Council News

February 3, 2012

Of Interest Finance Blog: Elective hope in a stagnant economy (ModernHealthcare.com)

Of Interest Finance Blog: Elective hope in a stagnant economy (ModernHealthcare.com)
by Melanie Evans, Modern Healthcare | Feb 03, 2012

NASHVILLE – Demand for elective procedures, slowed by the recession and persistently high unemployment, continues to drag along with U.S. job growth, my colleague Jaimy Lee reports this week.

Surgeries to repair worn hips and knees have slumped in recent years as patients delay medical care to avoid the expense or time off from work. The slowdown contributed to the lackluster growth (compared with historical growth rates) for U.S. health spending overall for 2010 and the prior year.

That has hospital and healthcare manufacturing corporate executives closely watching for a rebound. Johnson & Johnson’s chief executive told analysts in January that patients won’t wait forever, Lee reported. “You can only put these procedures off for so long,” J&J CEO William Weldon said.

It may be a bit longer unless the economy gains strength, said analysts who spoke at the Nashville Health Care Council’s annual Wall Street luncheon.

A.J. Rice, a senior healthcare services analyst for the Susquehanna Financial Group, said he does not see evidence of the growth that some companies have started to anticipate.

Economic recovery remains too unstable for elective procedures to rebound, said Whit Mayo, a senior research analyst for Robert W. Baird & Co. Healthcare demand historically lags behind employment gains by 18 months to two years, Mayo said. That would put the industry on track to grow during the last half of this year or early next year.

Mayo said he believes the year will more likely see no growth but also no further erosion in elective procedures.

Adam Feinstein, a managing director at Barclays Capital, agreed. Demand for elective procedures will be stable at best. A rebound to pre-recession growth levels will take time and could be tempered by health plans that shift a greater share of healthcare costs to households.

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