5 keys to a profitable DME business
Meet a growing need for equipment and increase revenue
- The market for durable medical equipment (DME) is growing because of the aging population and an increased desire by patients to stay in their homes.
- Difficulties with Medicare billing and lower payments are driving many DME suppliers to opt out, with patients paying out of pocket instead.
- Continual education for staff and physicians, as well as staying up to date on the latest products, allows pharmacies to more effectively serve this market.
The opportunity for DME
The U.S. DME market is large, growing — and can be profitable for independent pharmacies. While competitive bidding under Medicare and other regulations have made DME sales more challenging, the U.S. DME market is expected to grow from $46.5 billion in 2015 to $60.2 billion in 2020.1
Increases in the aging population, the move to serve more patients at home and increased insurance coverage all play a part in increasing demand.
However, one poll found that 89% of home medical equipment providers had stopped accepting Medicare assignment on certain products in the past year.2 As a result, 47% of customers choose to pay for their equipment up front.
Little Drugs Family Wellness Center in Sweetwater, Tennessee, has been accredited to provide DME since 1998. The pharmacy covers five counties with its DME business, delivering across a 20-mile radius. In the rural area that Little Drugs serves, the pharmacy faces only one DME competitor, but that doesn’t mean the DME side of the business is easy.
“To do DME, you have to do it well,” owner Joe Saffles said. “The learning curve is pretty steep to do it correctly.”
Keys to growing the DME business
To profitably grow the DME business in your pharmacy, consider these actions:
- Make it visible. When customers enter Little Drugs they see a 1,500-square-foot DME showroom to the left, as well as a wall of diabetic shoes straight ahead. The pharmacy’s conference room allows it to bring new people into the store by offering education sessions on diabetes and other diseases.
- Staff it well. Little Drugs has two full-time employees dedicated to handling DME billing, and the pharmacy ensures that they attend training every year to stay current on changes. The pharmacy also has four staff members certified to fit diabetic shoes and two full-time employees for DME delivery and setup.
- Train providers. If physicians haven’t crossed all the t’s and dotted all the i’s on their orders, insurance won’t cover DME. To minimize problems and build positive relationships, Little Drugs has reached out to healthcare professionals in its communities in a range of ways, from hosting lunch-and-learn events to sending faxes on DME issues. “[Physicians] hate DME because it’s so time-consuming for them,” said Patty Carr, one of Little Drugs’ DME experts. Pharmacies need to make it easy for physicians’ offices to provide the documentation needed.
- Stay up to date. Know what DME to offer and how to bill for it. Early this year, for example, the Centers for Medicare & Medicaid Services said that some continuous blood glucose monitors would qualify as DME.3
Because of his pharmacy’s focus on DME, Saffles regularly goes to conferences to see the latest products. When choosing items to offer, he considers both initial quality and whether the pharmacy will be able to offer ongoing patients repairs on equipment. “We stand behind what we sell,” Saffles said.
- Keep cash flowing. Frequent audits, delayed reimbursement and lower payments all pose challenges. Having good billing software and an expert staff is critical. “If you get behind on your billing, you have no money coming in,” Saffles said. Little Drugs accepts cash payments from customers on some items and orders diabetic shoes only after all required documents are in.
Typically, patients who need DME — such as patients with diabetes — also tend to be patients who need a range of different products and services that your pharmacy can provide. Offering quality DME products and a knowledgeable staff is one of many ways to better serve this population to build deeper relationships and increase the revenue per customer.
1 “Durable Medical Equipment Market Update,” Harris Williams & Co., March 2016. LINK
2 “Providers Start Dropping Medicare Assignment,” Theresa Flaherty, HME News, July 22, 2016. LINK
3 “CMS Defines Certain Continuous Glucose Monitors as DME,” Leah Lawrence, Medical Economics, Feb. 7, 2017. LINK