Indiana device companies are looking for ways to absorb revenue reductions resulting from the 2.3 percent medical device excise tax since they will not be able to pass the costs on to hospital customers, according to the Indianapolis Business Journal. 
Even larger companies will be hit hard by the tax, which was enacted by the Patient Protection and Affordable Care Act and went into effect Jan. 1. Zimmer Holdings, based in Warsaw, estimated the tax will take $50 million in the second half of 2013, about 43 percent of total cash flow from 2012, according to the report.
The language of the tax will also not allow companies to simply raise prices to make up the difference. According to Brian More, chief financial officer for Columbia City-based Nanovis, hospitals will only pay what they can afford for devices and will negotiate down from companies' requests. "The tax doesn't ever have a chance to come into it," he said in the report.
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Even larger companies will be hit hard by the tax, which was enacted by the Patient Protection and Affordable Care Act and went into effect Jan. 1. Zimmer Holdings, based in Warsaw, estimated the tax will take $50 million in the second half of 2013, about 43 percent of total cash flow from 2012, according to the report. The language of the tax will also not allow companies to simply raise prices to make up the difference. According to Brian More, chief financial officer for Columbia City-based Nanovis, hospitals will only pay what they can afford for devices and will negotiate down from companies' requests. "The tax doesn't ever have a chance to come into it," he said in the report.
More Articles on Devices:
8 Orthopedic & Spine Device Company Leadership Changes
Lanx Completes $15M Financing Round
A Model for Clinical, Financial Success in Orthopedics