Dive Brief:

• Nearly a third of obstructive sleep apnea tests are now performed in the patient's home rather than in a lab, up from 28% six months ago and 15% five years ago, according to survey results from investment bank Needham & Company.
• The survey of 104 sleep centers also points to a neck and neck battle for share in flow generators and sleep masks over the next year among market leaders ResMed and Philips’ Respironics unit.
• In other findings from the survey, low referral rates for Inspire Medical’s upper airway stimulation device indicate the market for that treatment is under-penetrated, Needham analysts said.

Dive Insight:

Obstructive sleep apnea and its associated breathing disruptions have been linked to increased risk of hypertension, heart failure, Type 2 diabetes, stroke and depression if the disorder progresses in severity. The standard test for diagnosis of the condition is polysomnography, in which a technologist monitors a patient’s brain waves, heartbeat, breathing patterns, eye movements and blood oxygen levels in a sleep center overnight.

Greater awareness of the importance of sleep quality in maintaining good health has attracted the attention of wearables manufacturers such as Fitbit, Apple and Garmin, whose watches have sleep apnea detection functions. Yet what role these digital health tools ultimately may play in medical diagnosis and treatment is unclear.

Needham's survey shows that sleep studies conducted in the patient's own home are becoming much more common. Current home tests use simplified monitors that track breathing effort and oxygen levels.

Home sleep apnea tests are considered a cost effective and convenient initial screening for people with symptoms such as loud snoring, gasping during sleep and daytime sleepiness. However, the American Academy of Sleep Medicine recommends against basing diagnosis and treatment decisions solely on the results of home tests, and cautions the data should always be interpreted by a board-certified sleep medicine physician.

The Needham survey showed 91% of sleep centers offer home testing for patients with commercial insurance, compared to 81% that provide the tests for patients with Medicare. Rising patient volumes at sleep centers support the growth with 47% of the survey's respondents anticipating increased involvement in home testing. The sleep centers forecast a pickup in their overall volume growth over the next 12 months, after a slightly slower pace this past year.

Across the competitive landscape, the results point to a modest 0.2% dip in ResMed’s share of the flow generator prescription market over the next year while Philips’ Respironics unit is expected to gain share (up 1.2%). Competitor Fisher & Paykel’s share is forecast down 0.9%. Both ResMed and Respironics are expected to see slight market share increases in prescription masks.

Separetely, ResMed announced Monday it launched AirFit N30, a lightweight sleep mask designed to minimize the pain users sometimes experience with the masks.

The survey also sought to gauge interest in Inspire Medical’s upper airway stimulation system. The implantable device, which stimulates the hypoglossal nerve to help keep airways open during sleep, received a reimbursement commitment this summer from UnitedHealthcare. Aetna and some BlueCross BlueShield plans also cover the system.

Referrals for the Inspire device increased to 36% from 30% six months ago. Most respondents (94%) were aware of the device, an "encouraging sign" suggesting room for referral growth.

The Needham analysts, who reiterated their "hold" rating on ResMed shares, predict the device maker will post high-single-digit revenue increases and 11% to 12% earnings per share growth for the next few years, noting the outlook is similar to their forecast for medtechs such Boston Scientific and Stryker.