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Health care business can beat market’s ills

BY PAULA BURKES Published: November 15, 2009
5 b

illion sleep diagnostics market to average 15 percent growth per year through 2011.

According to the National Institutes of Health, some 50 million to 70 million Americans suffer from sleep apnea, a disorder in which breathing repeatedly stops and starts during a night’s sleep.

"Sleep diagnostics and treatment probably is in its infancy,” Dollarhide said. "Who’s to say Graymark won’t grow into a $5 billion to $10 billion company?”

Nelson said Graymark — which has a $81 million in capitalized value and $49 million in debt including $45 million in structured long-term debt — will consider using stocks as currency, as well as looking into raising funds through investment banks. It paid about $8.4 million for the recent acquisitions, including $1.3 million in stock.

Some 60 percent of people who undergo sleep tests are diagnosed with sleep apnea, Nelson said.

"Many wake 60 to 65 times an hour and don’t realize it,” he said.

To test for apnea, patients are fitted with medical leads and spend the night in sleep labs where technicians in a nearby room interpret the electrical activity.

Those diagnosed with apnea are prescribed a $400 to $500 CPAP (continuous positive airway pressure) mask that uses air, not oxygen, to open airways.

Graymark has an 82 percent to 83 percent compliance rate because registered therapists work with patients to properly fit and set up CPAPs, Nelson said. Some companies just drop-ship the masks to patients’ homes and they eventually stop using it, he said. National compliance rates are 50 percent at best, he said.

Nelson and other industry observers believe Medicare will adopt higher regulatory standards for sleep diagnostic companies, so the barriers to entry will continue to rise. "But we’re already there,” he said.

Of the state’s 17 physicians who hold board certifications in sleep medicine, three are employed by Graymark including its chief medical officer Kevin Lewis of Tulsa. The company, Nelson said, has already set its own high standards.