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Company news

October 10, 2011

Executives at Bloomington-based Cook Group never have had kind words for the 2.3-percent excise tax that the 2010 health reform placed on medical-device makers. But now the maker of catheters, stents and other medical implants is trotting out specific numbers on just how much the tax is costing Cook. Company President Kem Hawkins told Fox Business the excise tax will cost Cook Group about $17 million in 2011. By comparison, Cook spent $12 million to open a plant in Canton, Ill., which now employs 300 people. “If people don’t think companies are being forced to leave our shores, they need to take a look around at what’s happening,” Hawkins told Fox Business. “Our government shouldn’t be placing obstacles in the path of companies that employ Americans.” In October 2009, the late founder of Cook Group, Bill Cook, said the tax could force the company to trim 1,000 jobs.

The planned merger of Indiana University Health and Kokomo’s Howard Regional Health System is now dead, the two hospitals announced Oct. 3. The integration of the two not-for-profit hospital systems was approved by Howard Regional's board in late May. At the time, Howard Regional officials said they needed the economies of scale of a larger system because of deteriorating demographics in its trade area and the threat of lower reimbursement from the 2010 health reform law. But now Howard CEO Jim Alender is citing the uncertainty of health reform as the reason for cutting off discussions with IU Health. “We know change is coming, but we do not know the form of these changes given the ongoing debates in Washington and the litigation over health care reform,” Alender said in a prepared statement. IU Health CEO Dan Evans said the two hospitals will continue to work in partnership.

Performance weakened at Warsaw-based Biomet Inc. during the three months ended Aug. 31. The maker of orthopedic implants said sales in the quarter were flat, when factoring out the benefit of foreign exchange rates. And the company’s earnings before interest, taxes, depreciation and amortization fell nearly 2 percent, or $3.9 million, to $202.5 million. Officially, Biomet recorded a loss of $39.2 million, more than twice as large as its loss during the same quarter a year ago. Sales, including the benefit of foreign exchange rates, rose nearly 4 percent to $664.6 million. "Biomet's results indicated continued weakness in its core (knees and hips) as well as spine and trauma markets,” wrote Barclays analyst Adam Feinstein in a research report. He added, “the flat growth in core recon and declines in spine and trauma point to continued weakness in ortho market fundamentals.”

WellPoint Inc. subsidiary National Government Services Inc. won a five-year Medicare contract worth up to $273 million. Under the agreement, WellPoint will process Medicare claims from Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Illinois, Michigan, Minnesota, Nevada, New Jersey, New York, the Northern Mariana Islands, Oregon, Puerto Rico, the U.S. Virgin Islands, Wisconsin and Washington. WellPoint has been trying to grow its business as a contractor for Medicare and Medicaid programs, which are predicted to grow in coming years even as WellPoint’s employer-sponsored health insurance business stagnates.

Drugmaker Eli Lilly and Co. doesn’t plan to buy Pfizer Inc.’s $3.6 billion animal-health business, CEO John Lechleiter told Bloomberg Oct. 5. In July, Lilly Chief Financial Officer Derica Rice said Lilly was interested in some Pfizer assets, but Pfizer said it wouldn’t break the business into smaller pieces to sell. “We don’t think we have to make a large acquisition,” Lilly’s Lechleiter said. “In our animal-health business, we’ve got a pretty good mix of organic growth and growth from smaller acquisitions. I think that’s the approach we’re going to take.” Lilly's Elanco animal-health business, which is based in Greenfield and has 2,400 employees, is expected to rack up sales this year of $1.7 billion.

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