Know Before You Go: Evaluating and Quantifying DME Market Expansion Opportunities

Published in Complex Rehab on July 07, 2022

By Ryan Ball, Director, VGM Market Data

The DME market is changing, and current market dynamics have further incentivized providers to explore new areas for growth and expansion. Planning for growth and selecting new markets to invest in frequently becomes a guessing game, done without solid data backing up your decision-making process.

What is my market share in my current markets? How much business is in that new market and how does that compare to my current markets? Who are my competitors and which payers do they work with? What is the reimbursement for the new product focus with private payers? Too often, DME providers move into a new market without having the answers they need.

Whether entering a new geographic market or expanding into a new product line, data should be at the heart of your business development strategy. Rather than flying blind into a new venture and hoping your projections will take hold, analyzing available market intelligence data can provide greater certainty to your strategic planning and jump start efforts to grow your business.

Defining market expansion opportunity is the name of the game in 2022. Data will enhance your planning efforts to ensure you’re selecting the right markets and setting your growth plan up for success.

Profiling Volumetric Market Opportunity

Once you’ve settled on a growth strategy, understanding market volume potential is the first step in planning a market expansion. The first step is to simply identify how much relevant claim volume exists by geographic and DME product market area.

Quantifying the market size to determine where the largest potential opportunity exists allows you to shrink your initial expansion plans to areas where the greatest payoff exists. Rather than spending time and money on multiple markets, focusing your resources in a more targeted, profitable area will provide your sales and marketing team with the information they need to act quickly and efficiently. Once you’ve determined key volumetric opportunities, the next step is to get a better sense of the competitive dynamic that exists in those potential new markets.

Understanding Competitive Dynamics

Competitive dynamics in a potential expansion area can have a significant impact on your strategic planning decisions. Do you have a specific competitor where you have a strategic advantage when approaching referral sources? Was there a recent local acquisition that may cause market disruption that could be of benefit to you? Is there a high volume of business being sent to non-local providers? Each of these potential market dynamics should be considered when selecting a new market to enter.

In addition to understanding overall market share dynamics, identifying and engaging a list of highvalue referral sources currently operating in the new market can jump start your efforts and move you to profitability more quickly. Engaging top referral sources will also help define messaging tactics and further define your niche within the market.

Evaluating Payer Dynamics and Potential Reimbursement Levels

Market volume and the competitive landscape are important factors to consider when evaluating an expansion opportunity, but can you actually go get the business? Understanding the prominent payers in new potential expansion areas, which competitors work with specific payers, and how the reimbursement rates compare to what you are currently accepting in adjacent markets are additional key factors in determining market potential, as well as profitability. Consider the following:

Key Factors to Consider When Evaluating Market Payer Dynamics

Covered lives by payer/geography
Network size/availability of key payers
Payment amounts by payer/HCPCS
Competitors working with key payers
Payment rate variance by payer

Network viability and negotiating quality reimbursement rates could be the differentiator between a successful and unsuccessful expansion plan. Data can provide a window into current market reimbursement dynamics, giving you the ability to better understand potential market profitability before investing in entering the market.

VGM Market Data provides market intelligence solutions for DME providers that spans all major product categories and markets across the country. By harnessing and using the power of market intelligence data in your business planning and market development strategies, your team can significantly increase your ability to capture market share and expedite your timeline to becoming a more profitable business.

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