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Home medical equipment (HME) and supplies have traditionally been a profitable but underdeveloped market driven by medical referrals and Medicare reimbursement. However, the aging of our population, increased technology and the rise of managed care have fueled recent double-digit annual growth in the HME marketplace, as well as resulting in more products being reimbursed at lower rates.

An increasing number of HME products are being labeled "lifestyle enhancements" and comfort aids as opposed to medical necessity. They sell for retail, out-of-pocket cash instead of being reimbursable. Ten years ago, the average HME provider's business was comprised of two-thirds Medicare, one-fourth private pay and the remainder retail. Today, the most viable providers sell one-third Medicare, one-third managed care and one-third retail. Several national drug chain home healthcare (HHC) provider "hubs" and retail "superstores"; report that retail, cash sales account for over half of their gross profit.

This growing consumer demand has resulted in more distribution locations opening to supply these HHC products in almost every retail environment: drug chains, grocery chains, mass merchandisers, big box outlets, HHC superstores and mail order. To date, these efforts have been moderately successful as no one company has developed the optimal combination of HHC knowledge and retail savvy.