And, what about capex?
Procedure Rates
In a hospital administrator survey (n=50) 3Q23 year over year growth was 3% for outpatient and the emergency department, 1.6% for inpatient and 2.1% for ASCs.
Procedure growth rates are a controversial debate among investors because of the “GLP-1 ledge” possibly restraining investor inclinations to buy MedTech stocks. In a contrary opinion, an analysis from Zimmer Biomet states GLP-1 drugs may make more patients eligible for orthopedic surgery by reducing obesity before orthopedic surgery, enlarging the pool of patients by reducing the risk of procedure related complications.
Weight-loss drugs that reduce the risk of heart attacks and diabetes can potentially improve the health of millions of patients, but this will also change the algorithms that medtech companies use to forecast procedures. For example, as more patients lose weight through GLP-1 drugs like Wegovy and Ozempic, there’s a strong possibility that the incidence of diabetes may decline. That’s great for patient outcomes but poses a demand forecasting issue for diabetes management device makers.
Of course, many disease states that require medtech procedures (cardiology, orthopedics, etc.) have a root cause in obesity, but there is no time like the present to begin the calculation of the impact of GLP-1 drugs on procedure rates. In the short term (from 3Q23 to 3Q24), below are the expected changes by hospital administrators in procedure rates.
Capex
Hospital administrator capex forecasts for the next twelve months indicated an increase (52%), no change (20%), and a decrease (28%). The biggest capex increases are forecasted for Healthcare IT, and imaging. The biggest capex decreases projected were for Beds/Stretchers & OR equipment.
Four macro risks were cited by hospital administrators: recession (45%), inflation rising faster than wages (27%), increasing cost burden for patients (6%), rising interest rates (3%).
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Footnotes
1. Truist 10/12/23
2. Assessing the Potential Impact of GLP-1s, Zimmer Biomet (October 2023)