SleepMed and Watermark Medical merge to deliver integrated community sleep management.
Executives of SleepMed and Watermark say their merged company will connect sleep medicine stakeholders and deliver the big data needed as all of medicine, including sleep, becomes more outcome focused.
Last spring’s merger of the nation’s largest private sleep diagnostics and therapy provider, SleepMed, with the cloud-based home sleep testing company, Watermark Medical, ignited passionate online discussions on sleep medicine forums about what role home sleep testing should play in diagnostics and what the merger might mean for traditional sleep lab models.
“In many ways, the merger was a direct response to payors’ demands for a nationwide integrated sleep medicine company that could deliver the full spectrum of sleep services, from education to testing (home and laboratory based) to treatment and finally to long-term outcome monitoring,” says Sean Heyniger, the company’s CEO.
And yes, there is a challenge here for smaller sleep medicine providers who now will be competing with a company with the critical mass needed to leverage efficiencies of scale and access to data on nearly a million and a half patient interactions.
However, the SleepMed/Watermark merger also presents opportunities for all sleep medicine providers, says Heyniger and David Lewis, its president. The biggest is the chance to expand the sleep medicine field much faster than the estimated 7% to 8% annual growth rate. This growth would be fueled by capturing the more than 80% of patients who are undiagnosed, as well as the patients who fail on treatment and simply give up instead of getting the appropriate follow-up care they need.
“We both had a lot of that data when we worked by ourselves; the real opportunity is that we now have an organization that isn’t just diagnostics focused,” says Lewis, who comes from the SleepMed side. “We really can begin to help the sleep experts across the country—labs, primary care doctors—to be part of a process that really looks at outcomes. Some of that is not happening tomorrow. A lot of that is a process. But we think we are in a position as a company to really help facilitate that.”
Charles Czeisler, MD, PhD, chief of the Division of Sleep Medicine at Brigham and Women’s Hospital, Boston, is not involved with SleepMed but thinks the merger might be a positive sign for patients and the field of sleep medicine for just this reason. “The goal is laudable but the key is going to be execution,” he says. “If SleepMed does its job and is able to actively engage primary care physicians in the treatment of sleep disorders, then there will be plenty of work to do on the complicated cases.” Czeisler cites the example of what happened with the diagnosis and treatment of diabetes. “Originally, only endocrinologists would do the blood glucose testing to diagnose,” he points out. Today, of course, primary care physicians test for diabetes, start treatment, and engage in disease management. Yet there is still so much work for endocrinologists that there is a shortage of these specialists and long wait lists for patients to see them.
How the Merged Company Will Work
The business model for the merged company, which will operate under the name SleepMed, is one that takes a population management approach to diagnosing and treating sleep disorders. In the SleepMed model, sleep medicine will be provided through sleep medicine communities divided up by natural boundaries that make sense for that community. For example, a sleep medicine community might be a town, an affordable care organization, or a large integrated delivery network like a health system that partners with SleepMed for sleep laboratory management and therapy compliance.
Within these communities, local sleep experts and SleepMed will work together to educate patients and primary care providers about the importance of sleep, ensure that patients are asked the appropriate sleep disorder screening questions, make the process for getting tested and treated frictionless, and ensure complicated cases are identified and sent for appropriate specialty care at the local laboratory testing facility—which SleepMed would like to manage, but wouldn’t have to.
“We will facilitate sleep care in those communities, and that doesn’t mean we will necessarily provide every component of sleep medicine in that community,” Heyniger says.
“But we would like to be available through our operating system and platform so that when you do utilize SleepMed in your community, we make that process really easy for you the provider, as well as, most importantly, the patient,” says Lewis. “This way, that patient data flows up to us from providing that care in the community, and we are able to fine-tune the diagnostic process, which also results in better outcomes.”
SleepMed plans to continue providing mail-order home testing since, in some cases, it is still the only way to reach certain patients. However, the focus is on patients working closely with their local sleep experts and that ideally happens face-to-face.
It also plans to leverage SleepMed University, its education component, to reach out to more sleep and primary care physicians with communications tools like webinars.
“A sales rep can only see so many doctors in a day and you are lucky if you get 3 minutes of that doctor’s time, but with the web and with the ability to digitize that content, you can literally educate thousands of providers online,” Lewis says. “[The undiagnosed sleep] patients are walking into these doctors’ doors every single day—pre-diabetic, hypertensive, obese, you go down the list.”
However, Heyniger and Lewis recognize that getting large groups of primary care providers to change any aspect of how they conduct medical appointments is difficult and something SleepMed cannot do without embracing as many sleep experts in each community as possible. “We have to educate and inform not just the patients but also the doctors who are seeing these patients every single day, and that is a challenge that is going to require the whole community,” Heyniger says.
Using Data to Deliver Value
There are several challenges for SleepMed as it moves forward, but these are also opportunities, Heyniger and Lewis say.
On a macroeconomic level, reimbursement pressure on all of health care (including sleep medicine) and cost shifting to patients through increasing use of high-deductible health plans mean that SleepMed cannot succeed without delivering value. But value doesn’t mean the cheapest care, Heyniger and Lewis say.
It means delivering what works best for specific patients in the most efficient way possible. If a patient on CPAP still feels tired and has inadequate follow-up care, they will stop using the device and the testing and treatment costs are wasted.
“A home sleep study costs less, but what we really want to do at SleepMed is create value,” Lewis says. “It is not just what you paid for one individual test, but did it improve your health and well-being? What matters is appropriate care, not just less or cheaper care. We would love to help frame that discussion in the next months and years.”
SleepMed’s opportunity is in having access to the big data necessary for predictive modeling on which patients will benefit the most from which types of care. The company can then use the outcome data to show that the treatment did in fact deliver value both in resolving the patient’s sleepiness and in reducing the many other costs associated with untreated sleep disorders, such as costly care for poorly controlled chronic medical conditions, absenteeism from work, and accidents related either directly or indirectly to a sleep disorder.
“You can’t make good decisions without good data and that is part of what we’ve been building from a platform standpoint—a place where we can aggregate both diagnostics and therapy,” Heyniger says. “If you can aggregate all that information and analyze it, you can make appropriate modifications where needed.”
SleepMed plans to take a broad view and look at all treatments, not just CPAP, to see what works best for which patients. It plans to share de-identified patient data with research partners (including those in industry working on new treatments) in order for the metrics SleepMed gathers to be linked with additional patient data to create a fuller picture of the value of sleep medicine.
SleepMed may even be able to go to skeptical primary care physicians who are themselves seeing their reimbursement level increasingly tied to how well they manage their patients’ various costly chronic conditions and show how treating their patients’ sleep disorders will improve the chronic care metrics that are linked to their payments.
The opportunity that the combined company’s patient data holds for research that improves patient care has Richard Bogan, MD, SleepMed’s director and chief medical officer, very excited. He notes that clinicians are intrinsically competitive, and if you give them information that allows them to see how their patients are doing and how this compares to other providers’ patients, they are much quicker to make changes that improve patient care because they naturally want to be the best.
Since most sleep disorders are lifelong conditions, funneling longitudinal outcome data up to the physicians will be a big step forward in improving patient treatment, Bogan predicts.
“If you look at the broad sleep community, we’ve been a community that has been good at making diagnosis but not good at longitudinal care,” he says.
What It Means for Other Sleep Medicine Companies
David Walsh, RRT, president of Sleep Case Management at DRW & Associates in Chicago, was an early adopter of home sleep testing and as a regional sleep case manager will likely be competing with SleepMed in offering a step-based sleep testing model where complex patients are referred to sleep labs and uncomplicated patients are provided with a home sleep test. He was not surprised by the merger and says it is exactly what he would have done if he was in SleepMed’s position.
“If you didn’t see this coming, I don’t think you were reading the tea leaves right,” he says. “Right now, I don’t see them having a competitor on the scale they are proposing.”
Walsh was the originator of one of the online discussion threads about the merger and thinks that people who are still discussing the relative diagnostic values of home testing versus laboratory testing may be missing the point. Insurers have determined that home sleep testing is here to stay and through the addition of home testing, SleepMed will be able to offer payors what they want as a national provider.
What is unrealistic is to expect sleep medicine to remain unchanged when health care reform and other changes in reimbursement are encouraging consolidation of health care providers and the rise of the large integrated delivery networks. Far from being a threat, the SleepMed model could be a way forward for sleep medicine stakeholders, note Heyniger and Lewis.
“If you look at what is happening with health care, you have to be able to make the user experience a lot more pleasant and easier, and as a doctor you also want to be part of a system that makes the workflow more efficient,” Heyniger says.
“If you are not, it is going to be very hard to compete as these integrated delivery networks continue to take market share. We think that critical mass that connects all the stakeholders is a really good place to end up. I can’t imagine being a little independent provider without aligning with organizations like SleepMed.”
Lena Kauffman is a freelance writer based in Ann Arbor, Mich. Questions for the author can be sent to firstname.lastname@example.org.