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U.S. Sleep Service Provider Markets
Frost & Sullivan, March 2005
Market Faces Increasing Saturation
While the sleep service provider market is expected to continue enjoying double-digit revenue growth over the next five years (2004-2009), the rate of market saturation during this time is also expected to increase from 51 percent to 69 percent. During this period, the industry will continue to expand the number of facilities. However, in those regions of the country with higher market saturation, slower, more mature growth is expected as providers expand the number of beds and focus on enhancing the breadth and scope of their offerings rather than creating new facilities. This enables them to target a wider patient population while developing specialized testing skills. Despite the continuing tendency toward market maturation, factors such as the proper diagnosis and treatment of sleep disorders among the aging baby boomer population is likely to positively impact future market growth.
This Frost & Sullivan research service is among the first studies to attempt to determine the actual state of the sleep service provider market. Apart from detailed market metrics and revenue forecasts, it examines major industry challenges and offers strategic recommendations to overcome them.
Accreditation Demand Could Curb Growth of Small Independent Facilities
Almost all hospitals in the United States abide by the Joint Commission of Accreditation of Healthcare Organizations (JCAHO), which ensures that facilities take every precaution to provide safe treatment to their patients. Sleep providers - both hospital and nonhospital-based ones - can also apply for specific sleep testing accreditation through the American Academy of Sleep Medicine (AASM). This is, however, a time-consuming procedure and requires facilities to satisfy several criteria before they can be certified. It could also pose a strong challenge if physicians and insurance companies were to campaign for patients to be treated only at accredited facilities. If accreditation were mandated the market growth would likely be greatly restricted, with independent facilities the most affected.
In a strong market, therefore, facilities along the entire gradient of nonaccredited to fully-accredited should exist, suggests the analyst of this research service. This ensures a steady influx of new entrants into the market while enabling patients to choose a sleep lab of their choice.
Shift to Split-night Studies Likely to Affect Revenues
Currently, full-night diagnostic polysomnography (PSG) and titration studies account for the majority of all evening studies performed. Split-night procedures are projected to see a slight increase over the forecast period due to a preference shown by some facilities.
If split-night testing is promoted as a preferred protocol by some of the leading insurers, or a large number of facilities begin to adopt it as a clinical protocol, the balance of evening studies could swing in favor of split-night testing, notes the analyst. However, these procedures are not suitable for all sleep disorders, many of which require full-night diagnostic PSG tests. Moreover, some patients do not meet the criteria for doing a split-night test. Should there be a shift to conduct more split-night studies, this would negatively affect future revenue growth, since split-night studies perform both PSG and titration diagnostics in the same evening at a significantly reduced rate.
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