Counting the Cost:  DMEPOS Accreditation vs. Loss of Patients

One of the first questions I get regarding DMEPOS (durable medical equipment prosthetics, orthotics and supplies) products and services is "should I even accredit my facility?  I only sell diabetes testing supplies."

The answer, of course, is an individual decision to be made by the pharmacy owner.  However, let's take a look at the pros and cons of either decision.

Facility accreditation can be expensive and time consuming.  Non-aligned independent pharmacists and home medical equipment (HME) dealers have reported fees exceeding $7,000 to obtain accreditation in some instances.  On the bright side, buying groups, franchisors and wholesalers have obtained volume discounts, which have lowered accreditation fees to less than $3,500 over three years or approximately $1,200 per year.

CMS quality standards focus on seven business and four general-product specific services.

Seven Business Subsections:

• Administration
• Financial Management
• Human Resource Management
• Consumer Services
• Performance Management
• Product Safety
• Information Management

Four General/Product Subsections:

• Preparation
• Delivery and Set-up
• Training/Instruction to Beneficiary or Caregiver
• Follow-up

Achieving facility accreditation demonstrates you have met CMS quality standards designed to protect Medicare beneficiaries from harm and limit fraud, but there is more to this story.

On the plus side, virtually every pharmacist I have spoken to about the time consuming process have expressed their satisfaction in an experience that made them more aware of the challenges and opportunities to run their businesses more efficiently and improve margins.

Back "in the day" and in pharmacy years, not so long ago, inefficient operations, poor customer service and bad business decisions were hidden in healthy profits.

Today, however, inefficient operators can no longer hide under the shade of diminishing profits margins.  Successful pharmacists must adjust to an ever-changing regulatory environment and make business mid-course corrections from year to year, or risk failure.

Still, for some, the decision to accredit comes down to simple costs.  Really is the "juice worth the squeeze?"

According to Roche, patients with diabetes spend $4,500 per year in prescription purchases.  This DOES NOT include complementary sales such as glucose meters, therapeutic shoes, hemoglobin A1c OTC testing devices, compression hose, wound care products, nutraceuticals and "sugar free" foods and cough and cold products.

Let's do the math.  With facility accreditation fees now reduced to approximately $3,500 per three year cycle and assuming a 20 percent gross margin ($900) on the $4,500 in prescription sales attributed to persons with diabetes THEN, serving only FOUR persons with diabetes ($900 x 4 = $3,600) covers facility accreditation costs.  I readily admit that claims processing and other charges apply and the cost of goods example does not reflect net profit, however, I think you get the picture.

How many patients with diabetes are served by your pharmacy?

Many large, publicly-traded pharmacies have made the decision.  They will not run the risk of having their customers buy diabetes supplies through the mail or worse yet, from the independent pharmacist's right around the corner!

Independents must provide convenient access and not roadblocks to ALL diabetes testing supplies.  And, guess what, we can do it a lot better!

The facility DMEPOS accreditation process, while initially burdensome, is now affordable and will establish business disciplines' to run an efficient and profitable pharmacy and DMEPOS department.

Now, the decision is up to you.  Count the costs and choose wisely!