Everywhere we turn, we’re reminded of our national — and even global — economic plight. The recent mortgage bailout, the high cost of fuel, and talk of recession have individuals, corporations, and institutions searching for new ways to cut costs.

But are healthcare facilities and the device industry feeling the same pinch?

In recent years, the healthcare industry has been considered by many to be “recession- proof,” given the nation’s aging population and the reality that getting sick is inevitable. But new evidence shows that even that belief may no longer hold water.

A recent national survey conducted by the National Association of Insurance Commissioners (NAIC) found that 22% of U.S. consumers say they have reduced the number of times they see the doctor as a result of the economy.

“There is no question that the financial crisis has slowed growth in the healthcare services industry,” Leigh Walton, co-chair of the Healthcare Practice Area of Nashville law firm Bass, Berry, & Sims, PLC, tells AAMI News.

“When the economy is soft, employers reduce insurance coverage and increase co-pays, and people whose jobs get cut lose their insurance altogether,” says Walton.“Governments tighten reimbursement, and patients avoid primary, preventive, and elective care. These trends hurt the revenue line of providers.”

Employee Input Adds Value

In response to the economic downturn and subsequent decreased consumer spending, an increasing number of hospitals are seeking ways to cut costs without affecting patient safety.

For example, Stanford Hospital & Clinics of California asked its employees to identify ways the facility could save money. So far the results have produced about $15 million in savings.

The ideas have ranged from reducing the frequency of trash pick up and buying a cheaper, yet still reliable, brand of disposable gloves to buying smaller cans of shaving cream for patient use and only delinting the towels that are used in the operating room.

At AAMI’s 2008 Annual Conference& Expo in San Jose, CA, Dave Stiles, CBET, manager of biomedical engineering at California’s Long Beach Memorial Medical Center, described his facility’s recent organization-wide program to reduce energy consumption and save money. Some of the facility’s initiatives include completing energy-efficient lamp replacement; installing motion and timed light switches in all ancillary, office, and utility areas; conducting an evaluation of medical and information technology equipment for potential energy savings; and replacing kitchen equipment with new, energy-efficient equipment. The initiatives resulted in a 14% decrease in water usage and an 18% decline in natural gas usage.

An Opportunity for Biomeds?

Despite the ominous economic news, Patrick Lynch, CCE, CBET — biomedical support specialist with GMI of North Carolina — sees a silver lining in the situation for managers of medical technology.

“For the properly prepared biomed or clinical engineer, the economic downturn can result in an increase in job security, pay, and job longevity.“When times are tough, hospitals cannot purchase new medical equipment with the same gusto that they can in normal times,” says Lynch. “The medical equipment that they already own must be kept operational for a longer time, and for less money. Biomeds are equipped to do this.”

Device Manufacturers Also Feel Economic Impact

Medical device manufacturers may also feel the pinch. Chuck Sidebottom, chair of AAMI’s Board of Directors, says he generally expects device manufacturers “to experience the same credit/financing issues as other types of manufacturers. But companies with strong balance sheets and good cash flows should be all right, at least in the short term. Companies that live on credit, especially start-ups, could be in for some rough times.

“In a long recession with high unemployment, people — even those working — may lose health benefits as employers try to reduce costs. A rising number of uninsured puts more strain on the public system, which could result in government taking measures to rein in costs. That could impact all of healthcare, including device manufacturers.”

SOURCE: AAMI News: November 2008, Vol. 43, No. 10