10:52am

Thu July 5, 2012
Health

Welch Allyn preparing for new tax on medical equipment

Despite months of preparation, the CEO of Welch Allyn says a new excise tax on medical supplies will hurt his company's bottom line.

As part of the Affordable Care Act upheld last week by the Supreme Court, a 2.3 percent tax on medical devices sold in the United States will go into effect January 1. The tax is supposed to help pay for the expanded health care coverage.

The tax will result in a multimillion hit on Welch Allyn's bottom line, says company head Stephen Meyer. He says the Skaneateles-based supplier is looking at ways to cut costs.

"We’re just spending time scrutinizing really every expense that we have," says Meyer.

Welch Allyn is hoping to pass as little of the added cost onto its customers, according to Meyer. But he says other companies in the industry may not have a choice.

"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," says Meyer. "We’d love to see our sales increase substantially, but given the challenges in the economy, that’s tough."

The medical supply industry is looking to have the tax repealed or reduced, according to Meyer.

New York Rep. Bill Owens (D-23rd) says he voted to repeal the medical device tax in the House of Representatives recently, but it has not been taken up yet by the Senate.

The Affordable Care Act aims to increase health care coverage to about 30 million Americans.