Medical device firms may be tapped to cut $15B to $25B in costs

With hospitals and the pharmaceutical industry already agreeing to accept considerable financial cutbacks in Medicare reimbursement to help reform go forward, it now seems to be the medical device industry's turn, according to experts who watch that sector. One concern is that health insurers seldom pay directly for such gear, because of this, it's not clear whether a big expansion of health insurance to more consumers will actually help device makers recoup their costs.

While no one from the White House has publicly discussed a number, Wall Street types following the sector are estimating that a deal of this type could cost the industry $15 billion to $25 billion over 10 years. Nobody's sure how the medical device industry would even get their money back over time, though speculation is that it would come in the form of savings routed through hospital group purchasing organizations.

While the medical device industry probably wouldn't be harmed by anything up to $15 billion in sacrifices, any cuts would displease financial analysts, as they don't think healthcare reform will do much to help the medical device industry.

What makes things worse is that medical device leaders are already expecting hospital leaders to clamp down on device investments so they can live up to the $155 billion they've promised to save over 10 years, medical device CEOs say.

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