Sleep patient volume growth could slow, according to the Fourth Quarter 2013 HME Sleep Survey. Conduced by HME Business and Needham & Company LLC.
Respondents to the survey saw their sleep patient volume grow by 6.7 percent in the last 12 months (LTM), and expected their sleep patient volume to grow by 5.4 percent in the next 12 months (NTM).
Other key findings from the report:
Of the providers responding, 24 percent saw a decline in their sleep patient volume in the last 12 months and 20 percent expect a decline in the next 12 months.
Respondents also said they believe the economy will place a drag on heir sleep patient volume growth, and on average, expect the economy to reduce growth by 1.8 percent over the next 12 months.
A majority (85 percent) of providers responding to the survey actively follow up with their sleep patients in order to drive re-supply sales. Of the methods used, live phone calls were the most common (used by 73 percent of respondents) followed by automated calls (used by 51 percent), email (used by 22 percent) and regular mail (used by 14 percent).
Respondents expect Medicare’s new re-supply policy change to create a small drag on growth. On average, respondents have seen a 2.4 percent reduction to Medicare sleep resupply sales versus a 5.6 percent reduction reported in our 2Q13 survey. Needham & Company estimated that this translates into a 0.6 percent reduction in US mask and accessory market growth. However, 88 percent of respondents expect other insurers to copy Medicare’s new re-supply policies, so the overall impact could increase.
Sleep providers reported that patients used an average of 2.08 masks per year in the last 12 months, and they expect this to decrease to 2.11 masks per year in the next 12 months. This could increase mask market growth by 1-2 percent. However, with patients now using over two masks per year, the effect of increased replacement rates is probably diminishing since we estimate this measure will max out at around 2.5 masks per year. (This is based on the calculation of two masks per year for privately insured patients times 75 percent of payer mix plus four masks per year for Medicare patients times 25 percent of payor mix would equal 2.5 masks per year).
Round two bid winners plan to negotiate lower prices with their existing CPAP suppliers. Only 20 percent of respondents indicated that their firm had won a round two contract under Medicare competitive bidding. Of those that won, the most popular strategy to offset reimbursement declines was to negotiate lower prices with existing CPAP manufacturers. And it appears that this strategy is having some success because the respondents indicated that all three of the major manufacturers (Fisher & Paykel, ResMed, and Respironics) had reduced prices in the last three months in response to bidding.
Bi-level flow generators are being used for 15 percent of patients and this looks likely to increase to 17 percent of patients in the next 12 months. Bi-level flow generators also sell for a premium to standard flow generators and as a result we expect increasing use to drive a positive mix shift.