due to increased use of home sleep testing (HST) by the sleep centers.

HST Use Continues to Increase


Does Your Sleep Center Administer Home
Tests? Time Series (click to enlarge)


Does Your Sleep Center Administer Home
Tests? (click to enlarge)

The results of the survey show that on average 20% of OSA tests are done with HST rather than in-lab tests. This is up from 17% reported in our prior survey (1Q15). Over time, we expect this to continue to grow.

Currently, 81% of sleep centers offer HST for patients with commercial insurance compared to 65% that offer home testing for patients with Medicare. The portion of sleep centers offering HST has risen rapidly in recent years but appears to have leveled off in our past few surveys. Despite this, we still believe that HST is growing rapidly since we believe that the centers with HST are seeing their mix shift to the home and away from their centers.

In two other questions about HST, 55% of respondents indicated that they expect to increase involvement in HST (versus 56% in our 1Q15 survey), 29% of respondents indicated that HST had negatively affected their expansion plans (versus 33% in our 1Q15 survey), and 42.7% indicated the potential increase of HST has not affected expansion plans (versus 45.2% in our 1Q15 survey).

APAP Use Increased, Bi-Level Use Stable


What Percentage of Your Sleep Patients
Use an Auto-Setting Flow Generator? Time Series (click to enlarge)


What Percentage of Your Sleep Patients
Use a Bi-Level Flow Generator? Time
Series (click to enlarge)

On average, respondents report that 19% of their patients use auto-setting flow generators (APAP) (up from 16% in our prior survey), while 14% of their patients use bi-level flow generators (in line with 14% in our prior survey). Over the longer term, utilization of APAP has steadily increased while utilization of bi-level flow generators has been relatively stable. Increased use of APAP is probably the result of increased use of HST. It’s less clear what is driving the recent increase in use of bi-level flow generators.

ASV for Complex Sleep Apnea Declined

Respondents use adaptive servo-ventilation (ASV) for 63% of their complex sleep apnea patients. This is down from 76% in our prior survey, possibly due to the SERVE-HF trial results even though the trial evaluated patients with heart failure and central sleep apnea, not complex sleep apnea. The ASV flow generator segment is important in our view because, while unit volumes are low, the products have very high prices and margins.

Oral Appliances as First-line Therapy

On average, 5.7% of patients start their obstructive sleep apnea treatment with an oral appliance. This compares to 4.9% in our 1Q15 survey. We specified that these are patients who have never tried a CPAP device.

Fewer HMEs Asking for Branded Prescription Changes


Brand-Specific Flow Generator And Mask
Prescriptions, Time Series (click to enlarge)

Around 14% of respondents indicated that they have been asked to make changes to branded prescriptions by HMEs due to competitive bidding. This represents a slight decrease from 15% in our prior survey. On average, respondents indicated that 13% of the HMEs to which they refer patients have asked for changes to branded prescriptions. This is a decrease from 17% in our prior survey.

On average, sleep centers reported writing brand-specific prescriptions for 66% of mask prescriptions and for 55% of flow generator prescriptions. The rate of branded prescriptions had been relatively stable in recent years.

Increase in Sleep Centers Selling CPAP


Sleep Centers Selling Sleep Therapy
Equipment, Time Series (click to enlarge)

In our recent survey, 17% of sleep centers report selling CPAP equipment, up from 12% in our prior survey. Roughly 3% expect to start selling in the next 12 months.

Over time, the portion of sleep centers selling CPAP equipment has been gradually declining.

About the Survey

Sleep Review and Needham & Company conducted a survey of US sleep centers. The survey received 327 responses between July 22, 2015 and August 10, 2015. Sleep center directors/supervisors/managers (35% of respondents) and registered polysomnographic technologists (34% of respondents) were the most common types of respondents. Every US geographic region and 47 different US states were represented, with the Midwest (29% of respondents) most heavily represented.

Mike Matson, CFA, is senior research analyst at Needham & Company LLC. He is an expert on the medical technologies and diagnostics sector.