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
Recent Developments
Mar 18, 2024 - Sales Remain Elevated
- Industry sales remained above pre-pandemic levels during the first nine months of 2023, according to the US Census Bureau (CB). Elevated sales were 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, according to the CB. Employment increased slightly during 2023 while wages for nonsupervisory employees decreased slightly, according to the US Bureau of Labor Statistics.
- The US Department of Justice is proposing a rule under the Americans with Disabilities Act that would adopt technical standards spelling out the responsibilities that hospitals and health care clinics operated by state or local governments have regarding medical equipment accessibility for people with disabilities. “Individuals with disabilities often experience great difficulty obtaining routine or preventative medical care because of inaccessible medical diagnostic equipment. From examination tables to weight scales to mammography equipment, accessible (medical diagnostic equipment) is critical to ensuring equal access to medical care,” said Kristen Clarke, assistant attorney general of the Justice Department’s Civil Rights Division. The proposed rule would adopt accessibility standards established in 2017 by the US Access Board for exam tables, chairs used for eye and dental exams, weight scales, mammography equipment and x-ray machines, among other items used by health care providers for diagnostic purposes.
- 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) is finalizing 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.
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