Welch Allyn preps for tax hit

Devicemaker Welch Allyn is looking for ways to cut costs before the 2.3% sales tax on medical devices  kicks in in January, the company said.

CEO Stephen Meyer said Welch Allyn is trying to avoid passing the cost down to patients, but it's predicting a multimillion-dollar hit and may not be able to avoid it. Other execs feel the same way, Meyer told NPR, and the whole industry is struggling to figure out how to compensate for the impending charge.

"Each company is going to try to handle this in a different way, but there are only so many buttons you can push in order to effectively manage this," Meyer said. "We'd love to see our sales increase substantially, but given the challenges in the economy, that's tough."

But not every devicemaker is so concerned with passing costs on to patients. According to a survey taken by MassMEDIC this year, 44% of responding device execs said they planned to convey the weight of the tax on to payers, hospitals and patients, while 39% planned to absorb the hit by cutting jobs, R&D and other expenses.

Anti-tax pundits have said that the device tax, which only applies to companies with more than $5 million in annual sales, will disproportionately harm mid-sized devicemakers, and, after last week's Supreme Court affirmation and the stalling of a repeal bill in the Senate, it would appear that the charge will stay on the books.

- read the NPR story
- check out the MassMEDIC survey