Medical device tax: Welch Allyn to cut 275 jobs over levy

Welch Allyn plans to shed about 10% of its global workforce, or 275 jobs, to compensate for the 2.3% medical device excise tax that goes into effect next year.

The medical device company’s CEO, Steve Meyer, said yesterday that the company will undertake a restructuring plan that will pare the 2,750 workforce over the next 3 years, according to a press release. Welch Allyn also said it will run a 90-day evaluation of its European operations to "determine the optimal deployment of the business in that important market, and reorganize its Latin America business to be more competitive in the region."

"We firmly believe this restructuring program is the right thing to do for the long-term success of the business, however, we also fully recognize the hardship it will cause some of our colleagues in the short term," Meyer said in prepared remarks.

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Most of the cuts will occur at the company’s Beaverton, Ore., patient monitoring, systems and low-acuity vital signs operation, which will be consolidated into Welch Allyn’s Skaneateles Falls, N.Y., headquarters.

The company will also consolidate its thermometer probe cover, lamp and some blood pressure cuff manufacturing operations from upstate New York to Tijuana.

"This restructuring plan will help us maintain competitive levels of investment in new products and technologies that are necessary to meet the changing needs of the global healthcare environment," Meyer said.

The 2.3% medical device excise tax, part of the Patient Protection & Affordable Care Act, is slated to go into effect in January 2013. It applies the levy to all U.S. sales of medical devices.

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