Answers - Finance

Healthcare providers, particularly those with a large mix of Medicare related transactions, are in for a ca

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

sh and profit squeeze. Refinancing existing medical and office equipment leases can be a way to ease the p

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ressure. According to AMA President Jeremy Lazarus, 45% of physicians in the American Medical Association

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

plan to decrease or stop the acceptance of new Medicare beneficiaries if Congress does not act to stop a 5%

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

decrease in Medicare payments. These payment reductions are scheduled to go into effect in 2007. Accordi

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ng to Lazerus "Over the next nine years, Medicare will cut physician payments 37%, unless Congress acts bef

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ore January 1, 2007", adding, "at the same time, the cost of caring for those patients will increase 22%, a

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

d that math just doesn't add up". The cuts, which would reduce payments by $2.8 billion over five years, a

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

re included in a 2006 deficit reduction package.

Should the projected cuts hold up, providers will need to

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

become more operationally and financially efficient. One way to offset the decreased cash flow is to refi

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

nance equipment. Many providers are making very large monthly payments because they have opted to execute

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

four or even three year leases. There are now medical equipment financing options available that can sprea

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

d those payments out over a 96 month period. For example, a physician needed $500,000 of equipment to star

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

t his practice and signed a 48 lease. Payments on the lease, assuming an 8% interest rate, would be approx

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

mately $12,200 per month. If that equipment were refinanced at the beginning of year two, the balance woul

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

d be approximately $380,000. Refinancing that balance over 96 months would result in payments of $5,400 pe

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

r month, a cash savings of $6,800 per month or $81,600 per year.

The provider should carefully review the

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

equipment being used to determine if he is a good candidate for long term refinancing or even buying new eq

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

uipment for longer amortizations. If the medical equipment is likely to withstand an onslaught of technica

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

l advances, a refinancing could be the ticket to helping offset the specter of Medicare payment deductions

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Answers - Refinance Medical Equipment to Offset Medicare Payment Reductions

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