Medical Equipment Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,400 medical equipment distributors in the US sell and distribute a broad range of medically related products, principally to hospitals, physician and dental practices, alternative care and rehabilitation facilities, and directly to the home healthcare market. Major categories of products include medical/surgical instruments and equipment, medical and hospital supplies, and dental equipment and supplies.

Complex Billing and Record Keeping Requirements

Medical equipment distributors are frequently subject to many stringent and complex billing and record-keeping requirements in order to substantiate claims for payment under both government and private insurance healthcare reimbursement programs.

Growing Industry Consolidation

The medical, dental, and hospital equipment and supplies distribution industries have undergone consolidation in recent years.

Industry size & Structure

The average medical equipment distributor employs 35-36 workers and generates $15 million in annual revenue.

    • There are about 8,400 distributors with total sales of $129 billion and 299,000 employees.
    • The hospital equipment and supplies market is dominated by the influence of Group Purchasing Organizations.
    • The physician office-based practice market is increasingly being influenced by the growth of Integrated Healthcare Networks, as more independent physician practices merge and consolidate.
    • Dental practices have generally remained small and independent, leaving distributors with unique challenges in servicing a large number of small, scattered customers efficiently and profitably.
    • The three largest medical/dental product distributors are Owens & Minor, Henry Schein, and Patterson Companies.
                                Industry Forecast
                                Medical Equipment Distributors Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Jan 3, 2024 - Sales Remain Elevated
                                • Industry sales remained above pre-pandemic levels during the first nine months of 2023 due in part to increasing demand as health care providers complete both recently scheduled medical procedures and those delayed by the coronavirus pandemic. Inventory to sales ratios also remain above pre-pandemic levels in late 2023. Employment increased slightly during the first 11 months of 2023 while wages for nonsupervisory employees decreased slightly.
                                • Global annual sales of medical devices and equipment may increase more than 5% per year and reach around $800 billion by 2030, according to professional services firm KPMG. Medical device and equipment manufacturers face many challenges in day-to-day operations, however, ranging from security, regulation, and quality to supply chain instability. McKinsey predicts that various interventions such as remote monitoring, artificial intelligence (AI), and automation can save anywhere between $1.5 trillion and $3 trillion annually for the industry by 2030.
                                • Private equity (PE) firms have aggressively sought to acquire and control segments of the healthcare industry, including the medical equipment sector, according to the Private Equity Stakeholder Project (PESP) and the National Disability Rights Network (NDRN). “As private equity firms continue to buy medical equipment manufacturers and suppliers, they have sought to cut costs to maximize outsized returns,” said Eileen O’Grady, Healthcare Director at PESP. “We have found these typical PE business practices result in quick profits for the firms, often at the expense of patients." The PESP and NDRN have made several policy recommendations such as enforcing timely repairs requirements, investigation into allegations of widespread fraud, limiting industry consolidation, and the elimination of prior authorization for necessary repairs.
                                • The Environmental Protection Agency (EPA) announced its intent to finalize by March 1, 2024, new rules governing emissions of ethylene oxide, the gas widely used in medical sterilization facilities. The EPA said that its proposal will reduce ethylene oxide emissions by roughly 80% by targeting 86 US medical sterilization facilities. The companies will also have to test for the antimicrobial chemical in the air and ensure that their pollution controls are working properly. The subsequent comment period has generated hundreds of submissions raising serious concerns about EPA’s proposals and how they would threaten to interfere with patient safety and disrupt our nation’s health care system. Approximately 20 billion medical devices are sterilized each year using EtO and EtO is the only validated and viable sterilization method for most of these devices, according to the Food and Drug Administration (FDA). The FDA has reported that a significant share of medical devices in the US exclusively rely on EtO as their primary sterilant and that the proposed EPA actions will disrupt the US medical device supply chain. Medical equipment distributors may experience supply chain issues if the new requirements slow the delivery of equipment. Ethylene oxide is potentially carcinogenic but is also an important component of the medical supply chain as it is used to clean catheters, syringes, pacemakers, plastic surgical gowns and other items. The EPA has regulated ethylene oxide emissions for 30 years, but studies completed in 2016 revealed that the chemical is more toxic than previously understood, the EPA said.
                                Get A Demo

                                Vertical IQ’s Industry Intelligence Platform

                                See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                                Build valuable, lasting relationships by having smarter conversations -
                                check out Vertical IQ today.

                                Request A Demo