Monday, May 14, 2012

Hospital Revenues an Indicator of Medical Device Industry Revenue

As key buyers of devices, how hospitals perform will provide some indication of what  those who sell medical devices are up against.  In recent years, hospitals have faced challenges on several fronts, from trying to collect from patients to the increased paperwork needed to keep up with payor demand.    To stave this off to some degree in the United States there is a trend toward consolidation in the hospital industry which results in the changes in hospital structures.   However, statistics are showing some leveling off in declining facility numbers—by 2015 the figure is estimated to be fairly stable at 5,700 hospitals in the United States. 

Revenue growth is falling at many not-for-profit hospitals, which face reimbursement pressures from Medicare, Medicaid and commercial health insurers and declining volume from a persistently sluggish economy, according to a new report from Moody's Investors Service. The median revenue growth rate for hospitals and health systems rated by Moody's was 4% in fiscal year 2010, the lowest in two decades.   This was found in their report "Hospital Revenues in Critical Condition; Downgrades May Follow."  Medicare cuts, patient volumes, new administrative challenges and uncompensated services are plauging hospitals.  

Kalorama expects medical device growth to be limited in a  similar fashion as hospitals increasingly look to transparent pricing systems and group purchasing organizations to make their device purchases.  Device companies who do not participate in these programs will come under increased government scrutiny as states and the federal government assert their influence as key payors. 

These events are covered in detail in Kalorama Information’s report The Global Market for Medical Devices, which includes profiles of companies in the industry, forecasts of the device market and regional breakouts of the device market, products in development and other information.   The report can be obtained at