Should You Buy or Start a DME Company?

If you’re entering the Durable Medical Equipment (DME) industry, your first major decision is this:
Should you buy an existing DME company—or build one from scratch?

Both options offer potential, but each comes with specific risks, costs, and compliance considerations. Before investing time or capital, it’s critical to understand what you’re really stepping into.

Buying a DME Company: Pros and Cons

Buying an established DME company may sound like the faster route. With infrastructure in place, billing systems active, and clients already onboarded, you could hit the ground running. But the benefits come with serious liabilities.

Pros

• Immediate Operations: Existing equipment, staff, and procedures allow you to operate without delay.
• Active Revenue Streams: A consistent cash flow may already be in place.
• Pre-existing Licenses & Accreditations: Saves time and effort needed for fresh enrollment.

Cons

• High Cost of Entry: Prices can range from $75,000 to $150,000+ based on licenses, state coverage, and payer enrollment.
• Inherited Risk: Any fraudulent billing or compliance issues from the previous owner may legally transfer to you.
• UPIC Audit Exposure: If the company has billing red flags, it may trigger Unified Program Integrity Contractor (UPIC) audits. These can halt reimbursements and require repayment.
• Limited Industry Knowledge: Without a solid understanding of DME regulations and billing practices, even a running business can quickly fail under new ownership.

Bottom line: A DME company with a clean record and strong payer relationships is rare—and difficult to fully vet before purchase.

Starting a DME Company: A Cleaner, Cheaper Path

Starting from scratch may require more effort, but it also gives you control from day one. If you’re cautious about assuming risk, this route may suit you better.

Pros

• Lower Initial Costs: Launching a basic DME business can cost under $25,000 with the right planning.
• Clean Medicare Enrollment: Your billing record starts fresh, reducing audit risk.
• Full Control: You build your team, compliance procedures, and documentation standards on your own terms.

Cons

• No Immediate Revenue: Expect a slower path to profitability while you build contracts and client trust.
• Learning Curve: If you’re new to the industry, you’ll need to invest time in training, especially around Medicare billing and accreditation.

Real Startup Costs (Estimates for 2025)

Estimated Total: ~$20,000–$25,000

Many states don’t require an HME license for mail-order services, which can lower your barrier to entry further.

What to Watch Out for When Buying

If you’re still leaning toward buying a DME company, take these precautions:

• Perform Due Diligence: Request all billing records, financials, and compliance logs.
• Check for Open or Past Audits: Investigate any CMS or UPIC audit history—past issues can resurface.
• Hire Legal Support: Work with a healthcare compliance attorney to evaluate contracts, liabilities, and regulatory standing.

Purchasing a company without applying for a new Medicare PTAN ties your Social Security Number to the old billing history—good or bad. Unless you restructure the business fully, you assume that liability.

So, What’s the Better Option?

If you have a strong understanding of DME compliance—or you’re willing to learn—it’s often safer and more affordable to start fresh. You’ll avoid inherited problems and maintain full control over operations, documentation, and culture.

Buying a business makes sense only if:

• You can confirm a clean billing record
• The company has active payer contracts in your target market
• You’re prepared for potential audits and legal reviews

Final Thoughts

The DME industry offers strong income potential, especially as home healthcare continues to expand. But whether you buy or build, success depends on compliance, accurate billing, and long-term planning—not shortcuts.

Take the time to review your goals, risk tolerance, and resources before making your decision.