Sleep: Doctors finding their dream business

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Hazel Feigel at the Colorado Springs Health Partners Sleep Center is being prepared for a sleep study by Janelle Svoboda, a registered polysomnography technician at the clinic.

Hazel Feigel at the Colorado Springs Health Partners Sleep Center is being prepared for a sleep study by Janelle Svoboda, a registered polysomnography technician at the clinic.

It might be bad news for the coffee industry. More Americans are opting to seek medical treatment for problems related to sleeplessness, and health care professionals are seizing the opportunity to tap into a new revenue stream.

The American Academy of Sleep Medicine, the trade organization that certifies sleep centers, estimates that 100 million people in the United States suffer from long-term sleep issues.

The growing awareness that there’s a nationwide problem means the sleep medicine industry is booming across the nation, and Colorado Springs is no exception. There are eight sleep centers in the Springs, ranging in size from two to eight beds.

Frost and Sullivan, a global market research consulting firm, estimates the sleep center industry will grow from $1.6 billion in 2004 to an expected $4.4 billion this year.

“You can make money from this,” said Bob Neuman, service line director for ambulatory services at Memorial Health System. “It’s one reason there are so many independent (sleep centers) cropping up now.”

An overnight test of a patient at a sleep center ranges between $750 to $3,000, a cost covered by most health insurance policies and some employers. The profit margin on those tests is around 10 percent, Neuman said.

That’s the reason for the dramatic increase in board-certified sleep centers and physicians. The American Academy of Sleep Medicine reports the number of sleep centers has nearly doubled from 1,395 four years ago to 2,213 centers in 2011.

The demand for sleep studies is so high, doctors don’t really have to do a market survey to see if there’s a need. They simply add the equipment and a few beds and they’re in business. They are, however, required to be board-certified in sleep medicine by the American Medical Association before they can read test results.

Certification for technicians overseeing the night-time tests is voluntary, as is certification for the centers themselves.

“But Colorado Springs is probably pretty saturated even for a city its size,” said Dr. Robert Glidewell, manager of the Lynn Institute’s sleep center and president of the Colorado Sleep Society.

Because of high start-up costs, sleep centers are usually associated with hospitals or large practices. The cost to establish a facility ranges from $500,000 to $1 million for a six-bed center, depending on where the practice is located, according to the American Academy of Sleep Medicine.

“The industry is also facing increased scrutiny from Medicare,” Glidewell said. “Medicare wants sleep centers to be (AASM) certified, and that requires more costs, certified technicians and more of them, more equipment.”

Some sleep centers are offshoots from the main business, such as the Lynn Institute, which mainly performs human drug trials for major pharmaceutical companies. Its four-bed sleep center was added in Colorado Springs about five years ago as a means to expand profits beyond the drug industry, Glidewell said.

The sleep laboratory at Colorado Springs Health Partners was designed to meet financial and medical needs, said Tim Reuhl, sleep center director. The CSHP is the city’s largest physicians’ practice, and the staff needed a place to send patients who were having sleep issues.

“It made more sense to have it here than send patients to the hospitals,” said Dr. John Newcomer, an internist who also reads the sleep lab results. “We want to offer people a complete medical home.”

The four-bed CSHP sleep lab runs six days a week. Newcomer ran a hospital sleep lab for 20 years and said he joined the CSHP practice to get the results of sleep studies back to patients quickly.

Doctors aren’t the only ones benefiting financially from the increasing awareness of sleep disorders. Medical device companies and sleep labs are also making money from sleep apnea, the most common cause of snoring and daytime sleepiness, according to medical experts.

The problem is treatable with a device known as a continuous positive airway pressure, or CPAP, mask. The market for CPAP devices is expected to grow to $5.8 billion by 2015, according to industry analysts. The Lynn Institute sells its own masks.

Sleep centers tend to have a similar design. They are all filled with large, cozy beds, fluffy comforters, television sets, books — almost all the comforts of home. The patient is hooked up to a variety of sensors to monitor vital signs, breathing and brain activity during sleep. In addition, technicians keep watch on patients via video camera.

“We always start out with a sleep study because the first time we have to do is rule out sleep apnea,” said Steve Owen, who manages the sleep lab at Memorial Health System. “Even if they say they aren’t sleeping or are waking up in the night, all that could be a sleep apnea problem.”

Memorial’s sleep lab runs seven days a week, and its eight beds are nearly always full.

More education about the causes of sleep disorders — and side effects that include high blood pressure and heart disease — means more business in the future for the sleep centers.

Even now, more primary doctors are sending patients to the city’s sleep labs. Estimates are that about 40 percent of sleep patients are referred from general practice physicians, with the rest coming from pulmonology and cardiology specialists.

“There’s some opportunity for growth, especially now,” Newcomer said. “The aging population is making this very much a growth field.”

40 million

Americans who suffer from chronic long-term sleep disorders each year

$7 billion

Value of the sleep medication industry in 2008


Accredited sleep center nationwide, up from 1,395 four years ago


Doctors accredited by the American Academy of Sleep Medicine, up from 7,139 in 2007.

Source: CSBJ research