Survey Highlights Financial Strain Pressuring US Hospitals
27 April 2009 - 2:31PM
Dow Jones News
Results from a new American Hospital Association survey
underscored the financial strain pressuring U.S. hospitals as fewer
people seek elective surgery and more people show up without
insurance, conditions that have trickled down to hurt sales at some
medical-technology companies.
The non-profit association's survey of 1,078 hospitals looked at
conditions in early 2009 verses the same period a year earlier. It
found that most hospitals were seeing "a moderate or significant
decline in their financial health" and that more than 40%
anticipated first-quarter losses.
These financial strains came as 45% of hospitals reported a
moderate increase in the number of emergency visits by uninsured
patients and 13% reported a significant rise. On top of that,
hospitals are seeing more patients enter through their emergency
departments.
"Today's findings signal what many of us in health care are
concerned about: People put off care when they lose their job,
which can complicate health-care issues for many down the road,"
Rich Umbdenstock, the association's president and chief executive,
said in a release.
"At the same time, the fact that hospitals are cutting staff
challenges the notion that hospitals are recession-proof," he
said.
The survey was sent to community hospital chief executives on
March 5, and data was collected through March 27, the association
said.
The problems facing hospitals have slowed demand for a diverse
array of medical products, an effect seen recently in financial
reports by companies such as Stryker Corp. (SYK) and C. R. Bard
Inc. (BCR).
The normally steady Bard saw a decline in product inventories
affect first-quarter sales of urology and other products. Stryker,
meantime, has been pinched by slowed demand for hospital beds and
stretchers and a downshifting market for replacement orthopedic
joints.
While more uninsured patients strain hospital budgets, many
hospitals report fewer inpatient admissions overall. For example,
41% of hospitals reported a moderate decrease in elective
procedures, and 18% said the decrease was significant.
Other companies in the $11 billion market for replacement hips
and knees, including Zimmer Holdings Inc. (ZMH) and Johnson &
Johnson (JNJ), also have noted a modest slowdown in procedure
growth due to the recession's impact on elective surgery
trends.
Meantime, capital-budget constraints have made it tougher for
hospitals to purchase pricey items like $1.3 million motion-capture
surgical robots from Intuitive Surgical Inc. (ISRG).
"Nearly eight of 10 hospitals have stopped, postponed or scaled
back projects such as facility upgrades as well as clinical and
information technology planned or already in progress," the
association noted, while citing hospitals' struggles to access
capital to fund such moves.
"Nearly all hospitals report that their ability to borrow funds
to make improvements is getting worse or remains challenging," the
association said.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com