Stryker Announces Layoffs Ahead of Excise Tax

Medical device manufacturer Stryker Corporation is planning a five-percent workforce reduction through 2012 in anticipation of the Affordable Care Act’s much-maligned Medical Device Excise Tax set to go into effect in 2013.

Stryker expects the move to yield about $100 million in operating cost savings.

Stryker’s announcement is one of the first from a major medical device manufacturer reacting to the pending excise tax with layoffs. But industry advocates and their allies in the US Congress have worked multiple levers in a months-long effort to derail the tax; although the outcome of that effort remains unknown, the likelihood of the tax’s implementation now seems far less certain than it was upon passage of US health care reform in 2010. The question is, are other major medical device industry employers waiting to see whether the excise tax is struck down, or are they also planning staff reductions to offset potential tax liabilities?

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