DMEPOS Outlook for 2023 and Beyond

Published in Member Communities on February 17, 2023

Mike MallaroBy Mike Mallaro, CEO, VGM Group, Inc.

We have been through three tumultuous years, ignited by a pandemic and exacerbated by supply chain disruptions, recalls, an upside-down labor market, and inflation. And while predicting the future is a fool’s errand—given that most predictions are wrong—allow me to offer my outlook on the next 24 months in the DMEPOS space.

Healthcare At Home

Despite the maladies mentioned in my opening, we are coming off the greatest period of home oxygen in history. Demand across our sector continues to increase at a very healthy level. Healthcare at home is more appreciated than it has ever been. Reimbursements have broadly risen for the first time in two decades, albeit not at the same level as costs. And the payer landscape, all things considered, is probably as favorable as it has been in a decade.

When all factors are considered together, I remain highly bullish on our space. Below are some of the things I anticipate over the next 24 months:

Reimbursements

By the time you read this, we will have received the largest Medicare rate increase in decades. Granted, that increase is driven by inflation and your costs have also risen. However, I believe the Medicare CPI increase for 2023 will be higher than the percentage of inflation in your P&L in 2023.

Reimbursement Increases

Supply Chain

Supply chains will remain vexing. I expect we will get out of the CPAP shortage by mid-year. Filling the pent-up demand in the sleep space will be a significant boost to business, likely in second half of 2023 and first half of 2024. However, I do expect that some other categories will experience supply chain disruptions in 2023 and 2024. These will be a result of several factors, such as:

  • Political instability in the world
  • Impact of massive reshuffling of supply chains
  • Labor issues
  • Negative impact of climate change driven weather events

Supply Chain

We can’t necessarily anticipate the specific disruptions, but we must remain nimble and expect the unexpected.

Inflation and Economy

Inflation and the Economy

I expect the economy to remain erratic. Inflation will be stubborn in 2023, exacerbated in industries where oligopolies dominate, such as cloud computing, home delivery, and energy. Expect labor rate inflation to ease significantly in 2023 as segments of the economy contract.

Some economic bubbles will burst, with single family housing and office complexes being two areas where we will likely see drops in valuation. I also foresee recessionary slowdowns, particularly in areas which were hot throughout the pandemic. On the positive side, our segment of healthcare is largely recession-proof.

Labor Rates

Labor Rates

While labor rates may stabilize, the labor market will certainly not “return to normal.” Flexibility will remain central to the needs of most workers. Employers who can find ways to offer flexibility within the context of meeting the needs of the customers and the business will be the winners. Those imposing inflexibility on workers will remain frustrated.

Customer Experience

Customer (user) expectations have changed, and healthcare has been slow to respond. Convenience, customer experience, and personalization are expectations that place demands on you as a healthcare provider, but also create a big opportunity for differentiation.

Contactless transactions in DMEPOS, efforts toward customization and personalization, informed recommendations, and coordination of care are all pathways to better customer experience and, thereby, growth in your business.

Revenue Strategy

Recurring revenue should be a central theme of your strategy and thinking. When allocating your time and attention, be overweight on attention focused on recurring revenue opportunities. Where you can strengthen recurring revenue—increasing CPAP resupply rates as an example—you can really start to drive material and lasting improvements in your financial performance.

New Opportunities

Healthcare is decentralizing in many ways and that will continue, making care at home very attractive. 

Payer Landscape and Perceptions

The payer landscape presents three primary challenges—reimbursement rates, access, and documentation/qualification rules.

Cybersecurity

Cybercrime activity will continue to be a pain point.

Mergers and Acquisitions

Capital markets continue to find DMEPOS a very attractive space, and as a result, mergers and acquisitions activity will be robust in 2023 and 2024. 

Demand Drivers

Demand for DMEPOS will remain very strong.

An Optimistic Outlook

It’s been a bumpy ride and will continue to be so. But there are far more reasons for optimism than there are for pessimism about your business prospects these next few years.

References

  1. Centers for Medicare and Medicaid Services. “Calendar Year 2023 Update for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule.” Change Request 13006. Published Dec. 2, 2022.
  2. Milstein, Jake. “Critical Insight Finds 35 Percent Increase in Attacks on Health Plans in 2021 End of Year Healthcare Data Breach Report.” Jan. 31, 2022. www.criticalinsight.com.

READ THE FULL ARTICLE HERE

VGM Playbook Forecasting 2023This article was originally featured in the VGM Playbook: Forecasting 2023. To read the full article and more like this, download your copy of the playbook today


TAGS

  1. dmepos
  2. forecasting
  3. playbook
  4. vgm

From Our Experts

DMEPOS Audits: Best Practices for Compliance thumbnail DMEPOS Audits: Best Practices for Compliance Explore DMEPOS audits best practices to ensure compliance and avoid claims denials, overpayments, and audit-related risks in healthcare. VGM Playbook: Technology-Driven Strategies and Resources Now Available thumbnail VGM Playbook: Technology-Driven Strategies and Resources Now Available “VGM Playbook: Technology-Driven Strategies and Resources” is designed to help VGM members harness the power of technology and artificial intelligence (AI). Building a Better Tomorrow thumbnail Building a Better Tomorrow As the fall colors begin to paint the landscape, it's a time to reflect on what we've achieved and the challenges we've overcome in 2025. This year has brought transformation to the home accessibility industry while continuing to meet the growing needs of our aging population. However, the journey has not been without hurdles. O&P Legislation: A Bill Where All Parties Benefit thumbnail O&P Legislation: A Bill Where All Parties Benefit Recent fraud takedown will fuel support for O&P legislation, stakeholders say. Live at Home Sees Spike in Interest in Home Access Market thumbnail Live at Home Sees Spike in Interest in Home Access Market VGM Live at Home's Cindi Petito is noticing increased interest in the home accessibility market in the wake of CMS's decision to resurrect competitive bidding. Meet The 2025 O&P Woman of the Year, Fanny Schultea thumbnail Meet The 2025 O&P Woman of the Year, Fanny Schultea OPGA is proud to announce that Fanny Schultea, MS, MSEd, CPO, LP, FAAOP, Executive Director of The Orthotics and Prosthetics Foundation for Education and Research, has been selected as the 2025 O&P Woman of the Year. Setting Up Your HME for Enrollment Success thumbnail Setting Up Your HME for Enrollment Success Unlock enrollment success for your HME business with tips on provider enrollment, CMS compliance, and avoiding pitfalls. Stay prepared and compliant. September Shift: From Busy to Better—Owning the Home in HME thumbnail September Shift: From Busy to Better—Owning the Home in HME Discover how HME providers can shift from busy to better this September. Learn strategies for enhancing patient experiences, improving operational efficiency, and navigating payer complexities. Join us in building lasting customer relationships and fostering community engagement for a successful Q4 and beyond.