GE exec: Fiscal cliff is stalling medical device sales
For months, analysts and industry insiders have said the market for medical devices would loosen up after the election, as the results would quell uncertainties about healthcare reform and reimbursement policy. Now, however, as fiscal cliff fretting gets louder and louder, it remains just as tough to sell devices, a GE Healthcare ($GE) exec said.
John Dineen, CEO of GE's life sciences unit, told Bloomberg that doctors and hospital groups are keeping their eyes glued to the congressional debate over how to avoid the $607 billion in automatic spending cuts that will take effect Jan. 1 if lawmakers don't reach a compromise. Until they do, the market for medical devices--especially the high-dollar imaging technologies made by GE--is effectively stalled, he said.
"It's impossible to make an investment if you're a hospital or hospital system if you don't know what the financial rules are going to be," Dineen told the news service.
GE Healthcare is the world's largest maker of medical imaging devices, Bloomberg reports, bringing in $18.1 billion in revenue last year. However, the company's U.S. sales dropped 2% in the last quarter, and Dineen said the ongoing uncertainty over the federal budget is largely to blame.
Assuming President Barack Obama and Congress wrangle a solution--either by extending the deadline or actually affecting new policy--the device industry will still be left with a more familiar threat to revenue: The 2.3% medical device tax, slated to kick in at the start of the year. However, as tax opponents have said, their lobbying efforts have fallen on partially deaf ears thanks to the looming budget disaster, and a timely solution to the fiscal cliff will make it easier to state their case to policymakers come 2013.
- read the Bloomberg story