Medtronic CEO Omar Ishrak ($MDT) said the 2.3% device tax will cost his company as much as an extra $180 million a year. But taking a pragmatic approach, he insisted that day-to-day business takes precedence over focusing on whether the tax can be repealed, even as industry leaders continue to push to revoke the assessment.
"This clearly has financial impact, as much on us as anybody else, because our sales are higher," Ishrak said in a recent interview with Twin Cities Business. "But I look at it in the context of being realistic about it. This is a law that has passed [and] right now we have to pay the tax, whether we like it or not. And we still have to run our business and we still have to invest in it and we still have to return to our shareholders."
Ishrak told Twin Cities Business that instead, he sees the tax debate as something that should be part of "the broader question of implementing effective healthcare policies in the U.S., which will drive better outcomes." He noted, however, that the larger healthcare issue remains "a journey in progress," where some parts of the Affordable Care Act (which the tax helps support) help, but don't address all the issues that remain.
Also part of the interview: discussion about Medtronic's $200 million acquisition of Cardiocom, a patient monitoring company. Ishrak is quoted in the story as saying that the deal remains a significant step for Medtronic's broader push to expand globally into health services.
"It's a different type of revenue stream than what we're used to," Ishrak said in the article. "The payment mechanism is based on overall outcomes and the value that's created in generating that outcome."
As well, the Cardiocom deal accesses patients being treated for heart failure who don't necessarily rely on Medtronic devices. That is a big and important strategic step for a company that usually only deals with Medtronic device patients, Ishrak said. And he sees the broader industry potentially following suit.
"As a company, and as an industry, we will eventually have to be measured much more on overall outcomes as opposed to procedures or equipment by itself," he said.
Meanwhile, Medtronic continues to address its announced plans earlier this year to slash 2,000 jobs from the payroll, but Ishrak is quoted as saying in the story that "overall, we're adding more [employees] than we're taking away."
- read the full Twin Cities Business piece