Buying a medical supply business in Florida

Medical supply businesses come in two kinds. Distributors buy equipment and supplies from manufacturers and resell them to physician and dental offices, surgery centers, nursing homes and hospitals, earning a margin on each order. Good accounts reorder gloves, wound care products, exam room supplies and other disposables every few weeks, so much of the revenue repeats.

Home medical equipment suppliers rent and sell wheelchairs, hospital beds, oxygen, CPAP machines, diabetic supplies and similar items to patients at home on a doctor's order. They bill Medicare, Medicaid plans and private insurers, and make some cash sales. Monthly rentals and resupply programs bring recurring revenue, but every claim needs the right paperwork behind it: a valid order, medical records that support it and proof of delivery.

A typical team has customer service staff who take orders, billing staff who know each payer's rules, delivery drivers and technicians who set up and maintain equipment, and warehouse staff. Companies that handle breathing equipment often employ a respiratory therapist.

• Many accounts and referral sources, with no single clinic, health system or physician driving most sales.
• Sales reps whose accounts would stay with the company if they left.
• Recurring revenue from rentals, resupply programs and standing orders, rather than one-time sales.
• A billing team with few denied claims and documentation that holds up in audits.
• Supplier relationships and pricing a new owner can keep, including any exclusive territory for a product line.
• A rental fleet tracked by serial number, with cleaning and maintenance logged on schedule.
• Current accreditation and licenses with no lapses, and a clean record with Medicare and the Medicaid plans it bills.
• Delivery routes, inventory counts and reorder points kept in a system, not in the owner's head.

What you need depends on what the company does:

• Selling or renting home medical equipment to consumers, or accepting physician orders for it, takes a home medical equipment provider license from the Agency for Health Care Administration (AHCA) for each location (section 400.93). The seller notifies AHCA, and your application must arrive at least 60 days before closing (sections 408.806 and 408.807).
• Delivering medical oxygen to patients takes a medical oxygen retail establishment permit from DBPR's Division of Drugs, Devices and Cosmetics, unless the business is a licensed pharmacy (section 499.83). A change in majority ownership needs a new permit, approved before closing (section 499.833).
• Distributing prescription drugs, or manufacturing, repackaging or assembling devices, takes a permit under chapter 499, and a buyer must apply before the sale (section 499.012). The division says a business that only distributes devices needs no state permit.
• Billing Medicare requires accreditation, a surety bond and enrollment of each location. Ownership changes must be reported within 30 days, and a new tax ID generally means a new enrollment. To bill from the day of closing, your bond must be in effect that day (42 CFR 424.57 and 424.550).

• Medicare pricing. Medicare's competitive bidding program is coming back as a single nationwide round, with bids due in early 2027 and contracts starting January 1, 2028 (CMS's target dates). It covers continuous glucose monitors, insulin pumps, ostomy and urological supplies and some off-the-shelf braces, and only winning bidders can bill Medicare for those items. If they matter to this business, ask whether the seller is bidding.
• Audits. Audits by Medicare and the plans, denied claims and repayment demands, and whether patient files have valid orders and proof of delivery. Florida Medicaid can hold a buyer liable for overpayments identified by closing (section 409.907(6)).
• Referral arrangements. Payments, free staff or perks for doctors or other referral sources can break federal anti-kickback law. Have a health care attorney read every such contract.
• Customer contracts. For distributors, how much of sales rests on a few customers, and the terms of any contracts with group purchasing organizations or health systems.
• Inventory and fleet. Expired or slow-moving stock, goods held on consignment, and the age and condition of rental equipment.
• Supplier agreements that end, or need the manufacturer's consent, when ownership changes.

• Which products bring in the most revenue and profit, and how much comes from rentals and resupply compared with one-time sales?
• Who are your largest payers or customers, and are any contracts up for renewal soon?
• Which doctors, hospitals or clinics send you most of your patients or orders?
• How often are claims denied, and have you had any audits or repayment requests?
• Which accreditation and licenses do you hold, and when are the next renewals and surveys?
• Do any manufacturer or distribution agreements need consent to move to a new owner?
• Who runs billing, delivery and the warehouse day to day, and would they stay?