Wall Street Journal

By Anjali Athavaley and Jon Kamp of Dow Jones Newswires

October 17, 2011

NEW YORK (Dow Jones)–U.S. medical-device makers are facing ever more pressure on product prices and profits, a new report suggests, because their hospital customers are getting squeezed by high product costs and are looking for relief.

Hospitals lost more than $1 billion on procedures involving expensive medical devices and would consider buying lower-cost alternatives, according to the report from hospital-owned purchasing organization Premier Inc. Its surveys of hundreds of hospitals and health officials underscore a key challenge for device makers like Medtronic Inc. (MDT) and Boston Scientific Corp. (BSX), which are also grappling with slowdowns in some markets brought on by economic turmoil…

…The report highlights why device makers are already seeing push-back on prices for some products. It’s not a new trend, but it’s one that could worsen amid the looming threat of potential Medicare cuts as lawmakers wrangle over deficit cutting. While device makers selling pricey cardiology and orthopedics parts have long relied on strong relationships with surgeons to support sales, hospitals are gaining more control of purchasing decisions by buying out physician practices…

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