Bard C R (NYSE:BCR)
Historical Stock Chart

From May 2019 to May 2024

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