Wednesday, September 12, 2012

"Affordable" Care Act Forces St. Jude's to Cut 300 Employees


From the StarTribune:  

St. Jude Medical Inc. said its recently announced restructuring, one that cost 300 employees their jobs...
St. Jude's managers are also fulfilling a basic task of good management -- moving aggressively to offset a new cost over which they have absolutely no control.
That cost is the medical device tax that is one of the sources of funds for providing health coverage for uninsured Americans in the Affordable Care Act. It imposes a 2.3 percent excise tax on the domestic sale of any taxable medical device by the manufacturer or importer of the device starting in 2013.
The analysts clearly get what St. Jude is doing. St. Jude's restructuring will save some $50 million to $60 million annually beginning in 2013. That is about what it will take to fill the $60 million or so hole created when the tax starts being collected after the first of the year.
By laying those numbers side by side, Thomas Gunderson, a senior research analyst at Piper Jaffray & Co., said he concluded that St. Jude was responding to the coming tax, as "it just seemed too big of coincidence not to include the excise tax as a contributing factor."
Analyst Danielle Antalffy of the firm of Leerink Swann did not need to look at numbers, saying that "based upon what they told us, the cost savings are primarily meant to offset the device tax."

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