Suboptimal inventory practices are draining billions of dollars from the home medical equipment (HME) and durable medical equipment (DME) spaces every year.
That’s according to a new research report shared with HME Business.
The report, conducted by In90group Research and commissioned by HME360, found that outdated, manual inventory processes remain the norm across the industry, despite the rise of automation technologies. In fact, only 10% of HME leaders said their inventory systems are fully optimized.
“Tracking inventory is a guessing game – teams are constantly counting, calling and searching for equipment; meanwhile, we are missing opportunities,” one executive said in the survey. “All this is killing our bottom line.”
In90group Research is an independent research firm focused on health care industry dynamics.
HME360 is a cloud-based inventory optimization software solution built for the HME and DME businesses.
“Despite advances in technology, the vast majority of HME providers still track inventory manually,” the research report explains. “Staff are pulled away from higher-value tasks to count supplies manually, reorder based on guesswork, and double-check inventory levels through phone calls, all while managing multiple warehouses, trucks and consignment closets.”
Source: HME360 and In90group Research
Billions at stake
The In90group-HME360 research report was based on an online survey of 80 HME and DME C-suite leaders – including CEOs, CFOs, operations leaders and others – in June 2025. Executives came from businesses with a wide range of revenue, product lines and lines of business served.
Specifically, the research report estimates the financial toll of poor inventory management at more than $4 billion annually.
That includes $840 million in excess inventory tied to over-ordering, $800 million in lost or unaccounted-for equipment, $1.5 billion in missed revenue opportunities when stock isn’t in the right place, and $900 million in wasted labor hours.
“The inefficiencies uncovered in this research – manual tracking, over-ordering, shrinkage and missed revenue – represent billions in lost value across the HME industry every year,” the report emphasizes.
Those losses come at a time when HME providers are already facing downward margin pressures from reimbursement challenges and rising labor costs. Manual counts, lack of real-time visibility, and mismatches between billing systems and stock levels exacerbate those pressures.
What’s more, HME leaders are facing a potential new chapter of competitive bidding. If what the U.S. Centers for Medicare & Medicaid Services (CMS) floated in the July home health proposed payment rule becomes a reality, efficiency and operational discipline will become that much more critical.
“Having led an HME company through multiple rounds of competitive bidding, I know firsthand how much it squeezes margins,” John Skoro, CEO and co-founder of HME360, told HME Business. “In that environment, every dollar lost to inefficiency is a dollar you can’t recover.”
“When bidding returns, the providers who understand their costs and operate lean without sacrificing care will be the ones who thrive,” Skoro added. “CMS doesn’t control that – providers do. Bringing clarity and automation to inventory is how you win.”
A push toward optimization
Bryan Hines, president and co-founder of HME360, said the $4 billion figure revealed in the report was one of the project’s most surprising takeaways. What’s more, that whopping sum doesn’t even factor into the ripple-effect costs tied to poor inventory management.
“That’s likely conservative,” Hines told HME Business. “The study didn’t even account for downstream impacts like delayed billing velocity, delayed patient care, or the opportunity costs when staff are tied up in manual processes. The true cost to providers may be significantly higher than reported.”
Forward-looking providers are starting to adopt specialized inventory optimization platforms, moving beyond manual tracking or billing-system add-ons.
These solutions, the report found, allow providers to free up staff time, improve profit margins and increase cash flow.
In particular, providers emphasized that new systems must integrate with existing billing software, reduce overall costs, and provide real-time visibility across multiple locations and product types.
“We looked at several inventory management systems, but none of them worked for HME, because the HME business is so unique,” another executive quoted in the research report said. “We need a software solution that actually works the way HME works.”
Source: HME360 and In90group Research
Practical guidance from the report includes automating manual counts with barcodes or radio frequency identification (RFID) technology, centralizing data across warehouses and consignment closets, and enforcing par levels to reduce cash tied up in stock.
“The biggest difference-maker is visibility – knowing exactly what you have and what’s truly on the shelf,” Skoro continued. “Too often, billing systems and physical stock don’t align, creating chaos. Step 1 is getting accurate counts, cost-effectively, with a time-saving tool that helps you count and build on a foundation of clarity.”
Looking ahead, half of surveyed leaders expect continued supply chain volatility and product shortages.
Without optimized systems, the report warns, those challenges could magnify existing problems and intensify financial strain.
