Reimbursement rates and competitionOne can speculate that VMD could never have had its initial success under the current reimbursement rates which were cut 25% a few years ago. The only reason for continued profitability are the economies of scale that it enjoys from its current size. Any further reduction in rates will discourage new competitors in this space.
Future reimbursement rate cuts appear to be a continuing risk for VMD. However, as this home care model realizes significant savings from the traditional care models for COPD, the current rates may be red-circled to help foster growth and competition, particularly in rural areas. Competitive pricing currently does not exist simply because of a lack of competitors.
Some were driven out of business due to the reimbursement rate cuts. It will be incumbent on VMD management to continue to tell their story from the perspective of cost savings to Medicare.