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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 8,100 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.

Growing Industry Consolidation

In recent years, the medical, dental and hospital equipment and supplies distribution industries have undergone consolidation.

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.

Industry size & Structure

The average medical equipment distributor employs 32-33 workers and generates $16 million in annual revenue.

    • There are about 8,100 distributors with total sales of $129 billion and 263,200 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

                                Coronavirus Update

                                Dec 22, 2021 - Biden Administration Attempts To Address Trucking-related Supply Chain Problems
                                • The Biden administration announced a plan in mid-December to recruit and train a new generation of truck drivers. The Truck Action Plan was developed by the administration's Supply Chain Disruptions Task Force, which was created to address near-term supply chain bottlenecks that were caused or made worse by the coronavirus pandemic. The plan includes providing resources and funding to help states expedite the commercial driver's licensing process, a 90-day challenge to expand a registered apprenticeship program, and outreach to veterans as recruitment for new drivers. Senior administration officials stressed that though some of the steps are focused on longer-term changes, their proposal includes actions that would support short-term economic recovery and help alleviate supply chain snarls.
                                • US Transportation Secretary Pete Buttigieg warned that the global supply chain troubles that continue to be a drag on the economy could continue as long as the coronavirus pandemic. “If you have, for example, the third largest container port in the world in China shutting down because of a COVID outbreak in late summer, you’ll feel that in the fall here on the West Coast,” Buttigieg said. Global imbalances between demand, which is off the charts right now, and supply, which is racing to keep up, are the key driver of supply chain problems, he added: “And in the medium-term, again, at risk of repeating myself, if we really want to see all of these disruptions end, we’ve got to end the pandemic. That’s what getting everybody vaccinated is all about.” The value of medical devices imported into the US has steadily increased over the past decade. The majority of imports are lower tech products, such as surgical gloves and simple instruments. Major low-cost producers are China, Brazil, Korea, Taiwan and India.
                                • Distributors may have difficulty acquiring sufficient inventory due to pandemic-related semiconductor shortages. About 5% of semiconductor manufacturers surveyed by IPC said that they expect the semiconductor shortage to be over by the end of 2021. About 58% said that the shortage will last until at least the second half of 2022.
                                • About 80% of chip makers say that it's become hard to find workers, many of whom have to be specially trained to handle the highly toxic compounds used in semiconductor manufacturing. The problem is worse in North America and in Asia, where more companies are reporting rising labor costs compared to those in Europe.
                                • Some medical facilities have enough personal protective equipment (PPE) to last for months. “There are some items that are going to take us six to nine months to kind of wean down because we bought so much of it. And then, there’s items we might have for years,” Carlos Maceda, vice president and chief supply chain officer at Mount Sinai Health System in New York, told the Wall Street Journal. “It will last us forever the amount of masks that we have.” New York hospitals are still abiding by the May 2020 requirement to maintain a 90-day PPE stockpile as the Department of Health reviews coronavirus regulations even though New York's state of emergency expired in June. The amounts of supplies in the stockpiles is calculated based on height-of-the-pandemic usage and multiplied by 90 days.
                                • The Federal Emergency Management Agency (FEMA) has removed export restrictions on four categories of personal protective equipment (PPE) and other items used to address the effects of the COVID-19 pandemic. FEMA also offers exporters an exemption from the remaining restrictions if they have a surplus of the materials to be exported. FEMA’s export restrictions no longer apply to industrial N95 respirators, PPE surgical masks, piston syringes, and hypodermic single lumen needles. FEMA first restricted exports of PPE and other supplies in order to reserve them for domestic use in fighting the COVID-19 pandemic.
                                • California dentist and doctor lobbies say that insurance companies which are flush with cash after collecting premiums during the pandemic but paying fewer claims than usual should pay for medical equipment that has become more expensive during the pandemic. The box of 100 gloves that cost $2.39 in February 2020 costs $30 now, according to Dr. Judee Tippett-Whyte, president of the California Dental Association. Her practice used to rely on surgical masks that cost 20 cents each but has upgraded to N95 masks at $2.50 each. The California Medical Association, which represents doctors, has sponsored legislation that would require insurers to reimburse medical and dental practices for pandemic-related expenses like personal protective equipment, disinfectant, and the staff time required to screen patients for symptoms before an appointment.
                                • A rewritten pandemic manufacturing bill introduced to both houses of Congress would enable the federal government to manufacture or contract with existing manufacturers to make products to fight COVID-19. The Pandemic Emergency Manufacturing Act of 2021 would supplement President Biden's promise to “fully use” the Defense Production Act to compel manufacturers to produce more PPE, drugs and medical supplies to fight the pandemic. It would establish an Emergency Office of Manufacturing for Public Health to ensure an adequate supply of drugs, devices, biological products, active pharmaceutical ingredients, and other supplies necessary to diagnose, mitigate, and treat COVID-19 and to address shortages in products used to treat non-COVID conditions and illnesses.
                                • The US Food and Drug Administration (FDA) is providing a list of medical devices in shortage or that have been discontinued during the coronavirus disease. The CARES Act requires manufacturers of certain devices to notify the agency of manufacturing interruptions or permanent discontinuances that could lead to a disruption in the supply of a device during a declared public health emergency. The CARES act also requires the FDA to maintain lists of devices reported to be in shortage or discontinued. The shortage list, which includes entries for devices under 20 different product codes, does not mention the specific devices or names of manufacturers. While the CARES Act calls for the list to include “The category or name of the device in shortage [and] the name of each manufacturer of such device,” FDA explains that it is not naming the devices because doing so would increase “the potential for hoarding or other disruptions in device availability to patients.”
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