Healthcare group purchasing organizations and hospital trade groups are firing shots at medical device makers over how they might handle an upcoming tax intended to help pay for healthcare reform.
The first volley came in a letter sent to the Internal Revenue Service last month by the Health Industry Group Purchasing Association, the American Hospital Association, the Catholic Health Association of the United States and the Federation of American Hospitals.
The groups asked the IRS to explicitly prohibit medical device makers from passing along the 2.3% tax on their products to customers, including hospitals. That tax is expected to start in 2013 and could raise $20 billion over a 10-year period.
“Given their commitment to the goals of (the Affordable Care Act), device companies should be prohibited from passing through the tax to their customers,” the groups said.
The purchasing and hospital groups contend that a pass-along to customers would amount to a “double dip” because the Affordable Care Act appears to permit medical device makers to deduct the tax from their income in federal filings.
That “could leave device companies in a better financial position” than before healthcare reform was enacted.
The groups argue that prohibiting a pass-along would still “afford manufacturers the benefit of reducing their income by the amount of the tax through a deduction, but will also require them to pay the tax in a manner consistent with their ‘shared responsibility’ commitment” to healthcare reform.
The Medical Device Manufacturers’ Association snapped back at the healthcare purchasing and hospital groups.
The association said it was “ironic” that the group purchasing organizations and hospital groups were concerned about costs “when they represent for-profit middlemen that collect billions from suppliers in exchange for preferential access to the hospital marketplace,” said Mark Leahey, Medical Device Manufacturers’ Association chief executive, in a statement.
The Washington, D.C.-based association believes that the group purchasing model “drives up medical costs and reduces access to care,” Leahey said.
Overall, the device industry, which mainly was supportive of healthcare reform, has lobbied to have the tax repealed.
Leahey added in his statement that his group continues to work on “bipartisan efforts to repeal the tax.” They have a sympathetic ear in the Republican-controlled House of Representatives, where a proposal to repeal the medical device tax has been introduced.
Sabra’s First Buy
Sabra Health Care REIT Inc., an Irvine owner of healthcare real estate, has bought its first property since spinning off from Sun Healthcare Group Inc., also of Irvine, in November.
Sabra is paying $62.7 million in cash for the Texas Regional Medical Center of Sunnyvale, a 70-bed hospital located in a Dallas suburb.
The hospital, which opened in 2009, is leased to Texas Regional Medical Center Ltd., a group that includes 75 doctors who practice there.
The buy is expected to close during the second quarter.
Buying the Texas Regional Medical Center “serves as the first step toward diversifying away from our primary tenant as well as broadening our (property) base,” Sabra Chief Executive Richard Matros said.
In earlier interviews, Matros said Sabra would be looking to buy properties that are leased to tenants other than Sun Healthcare, its primary tenant.
Sabra, which owns 86 other properties with a total of 9,603 beds in 19 states, was spun off from Sun because management felt Wall Street undervalued its real estate holdings.
Alternative Prostate Diagnostic
A University of California, Irvine, researcher has found that it might not be necessary to directly look for tumors in prostate cancer patients because looking at tissue without tumors might be just as effective for diagnosis.
UCI pathology and laboratory medicine professor Dan Mercola and his colleagues obtained 364 samples from men who had biopsies for possible prostate cancer or prostatectomy surgeries to remove cancer as well as some from men who died of other causes.
The researchers looked at changes in nearby non-tumor tissue and found that changes in genetic activity in normal prostate tissue could be detected up to a few millimeters from cancerous tissue.
Detecting tumors “is reminiscent of the game Battleship. We can detect more cancer cases using 12 shots with a biopsy needle than would otherwise be the case because we have made the ships bigger,” Mercola said in a release.
The researchers said study results indicate that doctors possibly could detect changes in normal tissue that indicated a tumor may be present. That could allow patients to get follow-up biopsies sooner.
Study results were published in Cancer Research, a journal from the American Association for Cancer Research.
Bits and Pieces
Lake Forest medical imaging company Insight Imaging said it was accredited by the Joint Commission, a not-for-profit healthcare evaluation body, for compliance with the commission’s national standards for quality and safety in ambulatory care … Humana Inc., a Louisville, Ky.-based health plan, named J. Edward Quinlan Jr. as its president of specialty products for its Southern California operations. Quinlan, who most recently worked as a regional manager for insurer The Hartford, will be based in Irvine.
