Guest Post: Medical Device Industry on a Downward Spiral


The following comes to me from a friend who owns a medical device distributor on Long Island:

Business is in a real downward spiral but we continue to fight on. Medicare implemented a new Competitive Bidding Program this year with the goal of only awarding contracts to 10% to 15% of existing providers. Of the 94 providers in Suffolk County, only one was awarded a contract (not us) and the new fee schedule is approximately 60% less. Suffolk County residents can now call California to get Oxygen and wheelchairs. Of course other insurance companies jumped on this band wagon and reduced their fee schedules by a similar amount.

medical equipment

Medical equipment will be hard to come by on Long Island

No one is allowed to make too much money. It’s the Obama way. Mr. Obama doesn’t believe in profit and he believes the government has the right to decide how much profit one can make.

It will kill the medical device supply business on Long island and, at some point, it will be hard to find devices when you need them.

Once the medical supply companies are out of business, this one supplier will be free to overcharge. While it’s called competitive bidding, it actually destroys competition. There is nothing competitive about it. It’s typical Obama sleight of hand.

The NY Times reported in October that the medical device industry is in sore need of reform and the medical device tax ‘problem’ is a myth. They said that the profits are too high. However, a 60% reduction in Medicare coverage for medical equipment is extraordinary and like everything the administration has done in healthcare, it’s a random percentage.

One of the problems with the overcharging is that the government is involved. The government reimburses them. If the government were less involved, the free market would take over and the market is a much better steward of the peoples’ money.

The truth could lie somewhere in between on the issue of costs but the problem is that Obama has put himself in the position of a king and he will decide how much profit medical device companies can make. He will force competition out of the market because he doesn’t believe in it. He didn’t just implement reforms, he is completely in charge and his performance so far borders on criminal.

Putting all this power in the hands of an elite few is a very bad idea. When there is no competition to spur innovation, there will be far less innovation.

Obama giveth and Obama taketh away.



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