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Dying for Sleep
New business opportunities abound for laboratories tapping into the sleep apnea market.
By Alan Barnes
Obstructive sleep apnea (OSA) is a serious medical condition with potentially life-threatening consequences. It is estimated that more than 20 million Americans could be suffering from this condition and have, as yet, gone undiagnosed. One treatment to correct the problem is the construction of a patient-specific device worn at night. Oral appliance therapy for OSA is one of many niche markets offering laboratory
owners a new business opportunity. Worth an estimated $1.35 million in 2008 and with a growth rate estimated at 16.2% and rising, the sleep apnea diagnostic and devices market is projected to stay on an upward trajectory for years to come.
What You Need to Know
OSA causes the tongue or soft tissue in the pharyngeal or palatal area to fall back on the airway, collapsing the opening to the lungs. An oral appliance used to treat OSA simply positions and holds the jaw forward in a protrusive position during sleep, allowing the tongue to slide forward to open the airway.
Although dentists cannot diagnose OSA, they can screen patients for the condition using the Epworth Sleepiness Scale. The screening asks patients eight questions that can be quickly answered. If patients score at least 9 points out of a possible 24, it is an indication of possible OSA. The dentist would then refer the patient to a certified sleep center for a full diagnostic assessment. If the patient tests positively for the disorder, the sleep specialist may then refer the patient back to the dentist with a prescription for an oral appliance and a letter of medical necessity. Unless the practice has experience in treating sleep disorders, many dentists will look to the laboratory for advice on which appliance to use.
Educate Yourself and Your Clients
Fabricating one or more of the 30+ devices on the market is a small part of the OSA-provider process. Each appliance company (see sidebar) offers its own training standards and licensing agreements. For the laboratory, knowing which appliance fits which type of condition is most critical. In order to become a resource for dentist clients, the laboratory must take continuous training to position the business as a specialty center for clients. A valuable resource for businesses entering the sleep market is the American Academy of Dental Sleep Medicine (AADSM), which meets annually every June and also hosts several outstanding training programs throughout the year. Consider exhibiting at their annual meeting to network and meet potential clients.
After training, laboratories can become proactive in helping clients get involved in the science of OSA by providing seminars presented by leaders in the oral appliance field as well as sponsoring webinars, holding lunch-and-learns, and forming study clubs. The arena of oral appliance therapy is constantly evolving so continuous monitoring of the field and education for both laboratory owners and dentist clients are extremely important.
The Business Side of Sleep
Insurance coverage for dentists providing OSA services is medical, not dental, which is new territory for most dental practices. Although insurance reimbursement varies widely across the nation, reimbursement can range from under $1,000 to as high as $1,800 or more for an average all-inclusive fee of $2,500 for the appliance, pre-exam, seating, and titration. Laboratory owners should seek education on how medical software works and what systems to recommend to dental practices. Encourage your dental clients to become DME providers whether they accept reimbursement from Medicare or not. Each dental practice has to decide if it will be fee-for-service-based or will network with insurance companies.
For laboratories, getting into the OSA treatment device market can be quite lucrative. Some larger laboratories average 25 units per day with five dedicated employees and charge approximately $425 per unit. A smaller laboratory usually averages four appliances daily with one dedicated technician and charges around $325 per unit. As an example, let’s say three technicians worked full time on oral-appliance fabrication and produced 12 appliances a day, assuming the appliance is proven and not overly complicated to produce. With a labor cost of $18 per hour per technician for an 8-hour day, the total labor investment would be $432 per day (not factoring in fringe benefits). If the selling price for the appliances were $335 each, total sales would equal $4,020. Subtracting additional material and royalty costs of $1,560 plus the $432 in labor costs, the laboratory would realize a gross profit of $2,028.
If you want to be profitable and be a leader in new technology, oral appliances for OSA can offer the right niche. You will find that many professionals in the sleep arena are cooperative and willing to share ideas. After all, the objective is to work toward the common goal of improving the health of the patients and the businesses of the dental practices we serve.
About the Author
Alan Barnes facilitates The Barnes Group as well as the Detroit Dental Sleep Network, a think-tank of dental practices in the Metro Detroit Area.