Despite rules, opportunity remains for DME suppliers
Even as so many pharmacy operators appear ready to abandon the home healthcare category in the face of the Center for Medicare and Medicaid’s looming Sept. 30 deadline to secure accreditation to sell durable medical equipment under the Medicare Part B program, there is a substantial amount of untapped opportunity within the durable medical equipment category many are overlooking.
Beginning in October, drug store retailers providing DMEPOS equipment to Medicare patients will need to have secured accreditation as a DMEPOS supplier, as well as post a $50,000 surety bond per store. And if that’s not deterrent enough, many of the DME products covered under Medicare are not brick-and-mortar friendly, at least not in the 15,000 sq. ft. that make up the typical drug store, on account of the actual space requirements associated with merchandising automated wheelchairs or electric beds.
But serving Medicare patients isn’t the opportunity, necessarily. The untapped opportunity actually resides in the cash customer. “The cash customer isn’t going to change,” said Matt McElduff, president of Carex Health Brands, noting that many of the products currently on the pharmacy shelf, such as bath safety, are not reimbursable under Medicare anyway, with the exception of a few core items, such as crutches, canes and walkers.
According to Carex research, the total home medical equipment category currently totals some $1.4 billion in sales, representing growth of 6.1%. That represents the entire universe of home care product sales, including respiratory, infusion, defibrillators, monitors, kidney dialysis and beds, along with other assisted living devices as sold in all outlets, including hospitals, nursing homes and at retail.
Food, drug and mass outlets currently comprise 6.2% of that market with some $86.8 million in sales, though the growth rate of 16% certainly is outpacing the category overall, according to Nielsen Medical Accessories data across food, drug and mass for the 52 weeks ended Aug. 23, as supplied by Carex.
Conversely, there are those retailers who are looking to expand their allotment against DME, such as Discount Drug Mart in Ohio, and successfully position that expanded DME set directly against the Medicare customer. That’s not necessarily a losing proposition, especially for a regional pharmacy looking to establish significant points of differentiation versus its national chain competitors.
Now entering its second year as an accredited provider under Medicare Part B, Discount Drug Mart is pleased with the results to date. “[The DME offering] clearly helps us from a traffic perspective.… It makes us a more complete provider,” Tom McConnell, Discount Drug Mart VP and CFO, told Drug Store News. In addition to building traffic, McConnell surmised the dedicated DME sets also help grow market basket, in part because DME usually are higher-ticket items, but also because those DME customers become very loyal shoppers.
There also is a possible synergy between an arthritis-suffering consumer and the sale of those DME supplies, which suggests that that larger market basket also may include pharmaceutical or OTC arthritis pain relief. More than 47% of seniors are diagnosed with arthritis, and more than 26% of assisted living device products are being bought for a person with arthritis.
According to a study commissioned by the National Institute on Disability and Rehabilitation Research, almost 4.1 million people, 13% of the overall senior population, are in the market for an assisted living device that’s not a wheelchair or scooter. Swedish manufacturer Etac has developed a broad range of assisted living products specifically enabling consumers with arthritis to more easily perform such daily living tasks as brushing their hair.
And among a full line of assisted living devices offered by Carex Health Brands, the company also recently launched its Bed Buddy Herbal Naturals line of hot wraps, including its Plush ThermaTherapy Neck and Hand wrap, a wrap that provides moist heat around the neck and shoulders, and features pockets at each extension for the hands.