Durable Medical Equipment: U.S. Market Size, Segments, Growth and Trends

Durable medical equipment (DME) is defined as instruments and products used for medical purposes and that can withstand repeated usage. DME is used primarily to help improve the quality of life of patients with injuries or illnesses.

Different stakeholders segment DME in different ways, making the market more or less inclusive. For the purpose of this report, we divided the DME market in six therapeutic segments:

• Home respiratory therapy
• Home infusions
• Diabetes supplies
• Patient positioning
• Patient mobility
• Other equipment

Using this segmentation, we estimate that the U.S. DME market reached ~$26B in 2010. We expect this market to grow 6% per annum (p.a.) to reach $31B by 2013, with various segments growing in the mid- to high- single-digits. We review the factors that will be driving and moderating this growth, including demographic trends, patient preference, cost benefits and international imports.

DME products are distributed primarily by national and local providers; other channels, such as 3rd party distributors or mail-in orders exist for some channels.

The DME market is highly fragmented, and counts more than 100,000 players. We review the consequences of this fragmentation for manufacturers, providers and payors, and highlight specific segments that appear less fragmented. This report discusses each segment and provides a detailed analysis of home respiratory therapy and patient mobility. For these two segments, we review key products, specific growth drivers and moderators, value chain, as well as manufacturer and provider economics in more details. We examine how reimbursement for oxygen tanks and standard wheelchairs spreads between manufacturers and providers.

Finally, we provide an analysis of six key events that may transform the industry. 1) We examine the implications of the Round 2 of the Medicare DMEPOS competitive bidding program aimed at replacing the existing fee schedule amounts with more market-based prices. 2) We discuss the entry of large new players in new therapeutic segments. 3) We analyze recent industry consolidation triggered by increased reimbursement pressure and Round 1 of DEMPOS competitive bidding. 4) We evaluate potential levers for private payors, given their increased scrutiny in this industry, and how they may control costs by negotiating with patients, physicians / hospitals and manufacturers. 5) We assess the potential impact of value chain disintermediation. 6) We discuss the status of patient discharge and referral laws.