Study details bidding impact on one state

Wednesday, July 25, 2012

WATERLOO, Iowa – Home medical equipment revenues in Iowa could drop by $99.4 million once competitive bidding prices are implemented in 2016, according to a new study.

The number of HME providers will also fall, says Ken Brown, a professor at the University of Northern Iowa, who did the study for The VGM Group.

Total HME revenues in Iowa in 2011 were $315.4 million. The nine product categories included in competitive bidding comprise approximately 75% or $236.6 million of total HME revenues, according the study.

The study also found that, as HME providers go out of business, the impact of competitive bidding will have a ripple effect. Companies that provide services to HME providers, including VGM and Medline, both of which are located in Iowa, will see their client base reduced, forcing them, in turn, to reduce operations. Losses from those two companies alone could total more than $60 million in lost output and more than 400 jobs.

“Some members of Congress mistakenly believe there would be no impact in Iowa, but this report refutes that view,” stated Mike Mallaro, VGM Group Inc.’s chief financial officer, in a release.

Overall, competitive bidding is expected to result in more than $200 million in reduced output and more than 2,500 jobs lost in the state of Iowa, concludes the study.

Read the study here: