Service Lines
With smart planning, hospitals tap into public’s demand for more shut-eye
This spring, after four years of feeling fatigued every morning, Ramin Ahmadi, M.D., finally did something about it. “I never really needed eight hours of sleep. Generally, I was happy with six or seven hours, but I wasn’t feeling refreshed,” says Ahmadi, 43, director of the internal medicine residency at Griffin Hospital in Derby, Conn. After consulting with a colleague, “I decided to essentially get a sleep study on myself.”
The nightlong evaluation measured his brain waves, breathing patterns and muscle movements. What it showed was illuminating: The doctor had sleep apnea, a disorder characterized by breathing pauses called apneas (meaning “without breath”). Each night, this awakened him 30 or 40 times, preventing him from falling into deep sleep. The study also revealed that the construction of his jaw caused his tongue to roll to the back of his throat, choking him. “I had no idea that my tongue was doing this to me in the middle of the night,” Ahmadi says.
He was referred to a dentist, who made a mouthpiece to hold his jaw in a position that wouldn’t let his tongue interfere with his sleep. “I suddenly sort of rediscovered good sleep,” he says. “I started waking up in the morning feeling really good, and I guess I have stopped snoring altogether. Because of the choking, I also was snoring a lot.”
On any given night, this type of diagnostic screening—known, obviously enough, as a sleep study—takes place in hospitals across the country. As awareness of sleep disorders spreads among physicians and the public, more adults and children are undergoing tests to get at the root of their chronic conditions. Hospitals are opening new centers and upgrading existing ones, but the competition with independent facilities is intense.
The number of facilities accredited by the American Academy of Sleep Medicine has risen significantly over the past 10 years. Today, there are 1,237 centers, up from 1,000 in 2006 and 915 in 2005. In 1997, there were only 374 sleep labs. The society doesn’t track how many facilities are hospital-based versus independently owned.
Despite the surge, most areas of the country still do not have enough sleep centers to meet demand.
“Waiting three to four weeks for a sleep study is not acceptable,” says Joyce Gray, R.N., manager of the Samaritan Sleep Center at Good Samaritan Hospital in Dayton, Ohio. “We are fortunate in the Dayton area to have enough centers that most patients can get in for an evaluation and study within a week or two.”
Even so, not every hospital should rush to add a sleep lab or upgrade an existing one. “It all depends on how many other sleep labs are in the area and if you have a good referral system in place,” says Jeanette Kroes, director of cardiopulmonary services at West Valley Medical Center, an HCA facility in Caldwell, Idaho.
Among the crucial questions hospital executives should ask themselves: Do we have the space, the capital and the staff to operate a sleep lab? Before making a decision, it’s wise to conduct a profitability study, tapping the expertise of the controller, chief financial officer and sleep lab director. A useful study evaluates payer mix, volume, setup costs and ongoing expenses.
“You look at expected revenue, market dynamics and physician referrals,” Kroes says. “From all this information, you decide whether you can turn a profit or not.” But she cautions: “You might not see a profit for quite a while if the investment was large. It also depends on your payer mix, which varies from area to area.”
Profitable … Perhaps
Reimbursement varies regionally and depends to a large extent on the proportion of Medicare patients compared with those who have private insurance. Medicare’s reimbursement schedule for sleep services is about $600 for the technical component and $230 for the physician’s fee (a total of $830). Private carriers’ payments range from roughly $500 to $1,100, says Jerry Barrett, executive director of the American Academy of Sleep Medicine.
HIP, a private insurer in New York, contracts with both hospital-based and independent sleep labs. These labs must be certified by the state, as well as be accredited to take Medicare patients, says Dennis Liotta, M.D., a senior medical director in the Manhattan headquarters.
As awareness of sleep disorders has grown during the last five years, so have claims for sleep studies. “The need for consistent and accurately monitored sleep studies is essential to making the correct diagnosis of a sleep disorder. It depends on the type, level and severity of the sleep disorder that will determine the treatment,” Liotta says. “For example, obstructive sleep apnea is easily diagnosed by sleep study and is readily treated with the use of a C-PAP (continuous positive airway pressure) device or, in less severe cases, with a custom-fitted oral appliance.”
Sleep labs tend to generate more profits than other outpatient services like physical therapy, cardiac rehab and stress tests. A fairly profitable lab in a suburban location such as Derby, Conn., can add $1 million annually to a hospital’s bottom line, says Bill Powanda, vice president of support services at Griffin Hospital.
Other challenges lie in keeping a lab full. Because patients often cancel on very short notice, employees at Griffin’s Sleep Wellness Center attempt to confirm appointments the day of the study or substitute with the on-call list. “Our no-show rate is much less than other labs,” says the center’s director, Royce York.
Hospitals that invest in sleep centers should be prepared for fierce competition from independent labs. For instance, “there is a bit of a war going on in the Dayton market at this time, and some private labs have already closed,” says Good Samaritan’s Gray. “Hospital-based labs have financial support through the tough times and can sustain the patient base. But even those labs can fail if the managers of the lab do not aggressively compete and provide the best customer service and support to the patients.”
Amid the rivalry, David Pisarra, president of Gateway Sleeplabs, an independent operation in Studio City, Calif., says there’s plenty of business to enable both hospital-based and nonhospital-based facilities to thrive. “From a lab operator’s perspective, there is a huge need,” he says. “The current levels of business are keeping many labs booked for weeks in advance, and this is only the tip of the iceberg.”
Apnea and Beyond
What’s fueling the demand? Sleep labs are most commonly used to detect sleep apnea. The high incidence of sleep apnea is only now coming to light, Pisarra says, and with obesity contributing to the condition, the depth of the problem will not be clear for some time.
About 5 percent of the U.S. population suffers from sleep apnea, of which 80 percent remains undiagnosed, estimates Alejandro Chediak, M.D., president of the sleep medicine academy. “There is still a lot of work to be done,” he says. Some 30 percent of patients with the disorder also have another sleep disturbance, such as insomnia or restless legs syndrome, “so if you treat only sleep apnea, the symptoms that prompted the testing may not be fully controlled.”
That’s why hospitals should provide comprehensive evaluations by credentialed sleep specialists. “The laboratory, in and of itself, is not a sleep center,” says Chediak, an associate professor at the University of Miami at Mount Sinai Medical Center in Miami Beach and medical director of the Miami Sleep Disorders Center, an independent facility. “A sleep center is a location where a person can go to receive a thorough sleep history and physical examination, and if necessary, undergo testing in a laboratory and whatever treatment is required.”
The American Academy of Sleep Medicine only accredits facilities that have the medical expertise as well as a laboratory that adheres to quality standards. “We hold our facilities to not just perform testing, but also to treat our patients in an ongoing manner until such time as you have controlled the underlying condition,” he says. At that point, patients can be referred to their primary care physician for ongoing care.
Recruiting qualified staff can pose challenges for labs, so managers should anticipate having to groom staff for this role. “Our center has hired RNs and LPNs, as well as other health care professionals, and trained them,” Gray says. “We now have four registered sleep technologists who were trained at our center, and six more will be sitting for the exam this year.”
Comfort with Wires Attached
In Chediak’s assessment, sleep testing is best done outside the hospital setting. “The way the hospitals have been able to achieve a facility with a feel similar to the experience at home is to put the laboratory outside the hospital,” he says. “It’s still a hospital-owned laboratory, but not physically within the main hospital.”
Some sleep labs are adjacent to the hospital; others are located a mile away. The successful ones tend to operate in newly constructed facilities, not in old hospital spaces poorly adapted for these purposes, Chediak says.
When Griffin Hospital opted to redo the sleep disorders center, it started from scratch. “We had a sleep program many, many years ago, and basically, it was like many of the centers around the country—a small, claustrophobic room with white walls and a hospital bed,” Powanda says. “That’s where patients were admitted to be studied overnight. I and others here used to say, ‘I don’t know how I can be a patient there and ever go to sleep.’ ”
In such an uncomfortable environment, “that sleep program limped along for a number of years,” he says. “We remained in that business, but it was not what I call a significant profit center. It was marginally breaking even.”
Flash forward to the winter of 1994, when the new center debuted with one bed. A second bed was added in July 2000, a third in February 2002, and a fourth in November 2003. The additions stemmed from “the quick-paced growth and referral base that we were working up,” says York, the center’s director.
Innovations factored in what patients wanted—a queen-size bed, carpeting, television, a sofa, private bathroom and homey furniture, along with breakfast and a morning newspaper. Their wishes amounted to “basically a room that was more like a hotel room than a hospital room,” Powanda says.
For patients like Dr. Ahmadi, the mahogany furniture, extremely comfortable bed, decorative wallpaper and paintings amount to a pleasant experience. “The only difficult part is that they attach all these wires to you,” he says wryly. “Normally, in a five-star hotel, they don’t.” Still, with all of the amenities, “you don’t feel like you’re sleeping over in the hospital. You feel like you’re spending the night at the Hilton.”
Practical Considerations
The cost of setting up a sleep center varies. Equipment alone for a four-bed lab runs about $85,000 to $90,000, including polysomnography, an infrared video camera system and audio system. Testing rooms may need to be reconfigured into comfortable and quiet sleep areas.
David Calder, executive director of respiratory care services at Long Beach (Calif.) Memorial Medical Center and Miller Children’s Hospital, advises hospitals to look ahead when planning sleep centers. “Our program has developed over time, starting with a one-bed lab, moving to three, four, and now a total of eight adult beds,” he says. “For efficiency’s sake, starting with a four- to six-bed lab allows for a good startup. Opening beds in pairs makes the best use of technicians who can generally handle well two patients per night.”
Experts say disorders are not just an adult problem. “More than 15 percent of adolescents in the general population complain of some form of sleep problem,” says Jerrod of Cady Nemours Children’s Clinic Orlando Sleep Center. Founded in the late 1990s, the center moved to a new facility in April and doubled the number of beds to four. It is used by Nemours physicians to diagnose and treat infants through adolescents with narcolepsy, various forms of sleep apnea, sleep walking and other sleep disorders.
In 2006, Long Beach-Miller opened a two-bed pediatric component of its sleep program. Its adult program has been operational since 1986. The program now includes a four-bed adult center in a medical office building near the Long Beach hospital, and a satellite four-bed facility in Los Alamitos, Calif.—Susan Kreimer is a freelance writer in Long Island City, N.Y.
This article 1st appeared in the October 2007 issue of HHN Magazine.
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