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An­a­lysts blame econ­omy for elec­tive surgery slump

Modern Healthcare - - FRONT PAGE - Jaimy Lee

Weak econ­omy blamed for elec­tive-surgery slump

The mar­ket for elec­tive pro­ce­dures has yet to show any gains de­spite a gen­eral con­sen­sus that the rate of de­cline is slow­ing and med­i­cal uti­liza­tion is on the rise. Unit­edhealth Group and Wel­lpoint cited in­creases in med­i­cal care when they re­ported their year-end re­sults last week, while John­son & John­son CEO Wil­liam Wel­don told an­a­lysts and re­porters that he ex­pects pa­tients who post­poned elec­tive pro­ce­dures dur­ing the re­ces­sion to be­gin to move for­ward with them.

“You can only put these pro­ce­dures off for so long,” Wel­don said dur­ing the call. “There’s go­ing to be a bo­lus of peo­ple that will come back in the mar­ket over time. I don’t know if it’s go­ing to be in 2012 or in 2013, but I don’t think the mar­ket is go­ing to de­cline as pre­cip­i­tously as it had pre­vi­ously.”

But an­a­lysts say that with­out some kind of eco­nomic cat­a­lyst, such as a drop in un­em­ploy­ment rates, the rate of de­cline for elec­tive pro­ce­dures such as hip and knee im­plants will likely sta­bi­lize this year, but will not show any sig­nif­i­cant growth.

“It’s hard to iden­tify a turn­ing point,” said Me­gan Neuburger, a Fitch Rat­ings an­a­lyst. “There’s not a whole lot of good news on the uti­liza­tion front head­ing into 2012.”

Be­fore the re­ces­sion, the vol­ume of elec­tive pro­ce­dures was ris­ing. Data from 2000-2001 com­pared with that from 200506 shows that knee im­plants for Medi­care ben­e­fi­cia­ries in­creased 48% while hip im­plants in­creased by 15%, ac­cord­ing to a 2010 anal­y­sis of Medi­care data by the Dart­mouth In­sti­tute for Health Pol­icy and Clin­i­cal Prac­tice. Elec­tive-pro­ce­dure rates can vary as much 300% in dif­fer­ent regions.

The de­cline has af­fected hos­pi­tals and man­u­fac­tur­ers. When HCA re­ported that in­pa­tient surgery cases on a same-fa­cil­ity ba­sis dropped 2% in the first half of 2011, an ex­ec­u­tive at­trib­uted some of the com­pany’s re­sults in the sec­ond quar­ter to the soft econ­omy and tech­nol­ogy and drug pro­grams that can re­duce the need for surg­eries. HCA is sched­uled to re­port its year-end earn­ings Feb. 6.

Stryker, the Kala­ma­zoo, Mich.-based de­vice­maker, has twice cited the mar­ket slow­down in elec­tive surg­eries over the past three years, in­clud­ing in De­cem­ber when the com­pany said it w+ould cut 5% of its work­force.

Neuburger sug­gested that in med­i­cal care’s “new nor­mal,” in which pa­tients in­creas­ingly weigh their share of a pro­ce­dure’s cost and clin­i­cians eval­u­ate the use of a drug-ther­apy pro­gram or other treat­ment op­tions over surgery, elec­tive­pro­ce­dure rates may not re­turn to their pre­re­ces­sion lev­els.

Fur­ther com­pli­cat­ing any re­bound in elec­tive-pro­ce­dure vol­ume is the im­pact of the over­all eco­nomic down­turn on the health­care in­dus­try.

Health­care has never been an “eco­nom­i­cally sen­si­tive in­dus­try” un­til

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