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Cook: Tax could kill 1,000 jobs in Bloomington

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Bloomington-based Cook Group Inc. could find itself cutting as many as 1,000 local jobs if Congress enacts a tax on medical devices to pay for health care reform, company founder Bill Cook said in an interview.

Cook, who also proposed his own plan for health reform this week, didn’t say his medical device company would cut those jobs for sure. But he said automating Cook’s plant in Bloomington would be one of the company’s first responses and could easily cut out 1,000 jobs.

He said the company also might have to scale back on its clinical trials of new products, an effort that employs more than 325 people in West Lafayette and Bloomington.

“It would force us to the end of creativity,” Cook said, adding, “There are so many things we couldn’t do in the style that we do them today.”

The tax that drew Cook’s ire is part of the Senate version of health care reform. It would assess the medical device industry $4 billion a year, divvying up the fees based on each company’s market share of certain classes of devices.

Cook said his company sells about $600 million of those devices. The tax, which would deduct 4 percent from top-line revenue, would cost Cook about $30 million a year, boosting its tax rate from about 38 percent to 68 percent.

The company is the largest maker of aortic and lower-body stents—small metal tubes that prop open arteries. It also makes a variety of other grafts, catheters and other products implanted through minimally invasive procedures. The company has annual sales of $1.5 billion.

Cook’s medical device peers have been equally upset about the tax—including the orthopedic implant makers in Warsaw. Industry groups claim that the $4 billion a year equals half of the medical device industry’s research and development spending.

“It will certainly have an impact on the companies’ ability to deliver innovation to the marketplace,” Cheryl Blanchard, chief scientific officer of Warsaw-based Zimmer Inc., said during the Indiana Life Sciences Forum yesterday in Indianapolis.

Both she and Cook noted that Congress’ proposed expansion of health insurance coverage won’t really help medical device companies because they aren’t paid by health insurers, but by hospitals, who are on the hook whether the patients they serve have insurance or not.

Beyond the tax, Cook said the health care reform efforts aren’t likely to fix the nation’s health care problems anyway. He proposed a network of federally funded clinics.

“As a nation, we have unwittingly increased medical costs by not understanding how to lower costs: treat diseases early through the simple methodology of performing diagnosis, minor surgery, and drug regimens in a small clinic environment,” Cook wrote in a blog post on Monday. “Treating diseases early will save billions.”

When patients need more complex care, clinics could refer them to existing community hospitals or major medical centers. Procedures at those facilities would be paid for by a new federal insurance program.

Cook said Congress should create and staff enough clinics to treat 12 million to 20 million people who are currently uninsured. Existing bills in Congress would cover roughly 30 million of the uninsured, which total about 46 million over the course of each year, according to some estimates.

His inspiration comes from a clinic that Cook Group operates in Bloomington for its employees and their families. That clinic, founded in 1993, serves about 5,000 people.

A similar clinic would cost $2.5 million to build today. It costs $4 million a year to operate. To scale those up to serve 20 million people would cost $10 billion to build and $16 billion a year to operate.

Cook also called for medical-malpractice reform with Indiana-style caps on damage awards, and the freedom to buy health insurance across state lines.

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  • what a mess
    Obama seems to want to force honest hard working Americans to sacrifice what they've earned in order to make it easier on the unemployed (by choice) and the people who enter our county illegally. I would hate to think what Obama would do if one of his family members needed a "good quality product in a timely manner" without people like Bill Cook.
  • Obama Medicine
    The people chose Obama because they wanted change. Sure Bush was a bit of an idiot and yes we needed a change.... but Obama? I think many people are rethinking their election choice now. I agree that our country needs a better healthcare plan for the uninsured, however, not at the expense of innovation from companies. If companies aren't making enough profit, they can and will cut jobs and R&D budgets. This will affect all of us in quick fashion. Research how long it takes to have an elective procedure done in Canada and the skill of surgeons that are in their community hospitals. Take a tour of their operating rooms and compare the condition and equipment to that in the US. I have worked in the OR there in a sales capacity and it was pathetic in most places. Now ask yourself if this is the type of care you want for yourself or your family here?

    Obama is not going to help this country by taxing the device companies. Why don't we discuss how congress approved a $680 billion. The 2009 U.S. military budget is almost as much as the rest of the entire world in defense spending combined and is over nine times larger than the military budget of China. The money we need for healthcare is being spent on bombs and soldiers. We have also spent over a trillion dollars in Iraq and Afganistan now. Does anyone else see the real problem here?
  • Alarmism
    We survived the great Depression and WWII, plus numerous other threats and challenges.

    Your comment lends support to the assertion that this is 'The Crybabiest Generation'. If I'm ashamed of anything it's all this crybaby attitude in this country. At least this time the election was won fairly.
  • Jobs in America
    All I have to say is thank God for people like Mr. Bill Cook!. At least he is standing up for his employees instead of letting us possibly lose our jobs. Other companies just let their jobs go here and there leaving Americans and America hanging. Thank you for thinking of me Mr. Cook, the last company I worked for didn't. As for keeping his rich mouth shut, if he did that our city wouldn't be what it is today. He has given more to this community then you will earn in your lifetime!!
  • Whoa... People Calm Down
    First of all it wasn't Obama that put this nation in shambles. For those of you who are hating this president. I dislike the last one. It was GWBush who messed the country up. Those of you turning a blind eye as to what happened in the last 8 years are close minded. As far as Mr Cook doing his thing with the company because of the tax increase he his one of the last people to get hit up for the medical supplies sector. Everybody is hurting people not just him he is losing money as well. I understand that employees are upset about MAYBE losing there jobs but there is a slim chance that everyone is talking out the side of their neck since we don't know if this happening for sure jeeze.....
  • Mr. Cook
    I don't normally leave comments after stories, but as a former Cook employee married to a current Cook employee, this time I have the desire. The people who left comments about Mr. Cook that appear to be upset because he has worked hard for many years and profited should read up on Mr. Cook and see what kind of person he truely is. If you didn't know who he was, you wouldn't be able to pick him out in a crowd. For being a billionaire, he is actually a down-to-earth man living in a modest house. Oh, he has the money to buy a mansion, limos, all the luxuries, etc. But instead he invests his money back into his company and his communities. He is quite the philanthropist, but also a very smart one, as was mentioned. I don't believe he would be saying things like job losses lightly. See comment about no lay-offs since the beginning of the company. As far as his ideas for the health plan, last time I checked this is still a free country and he has the right to his opinion and to speak his opinion. Just like you and I do. We have used his idea since it opened and apparently it is working. So, please, before you pass judgement, get to know your subject a little better, look beyond thier net worth.
  • Losing your job.
    It's easy to say let's get rid of jobs when you're not the one possibly looking at losing your job.We take pride in what we do and I don't believe it is going to be as easy to replace people with machines. Sometimes man made is better.
  • Read the article
    Here's a tip: comments might be taken seriously if they appeared to be at all related to the substance of the article. Smart business people find ways to adapt to changes in the business climate, and despite his political rhetoric, I believe Mr. Cook is one of those smart people. After all, he consistently ranks among Forbes's top 100 richest Americans! If his first thought is to cut other people's jobs before sacrificing his own riches, I'm not sure I'd want to work for him anyway. And if Cook has 1000 jobs that would be lost due to "automation", those jobs should have been long gone already and the workers re-tooled with new skills that actually might support innovation. I think these orthopedics manufacturers have been sitting fat, dumb, and happy for a long time using outdated business practices, and now they're crying foul because they actually have to play catch-up.
    • Nation in shambles
      Under Obama's leadership I have never been so scared in my life. He is going to single handedly be the downfall of our nation. He gets his funding from overseas, from enemy countries. For all the Obama lover's above is only a small preview of what is to come. You guys did this and now we are going to pay for it. If Obama is not put in his place by the American people, we are going to lose what little freedom we have left. Cook hasn't had a layoff since it opened in 1963 and now they are the verge of losing 1000 jobs because of Obama's new joy-ride. He has done nothing for American's but give us false hope and shattered promises. Thanks Barrack Husane.
      • jobs
        What the idiot above does not understand is that innovators like Cook create jobs. The governmental Looters stifle innovation by taking from those who have and redistributing to the have nots. This is a sign of things to come under the current administration.
        • Greed with a big G
          Mr. Cook is beginning to sound like an Obama Czar. His thinly veiled threat to cut jobs is pure Boss Tweed behavior. Mr. Cook, why don't you just keep your rich mouth shut.

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