Industry ‘on the edge’ of strategic shifts

PHOENIX – The durable medical equipment (DME) industry has strong growth ahead, including a projected 17% increase in the next few years. But providers must adapt quickly to an evolving payer landscape, said a panel of experts at Medtrade on March 2. 

“At the highest level, DME is growing,” said Alan Morris, senior vice president of strategy and business development for VGM & Associates. “DME is growing faster than hospitals and skilled nursing facilities (SNFs).” 

Morris spoke during the session “DME 2030 and Beyond: Preparing for the Future” alongside Kris Srinivasan, chief strategy officer at Valere Health, and Craig Douglas, executive director of the Healthcare Quality Association on Accreditation (HQAA). 

Medicare Advantage continues its rise 

Medicare Advantage (MA) remains a major driver of change in the payer landscape. Even with slower growth expected in 2026, the shift from Medicare fee-for-service to MA is accelerating. Morris estimates MA now represents about 26% of the industry’s payer mix and could exceed 30% within a few years. 

Srinivasan said providers often ask him how much of their payer mix should be MA. The answer varies by state, he noted, but participation is unavoidable. 

“You definitely have to have (a presence) there,” he said. 

Contracting realities: Capitation is expanding 

Panelists said providers should also prepare for more payers pushing capitation. Morris said reactions to this trend vary widely across the industry. 

“It’s something that some in the industry are benefiting from, many are trying to navigate their way through, and others are battling against it,” he said. “The reality is those shifts toward capitation – they’re driven by the payer, which sees them as a way to exchange volume for lower rates.” 

While large national providers have taken the lead, smaller providers will increasingly feel the pressure, Srinivasan said. 

“How can you sustain your business and start strategizing,” he said. 

How providers can prepare for the new normal 

To stay competitive in a market shifting toward Medicare Advantage and capitated contracts, experts said providers should: 

• Strengthen relationships with health systems, which have growing influence with payers; 

• Leverage artificial intelligence (AI) and automation, with a focus on filling operational gaps and improving efficiency; and 

• Diversify their product mix into adjacent home-based services, such as home dialysis, that build on their existing footprint in the home. 

• Ultimately, Morris said DME companies must view themselves not just as equipment suppliers but as key players in the broader home-based care ecosystem. 

“We’re on the very immature edge of all of that,” he said.