Positives and negatives for new medical supply businesses

    By Mark Taylor | Small Business

    The Affordable Care Act (ACA) has impacted small medical suppliers in ways that may not be fully understood for years. Even those applauding the law, which expands health insurance benefits to more than 30 million Americans, still question some of the taxes it imposes.

    A boon to small businesses

    Anton Gunn, a former Obama administration official in the U.S. Department of Health & Human Services (HHS), said the ACA has already been a boon to small businesses, allowing many for the first time to afford to provide health insurance to their employees.

    Gunn said the ACA also presents the biggest opportunity small businesses have seen in the last 50 years.

    “It is an incredible chance for small businesses who can figure out how to meet the healthcare needs of 32 million new customers receiving private and Medicaid insurance through the $2.8 trillion healthcare industry,” he explained.

    “If you’re in the healthcare supply chain, there are now more opportunities to bring more products to a market that didn’t exist before. Many of these customers look different, with higher percentages of African-Americans, Hispanics, Asians and Native Americans moving into the ranks of the insured. This is a boon for hospitals and other providers treating those patients and for the companies that supply products to those hospitals and businesses.”

    Gunn likens the business climate to the period before the release of smart phones.

    “We will see this happening in healthcare, with products that don’t exist now but will in the next few years. And whoever can find, create and sell the next big thing can move markets. This is about the transformation of our healthcare delivery system. And small businesses and suppliers will play a big role in that process.”

    Uncertainty lingers because of new taxes

    Healthcare consultant Bill Maddocks said it’s too soon to know how the ACA will affect medical suppliers.

    “With 30 million new customers, the news could be good,” Maddocks suggested. But he noted that a 2% tax on medical devices is already hurting his wife’s firm, MAC Medical Supply of Chicago. “When you’re making only a 3% margin and you get tagged with a 2% tax, you’re affected. It remains to be seen whether the law will accomplish what it set out to do.”

    MAC Medical Vice President Scot O’Flaherty is optimistic, noting that infection prevention is a greater focus for physicians and hospitals under the ACA.

    “And our products can help in that environment,” O’Flaherty said. “We’re excited for the opportunity to grow as everyone is seeking to improve quality while reducing costs.”

    Diverse suppliers can capitalize

    Richard Manson, president and CEO of Brentwood, Tenn.-based medical supplier, SourceMark, said because the ACA also aims to improve accountability and affordability, it challenges healthcare providers, manufacturers and medical suppliers to look at patients as end users and consider what is best for them.

    “Our companies (medical suppliers) are very sensitive to the end users,” said Manson, whose firm manufactures, distributes and sells medical supplies, primarily airway management equipment to anesthesiologists.

    “Our healthcare system has been undergoing a shift for some time, from incentivizing volume to rewarding quality, a system that now will be judged and reimbursed based on outcomes. It will take a while to change everyone’s thinking to move Americans towards wellness, prevention and personal responsibility for their health. But this law is moving us in the right direction.”

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