EPIDEMIOLOGY

The Economic Cost of Sleep Disorders

David R Hillman, MB, FRCPE, FANZCA1; Anita Scott Murphy, BEc2; Ral Antic, MB, FRACP3; Lynne Pezzullo, BEc2
Sir Charles Gairdner Hospital, Perth; 2Access Economics, Canberra; 3Department of Thoracic Medicine, Royal Adelaide Hospital, Adelaide, Australia

of $146 million for sleep disorders and $313 million for associated conditions, $1956 million for work-related injuries associated with sleep disorders (net of health costs), $808 million for private motor vehicle accidents
(net of health costs), $1201 million for other productivity losses, $100 million for the real costs associated with raising alternative taxation revenue,
and $2970 million for the net cost of suffering.
Conclusions: The direct and indirect costs of sleep disorders are high.
The total nancial costs (independent of the cost of suffering) of $4524
million represents 0.8% of Australian gross domestic product. The cost of
suffering of $2970 million is 1.4% of the total burden of disease in Australia.
Keywords: Sleep disorders, obstructive sleep apnea, periodic limb movement disorder, insomnia, costs
Citation: Hillman DR; Murphy AS; Antic R et al. The economic cost of
sleep disorders. SLEEP 2006;29(3):299-305.

Study Objectives: To determine the economic cost of sleep disorders in

Australia and relate these to likely costs in similar economies.
Design and Setting: Analysis of direct and indirect costs for 2004 of
sleep disorders and the fractions of other health impacts attributable to
sleep disorders, using data derived from national databases (including
the Australian Institute of Health and Welfare and the Australian Bureau
of Statistics).
Measurements: Direct health costs of sleep disorders (principally, obstructive sleep apnea, insomnia, and periodic limb movement disorder)
and of associated conditions; indirect nancial costs of associated workrelated accidents, motor vehicle accidents, and other productivity losses;
and nonnancial costs of burden of disease. These were expressed in US
dollars ($).
Results: The overall cost of sleep disorders in Australia in 2004 (population: 20.1 million) was $7494 million. This comprised direct health costs

ciated work-related injuries, motor vehicle accidents (MVA), and

lost production; and the nonfinancial costs derived from loss of
life quality and premature death. While the analysis was of Australian costs (expressed in United States dollars), it is likely that
the findings could be applied to other countries with similar (Organisation for Economic Cooperation and Development member)
economies.

INTRODUCTION
ADEQUACY OF SLEEP IS A FUNCTION OF ITS DURATION,
TIMING, AND QUALITY. PARTIAL SLEEP LOSS IS COMMON IN MANY SEGMENTS OF OUR SOCIETY.1 Suboptimal
timing of sleep occurs with evening and night shiftwork, which
conflicts with the circadian increase in sleep propensity overnight
and corresponding daytime decrease when sleep is attempted. Impaired quality can result from disruption caused by specific sleep
disorders, such as obstructive sleep apnea (OSA), periodic limb
movement disorder, and insomnia.
While clinicians and scientists familiar with these disorders
understand their impacts on health and well being, there has been
no previous attempt to comprehensively determine the economic
costs associated with sleep disorders. The purpose of this study
was to determine the nature and magnitude of these costs, including the direct health costs of managing these sleep disorders and
associated medical conditions; the indirect financial costs of asso-

METHODS
Prevalence of Sleep Disorders and Their Contribution to Other Conditions
A literature search was used to establish the prevalence of common sleep disorders and epidemiologic evidence for the attributable fractions2 of other health impacts associated with these
sleep disorders. This was undertaken for cardiovascular disease,
diabetes, depression, MVA, and workplace injuries. Australian
data were used when available and sufficiently robust. When they
were not available, data from populations with similar demographics were utilized.

Disclosure Statement
This study was undertaken by Access Economics, a national economics consultancy, commissioned by the steering committee of Sleep Health Australia,
a nascent national sleep health body. It was supported by an unrestricted
grant from the ResMed Foundation, a private not-for-prot organization.
They had no role in any aspect of study design, data collection, analysis
and interpretation, writing the manuscript or the decision to submit it for
publication. Ms. Scott Murphy and Ms. Pezzullo are employees of Access
Economics. Dr. Hillman and Dr. Antic are members of the steering committee
of Sleep Health Australia. They also serve as consultants to ResMed Ltd, a
medical devices manufacturer.

Estimation of Direct Health Costs of Sleep Disorders

Direct health costs include all expenditure within the Australian health system. These were derived from recurrent cost data
for 2000 to 20013 extrapolated to 2004 based on demographic
growth and inflation. They included costs of hospital care, health
practitioners, pharmaceuticals, diagnostic tests, health aids and
appliances, aged care, research, community and public health,
and capital and administration.
Estimation of the Direct Health Costs of Conditions Associated with
Sleep Disorders

Submitted for publication August 2005

Accepted for publication November 2005
Address correspondence to: Dr. D. R. Hillman, Department of Pulmonary
Physiology, Sir Charles Gairdner Hospital, Nedlands WA 6009, Australia; Tel:
08 93462888; Fax: 08 93462034; E-mail: hillo@it.net.au
SLEEP, Vol. 29, No. 3, 2006

The attributable fractions of the various conditions associated

with sleep disorders listed above were calculated using standard
methods2 (see Appendix) and applied to derive the proportion of
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The Cost of Sleep DisordersHillman et al

their costs due to disordered sleep. The attributable fractions calculations were based on the odds ratio of having the health impact
with (relative to without) disordered sleep. For cardiovascular
disease and diabetes, attributable fractions were calculated in relation to having OSA only because there was no a priori reason to
link these to all causes of disordered sleep. For accident risk and
depression, they were calculated in relation to all sleep disorders
because these are likely to be related to sleep disruption independent of cause. Incorporation of odds ratios that control for other
factors ensures that the associations are derived independent of
potential confounding conditions.

populations.14,15 With diabetes, 23.8% of patients have moderate

OSA.16 In all forms of the sleep disorder, 25% of patients exhibit some form of depression.17 A strong association also exists
between disordered sleep and accidents, with the odds of injury
from an MVA being 7.2 times greater and odds of a work-related
accident 3.1 times greater with OSA that without.18,19
Direct Health Costs of Sleep Disorders
Hospital
Total inpatient costs of sleep disorders for 2004 were estimated
to be $44.2 million (Australian Institute of Health and Welfare
hospital morbidity special data request). A breakdown is given
in Table 1. These were based on International Classification of
Diseases-10 codes for primary diagnosis of hospitalization to
concord with the International Classification of Sleep Disorders.

Estimation of the Indirect Costs

Indirect costs are those other financial and nonfinancial costs
that are not health costs. The financial costs include the nonhealth
costs of work-related injuries and road accidents; lost production
though premature workforce separation, absenteeism, low productivity, and premature mortality; and the real economic costs
(distortionary and administrative) that arise from the need to then
raise alternative taxation revenue and make higher welfare payments (rather than the income transfers themselves). The nonfinancial costs derive from loss of healthy lifepremature death
and loss of life quality. These were analyzed in terms of burden
of disease using disability adjusted life years4 to which a monetary value was assigned using the value of a statistical life5
discounted to calculate the value of a life year.
All costs were expressed in United States dollars ($), using
2004 Organisation for Economic Cooperation and Development
purchasing power parity of 72.8 United States cents per Australian dollar.

Health Practitioners
Using data from the Australian Bettering the Evaluation and
Care of Health primary-care database, an estimated 1.6% of primary-care general-practitioner encounters are for sleep disturbance as the problem managed, predominantly insomnia.20 When
adjusted for the number of problems managed per consultation,
annual general-practitioner costs were estimated to be $26.6 million. Of these patients, 4.26% were referred to medical specialists
and 0.66% to other health practitioners, with costs of $16.4 million and $0.6 million, respectively.
Table 1Direct Health Costsa of Sleep Disturbances in 2004,
Independent of Comorbidities

RESULTS
Prevalence of Sleep Disorders and Their Contribution to Other
Conditions

Inpatient hospital costsb

General practitioner costs
Specialists
Other health practitioners
Pharmaceuticals
Pathology
Diagnostic imaging
Outpatient
Aged care
Dental
Research
Unallocated costsc
TOTAL

Chronic primary sleep disorders were conservatively estimated

to affect 6% of the population. The most common was OSA, affecting 4%.6,7 While chronic insomnia affects 5% of Australians,8
it has been estimated that only 25% of such cases (1.25% overall)
are attributable to a primary disorder,9 the balance being secondary to medical, psychiatric, circadian, or other sleep disorders.
Periodic limb movement disorder is another common disorder
affecting approximately 3.9% of the population,10 25% of which
are estimated to be primary and/or warrant treatment, yielding a
prevalence of 1%. The remaining cases of periodic limb movement disorder include mild forms and/or are secondary to other
disorders (e.g., iron deficiency) or their treatment (e.g., antidepressants). Narcolepsy affects less than .05%.11 Although relatively common in children, parasomnias that are regular, persistent,
require treatment, and/or are independent of other sleep disorders
(such as OSA) are uncommon in adults.
While the prevalence of childhood sleep problems is high, particularly parasomnias and OSA in the first decade, there are insufficient robust data to calculate all their associated costs.
There is strong evidence for an association between OSA and
cardiovascular diseases such as stroke and heart attack12 via the
established hypertension linkage.13 OSA is also associated with
congestive heart failure, with a prevalence of up to 11% in such
SLEEP, Vol. 29, No. 3, 2006

$, million
44.2
26.6
16.4
0.6
8.8
1.0
0.2
10.0
8.3
6.6
2.5
20.4
145.6

Costs of polysomnography are included within the inpatient, outpatient, and specialist components and are estimated to be $22 million.
The unallocated component includes the costs of aids and appliances and may be conservative, as it is based on the average share of
appliances across all health disorders, while the Australian market for
continuous positive airway pressure devices and accessories alone is
estimated to be $22 million in 2004.
b
Related to OSA (25%), other sleep-related breathing disturbance
(14%), sleep-related epilepsy (14%), periodic limb movement disorder (1%), circadian rhythm disorders (11%), nonorganic sleep-wake
disorders (6%), other insomnias (2%), alcohol-related sleep disorders
(3%), other sleep disorders (5%), nocturnal cardiac ischemia (7%),
nocturnal asthma (3%), nasal obstruction (4%).
c
Capital, community and public health, administration, aids, and appliances
a

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Pharmaceutical, Pathology and Diagnostic Imaging

Table 2Summary of Costs of Sleep Disorders in 2004

For 85.8% of sleep-disturbance problems managed, 1 or more

medications were prescribed, of which 76% were hypnotics,
17.4% anxiolytics, and 4.5% antidepressants, with an estimated
cost of $8.8 million.20 Of those with patients with a sleep-disturbance problem, 4.2% were referred for pathology tests and 0.19%
for diagnostic imaging, costing $1.0 million and $0.2 million, respectively.20

DIRECT HEALTH COSTS

Sleep disorders
Associated conditions
Cardiovascular disease: $30 million
Diabetes: $21 million
Depression: $70 million
Work-related accidents: $132 million
Nonwork MVAs: $16 million
Unallocated: $44 millionb
INDIRECT FINANCIAL COSTS
Work-related injuries (net of health costs)
Production disturbance: $90 million
Human capital: $1616 million
Legal: $28 million
Investigation: $33 million
Travel: $26 million
Funerals: $1 million
Transfer: $87 million
Caregivers: $57 million
Aids and modications: $18 million
MVA (net of health costs)
Long-term care: $110 million
Workplace labor and disruption: $107 million
Household labor: $82 million
Quality of life: $98 million
Legal: $45 million
Correctional services: $1 million
Vehicle unavailability and repairs: $225 million
Towing: $2 million
Travel delays: $80 million
Insurance administration: $51 million
Police: $4 million
Nonvehicle property damage: $2 million
Fire and emergency services: $1 million
Other productivity costs
Costs of raising alternate tax revenue,
administering welfare payments
NONFINANCIAL COSTS
Net cost of suffering
TOTAL

Total Direct Health Costs

The average percentage of inpatient relative to total allocated
health costs is 35.3%. 3 Factoring up total inpatient expenditure
of $44.2 million by 100/35.3 gives an estimated allocated health
expenditure for sleep disorders of $125.3 million. Factoring up
by a further 100/86 to account for costs not allocated by disease3
(e.g., capital goods, community and public health, health administration, health aids and appliances, including continuous positive
airway pressure devices [see Table 1 footnote]) yields total health
costs for 2004 of $145.6 million. Table 1 gives a breakdown,
including costs identified above plus costs of outpatient clinics,
dental treatments, and research.
Direct Health Costs of Conditions Caused by Sleep Disorders
Calculation of the attributable fractions of conditions associated with sleep disorders allows the proportions of their management costs due to disordered sleep to be estimated.
Attributable Fractions for Disease
Assuming a prevalence of hypertension of 30%21 and an odds
ratio for hypertension in patients with OSA of 2,13 the fraction
of cases of hypertension attributable to OSA was estimated to be
2.1%. Using the linkages established between hypertension and
various cardiovascular diseases4 enabled the percentages attributable to OSA to be calculated as follows: 0.5% ischemic heart
disease, 0.7% stroke, 2.1% hypertensive heart disease, 0.9% renal
disease, and 0.2% peripheral vascular disease. Conservatively,
other potential links between OSA and cardiovascular diseases
were not included.
The fraction of diabetes attributable to OSA was estimated to
be 2.9%, assuming a prevalence of diabetes of 7.6%21 and an odds
ratio for diabetes in patients with OSA of 1.91.22 The fraction of
depression attributable to disordered sleep was estimated to be
8.3%, assuming a prevalence of depression of 5.1%23 and an odds
ratio for depression in patients with disordered sleep of 2.85.24

146a
313

1,956

808

1,201
100
2,970
7,494

See Table 1 for breakdown

Includes costs of capital, community and public health, and health
aids and appliances
MVA refers to motor vehicle accidents.
a

tive conditions allows the direct health expenditure attributable to

their sleep-disorders component to be derived. This was estimated
to be $269 million. As with direct costs for sleep disorders themselves, factoring this up by 100/86 to account for recurrent unallocated health costs3 (see Total Direct Health Costs above)
yielded a total cost for conditions associated with sleep disorders
for 2004 of $313 million (Table 2).

Attributable Fractions for MVA and Workplace Accidents

Assuming an annual probability of an injury from a MVA of
1.3%25 and an odds ratio of MVA with disordered sleep of 2.52,26
the fraction of MVAs attributable to sleep disorders is 7.6%. The
fraction of workplace injuries attributable to sleep disorders was
estimated to be 9.1%, assuming an annual probability of a workplace accident of 4.5%27 and an odds ratio of accident with disordered sleep of 3.0.19

Indirect Costs of Sleep Disorders

Financial Costs
WORK-RELATED INJURIES:

Cost Implications

The total 2004 cost of work-related injuries, excluding disease

and health costs, is estimated to be $21.5 billion.28 Applying the
fraction attributable to sleep disorders (9.1%, see above) yields an

Applying these fractions to global expenditure on the respecSLEEP, Vol. 29, No. 3, 2006

$, million

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The Cost of Sleep DisordersHillman et al

estimated cost from sleep disorders of $1.96 billion, net of health

costs.

of diabetes, and 2.1% of hypertension. Indeed, sleep disorders

rank in the top 10 risk factors for other health conditions in Australia, exceeding well-known risks to health such as alcohol or
unsafe sex.
The total financial costs of sleep disorders ($4.5 billion) represent 0.8% of gross domestic product or $225 per Australian and
$3750 per Australian with a chronic sleep disorder in 2004. The
suffering and premature death associated with sleep disorders is
estimated to impose an additional nonfinancial cost of $3 billion.
This represents 1.4% of the total burden of disease in Australia.
The major financial costs are those associated with the effects of
disturbed sleep on cognitive and psychomotor function, namely
motor vehicle and work-related injuries and productivity losses.
The fact that the direct health costs of sleep disorders ($146 million) are only 2% of the $7.5 billion total cost of these disorders in
Australia suggests that too little is being spent on prevention and
treatment to reduce the huge tail of indirect cost impacts. Total
health expenditure on sleep disorders themselves ($146 million)
plus conditions caused by sleep disorders ($313 million) is of a
similar magnitude to asthma, which is a national health priority.
While these are Australian data, the per capita costs are likely to
be similar in other Organisation for Economic Cooperation and
Development and equivalent economies.
Central to our analysis was the attributable fractions methodology (see Appendix). This was used to calculate the proportion
of diseases (e.g., hypertension) and other conditions (e.g., workrelated accidents) attributable to disordered sleep. The method
takes into account the prevalence of the condition, the prevalence
of the relevant sleep disorder or disorders, and the odds ratio that
relates them and accounts for potential confounding variables.
Uncertainty associated with the calculation is related to uncertainty associated with these factors. We attempted to account for
this by using only data sources for which a strong evidence base
existed and making conservative determinations of prevalence.
For example, in determining the prevalence of chronic insomnia,
we discounted published prevalence described for a range of ages
by a factor of 4 to account for insomnia secondary to other conditions. We applied a similar discount to the prevalence of periodic limb movement disorder. We used an overall prevalence for
OSA of 4%, consistent with Australian6 and US data,7 recognizing that it may be lower among young adults but higher in older
age. We conducted a sensitivity analysis to quantify the effect of
variation in this important variable. Variation in OSA prevalence
from our estimate of 4% overall to 3% to 5% and, thus, an overall prevalence of sleep disorders from 6% to 5% to 7% changed
the attributable fractions for work-related accidents from 9.1% to
7.7% to 10.3%; for MVAs, from 7.6% to 6.5% to 8.7%; for depression, from 8.3% to 7.1% to 9.5%; for diabetes, from 2.9% to
2.2% to 3.6%; and, for hypertension, from 2.1% to 0.8% to 4.0%
(including the effect of varying the odds ratio for hypertension
from 2 to 1.42 to 2.9, according to the described range of values
from the Wisconsin Sleep Cohort Study13). The variation in OSA
prevalence also changed the burden of disease from 1.4% of total disability adjusted life years to 1.2% to 1.7%. The associated
variation in total costs was -$ 870 million to +$1019 million (i.e.,
a range from $6.62 billion to $8.51 billion overall).
Our analysis primarily relates to the financial impacts of
chronic sleep disorders. It does not, because of paucity of data,
cost the long-term financial impact of childhood sleep disorders,
such as learning or behavioral problems. Neither, for the same

MOTOR VEHICLE ACCIDENTS:

The total 2004 cost of MVAs, excluding health costs, ($10.6
billion) was estimated from 1996 data.25 Applying the fraction of
MVAs attributable to sleep disorders (7.6%, see above) to this
figure yielded a sleep-disorders component of $808 million, net
of health costs.
OTHER PRODUCTION LOSSES:
The 2001 National Health Survey29 suggests that patients with
cardiovascular disease are employed in the workforce 3% less
than the age-standardized average. Assuming the same proportion
for other chronic illnesses, we estimate that 36,026 people with
sleep disorders and 4065 with related conditions are absent from
the workforce. This equates to lost earnings of $1144 million,
with an estimated further 5% loss ($57 million) from absenteeism
and lower productivity. Associated foregone taxation revenue of
$349 million yields administrative costs of $100 million in raising
alternate taxation revenue and making welfare payments (28.75%
marginal cost of tax collection distortions and system administration30).
Nonfinancial Costs: Burden of Disease
Applying attributable fractions derived earlier and using proportionality of health costs to proxy proportionality of disease
burden,4 we estimated 37,848 disability adjusted life years are
associated with sleep disorders. Of these, 32% are attributable
to sleep disorders themselves, 30% to work-related and private
MVAs, 22% to depression, 9% to cardiovascular disease, and 6%
to diabetes.
To cost the 37,848 disability adjusted life years, we multiplied
by the value of a life year of $118,344, derived by discounting the
value of a statistical life of $2.7 million5 at a rate of 3.3% over
40 years. This yielded an estimated $4479 million for the annual
gross cost of suffering associated with sleep disorders. The net
cost of $2970 million is this figure less costs borne by individuals, comprising their contributions to health costs ($92 million),
work-related injury costs ($757 million), MVA costs ($127 million), and other production losses from decreased workforce participation ($533 million).
DISCUSSION
Sleep disorders are a large and underrecognized problem.
There has been no previous attempt to comprehensively evaluate their economic cost. Previous analyses have concentrated on
health costs31, 32 without accounting for the indirect financial33 and
nonfinancial costs, which our analysis demonstrates predominate.
We estimate that more than 6% of the Australian population has a
chronic sleep disorder, with a total cost of $7.5 billion in 2004. In
2004, the population of Australia was 20.1 million; the equivalent
cost for a population of the size of the United States (293 million
in 2004) would have been $109 billion.
OSA and insomnia are the most common of these disorders and
have substantial associated morbidity. Sleep disorders contribute
to a range of other health and social problems, including 9.1% of
work-related injuries, 8.3% of depression, 7.6% of MVAs, 2.9%
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reason, does it account for social costs, such as caregiver costs,

or cognitive disturbance or mood changes. Conservatively, it only
considers cardiovascular consequences of sleep disorders that are
related though hypertension, although there is growing evidence
of direct cause-effect relationships between OSA and myocardial
infarction or stroke.7 It does not account for poor sleep behaviors
secondary to shiftwork or sleep deprivation associated with pressure from work or social commitments. Hence, it is likely that the
analysis underestimates the economic impact of disordered sleep,
considered in its widest sense, on the community.
While the costs identified are substantial, they are, perhaps,
not surprising given the pervasive effects of disordered sleep on
cognitive and psychomotor function, which directly translate into
accident risk and lost productivity, the major sources of financial
cost identified in our analysis. These matters warrant community
attention. Sleep is underrepresented on national health agendas
despite the availability of a range of proven, cost-effective interventions available for management of sleep disorders.34,35 Priority
interventions should include public education, awareness raising,
research, and continuing development of cost-effective prevention and treatment options.

12.
13.
14.

15.
16.
17.
18.
19.

ACKNOWLEDGEMENT
20.

This study was undertaken by Access Economics, a national

economics consultancy, commissioned by the steering committee
of Sleep Health Australia, a nascent national sleep health body. It
was supported by an unrestricted grant from the ResMed Foundation, a private not-for-profit organization.

21.

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APPENDIX
Estimation of Attributable Fractions2
To estimate the attributable fraction of disorder D:
Firstly, the following 2 equations are solved simultaneously for p(D|E) and p(D|~E):
p(D|E) * p(E) + p(D|~E) * p(~E) = p(D)
(p(D|E)/(1- p(D|E)) / (p(D|~E) /(1 - p(D|~E)) = OR
where: p(D|E) = probability of having D given exposure (E) to sleep disorder
p(D|~E)= probability of having D given no exposure (~E) to sleep disorder
p(E)= probability of having sleep disorder (from prevalence data)
p(~E)= probability of not having sleep disorder (1-p(E))
p(D) = probability of having D (from prevalence data)
OR = odds ratio for having D in presence of sleep disorder (from epidemiologic data)
The probability of having a sleep disorder given D (p(E|D) is then derived as follows:
p(E|D) = p(D|E) * p(E) / p(D)
p(E) is then deducted from p(E|D) to derive the percentage of D that can be said to be attributable to the sleep disorder (the attributable
fraction). Using hypertension as an example: p(E) = 4%, p(~E) = 96%, p(D) = 30%21 and OR = 213. This yields p(E|D) = 0.061, i.e.,
6.1% of individuals who have hypertension also have obstructive sleep apnea. Given that p(E) = 4%, the percentage of cases of hypertension that can be said to be attributable to obstructive sleep apnea = 2.1%.
Note that for cardiovascular diseases and diabetes, attributable fractions were calculated in relation to prevalence of obstructive sleep
apnea (4%, see Results, under prevalence of sleep disorders) alone (i.e., p(E) = 4%), as there is no a priori reason to link these disorders to all causes of disordered sleep. For accident risk and depression, they were related to prevalence of all sleep disorders (6%, see
Results), as these problems are likely to be related to sleep disruption independent of cause.

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The Cost of Sleep DisordersHillman et al