Most hospice administrators know their per diem rate. Far fewer know their all-in DME cost per patient per day - the number that includes formulary charges, non-formulary add-ons, delivery fees, and the staff time absorbed by DME coordination.
Those are two very different numbers. And the gap between them is where your DME budget is actually living.
Benchmarking your DME spend means figuring out your real number and comparing it to what similar hospices pay. When you know where you stand, you know whether you have a problem - and how big it is.
The per diem rate is easy to find. It's on your contract. But it only covers formulary items, and it doesn't capture everything your hospice actually pays for DME.
Your real per-patient DME cost includes:
Most hospices have never calculated the last item. If two nurses spend a combined 20 hours per week on DME-related calls, order tracking, and invoice disputes, that's roughly $40,000 per year in nursing time - not counted in the DME budget, but absolutely a DME cost.
The calculation is straightforward. What it requires is pulling your data.
Step 1: Get 12 months of DME invoices. Total everything you paid - per diem charges, non-formulary charges, delivery fees, admin fees. Include disputed invoices that were eventually paid.
Step 2: Get your average daily census for the same 12 months. Your EMR can pull this. If you have monthly census data, average it across 12 months and multiply by 365 to get total patient days.
Step 3: Divide total DME spend by total patient days. The result is your all-in cost per patient per day.
For example: If you paid $480,000 in DME costs over 12 months, and your average daily census was 80 patients (80 x 365 = 29,200 patient days), your all-in cost is $480,000 / 29,200 = $16.44 per patient per day.
That number is your baseline. Now you need something to compare it to.
DME spend per patient varies by geography, patient acuity, formulary structure, and whether the hospice uses a management company or contracts directly with vendors. There is no single universal benchmark.
That said, hospices that work with a well-structured DME management company typically see all-in costs in the $10-16 per patient per day range, depending on market and acuity. Hospices managing DME directly, or using a single exclusive vendor, often run higher - sometimes significantly.
The most meaningful benchmark isn't an industry average. It's what similar hospices in your market are paying with a similar census and patient population. A DME management company that works across many hospices has that data.
If your per-patient cost is higher than expected, the culprit is usually one of three things:
Non-formulary creep - items being ordered outside the formulary at individual unit rates because the formulary doesn't include what your patients actually need. This is common when the formulary wasn't built around your specific patient population.
Single-vendor pricing - when you have one vendor and they know it, there is nothing keeping rates in check. Competitive pricing requires vendor alternatives. Hospices with multi-vendor access consistently pay less than those locked into a single source.
Administrative overhead not being tracked - staff time spent on DME coordination is invisible in the budget but real in practice. When that time gets measured, the true cost of an unmanaged DME process becomes clear.
How Hospice DME Per Diem Rates Get Calculated
Crossroads Hospice came to Qualis knowing their DME costs were high. What they didn't know was exactly where the money was going. Working through a spend analysis, they identified the specific drivers - non-formulary utilization patterns, single-vendor pricing, and staff time that had never been counted.
The result was $2.5M in annual DME savings. Not through cuts to equipment quality or patient access. Through visibility.
That visibility started with calculating the real per-patient number - not the per diem rate, but the total.
Once you have your per-patient cost, you have a starting point for several conversations:
The hospices that have the clearest picture of their DME spend are the ones best positioned to manage it.
If you want to run this analysis on your own data and understand how your number compares to what it could be, Qualis can help. Start at qualis.com/contact-us.