Beckman sees tiny health reform gains for sector

Scott Garrett, President and CEO of Beckman Coulter Inc., speaks at the Reuters Health Summit in New York, November 9, 2009.

NEW YORK (Reuters) - Beckman Coulter Inc BEC.N Chief Executive Scott Garrett said insuring more Americans through U.S. health reform would increase demand for medical devices and lab tests by a surprisingly small amount.

"By and large, it's probably not a big windfall for hospitals or for pharma or medical devices," said Garrett, speaking at the Reuters Health Summit in New York on Monday.

Garrett said he sees volume across the industry receiving a boost of only 1 to 2 percent a year over the next decade from health reform because many of the newly insured will be young and healthy Americans who will not seek out frequent treatment.

Garrett also said he remains hopeful that a proposed tax on makers of medical devices and tests would be reduced as lawmakers reconcile health care reform bills in both houses of Congress.

The proposed tax on medtech companies would be $40 billion over 10 years in the Senate version of health care reform legislation and roughly half that in the House version.

However, he sees price pressure on devices continuing with or without reform.

"Pricing in my career has only gone one way, and that's down," he said.

Asked whether health care reform would place more pressure on prices, he said: "We're always expecting pricing pressure." That pressure, however, would be offset by the positive demographics of an aging population, he said.

Hospitals, he said, will remain cautious about capital expenditures until there is greater clarity on health care reform.

"The great unknown in health care reform right now is what is it going to do to the P&L of a hospital, be it profit or not-for-profit? How much of the payment is going to be at Medicare rate versus private pay?"

He said hospital chief executives around the country will continue to be careful about spending.

"Until it's perfectly clear how they're going to be paid, I think we're going to have a very conservative approach to spending," he said.

Even as Garrett downplayed the potential impact of health care reform, WellPoint Inc (WLP.N) Chief Executive Angela Braly said it would hurt many hospitals, even some large institutions, because they might be required to accept smaller reimbursements.

In a separate appearance at the Reuters Health Summit, Braly said: "Our perception is it could potentially bankrupt some hospitals, depending on the scenario" of eventual reforms.

In the event reform includes a public option plan, she said some hospitals could receive much lower reimbursements, in line with Medicare and Medicaid payments.

With hospitals going bankrupt, she said lost services would create an "access question" for patients.

"The question is whether we're solving or creating access problems in another way," she said.

Beckman shares were up 13 cents, or 0.2 percent, to $65.70 on the New York Stock Exchange, while WellPoint shares were up $1.21 or 2.4 percent to $52.21.

(Reporting by Susan Kelly and Debra Sherman, editing by Matthew Lewis and Gerald E. McCormick)