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Study Shows Medicare Bidding Toll on Iowa: 2,500 Jobs Lost, $200 Million In Economic Activity Gone

A new study concludes that competitive bidding for home medical equipment will have a significant negative impact on Iowa, including the loss of 2,500 jobs and $200 million in economic activity. This news was announced in the 7-27-12 VGM Group Legislative Update.

"Competitive Bidding for Durable Medical Equipment: An Estimate of the Economic Impact on Iowa" was conducted by Ken Brown, Ph.D., from the University of Northern Iowa Department of Economics.

"Some members of Congress mistakenly believe there would be no impact in Iowa, but this report refutes that view," said Mike Mallaro, VGM Group Inc.'s chief financial officer. "The economy is already fragile, and this ill-conceived approach from Washington will damage Iowa and its small businesses." VGM commissioned the study.

While competitive bidding sounds like a good deal for all, the fractured auction process used to award bids to winners has been criticized by groups as diverse as well-known U.S. economists and patient advocacy organizations. Bids were awarded solely on low price; quality or a provider's ability to service an area were not considered.

Companies that lose bids can't serve Medicare patients, and those that win for a specific city may be located across the country. At least 450 small businesses have closed since competitive bidding was rolled out in select cities, and patient problems with access, choice and quality care have been widely documented.

"With HME, buying lower quality means two things. First, the patient will receive a lower-quality produce that will cost slightly less. More importantly, second, the patient will see a significantly reduced level of service," Brown concludes.

In addition, two large companies in Waterloo and Dubuque that serve HME providers across the country  will be negatively affected by competitive bidding.

Many of the HME providers those companies serve will go out of business as the bidding is rolled out across the country, which will reduce both companies' client bases. Losses from these two companies could result in more than $60 million in additional economic output and more than 400 additional jobs lost, Brown says.

VGM will be working with the American Asssociation for Homecare and the Midwest Association of Medical Equipment Suppliers to ensure that Congress see this study and understands its impact.

The study may be found at:  

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For more information, contact Mike Mallaro at the VGM Group, 319-274-6682.

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