Boom and Bust Cycle

Still, riding out boom and bust cycles is no small accomplishment, not to mention a simple proposition. It's a concern for any company in the healthcare industry, no matter its size or current financial viability.
]

Hospitals and imaging centers aren't the only sector that's feeling the squeeze. Just ask the OEMs. Estimates vary, of course, but their sales were said to be off anywhere from 20-35 percent in 2007

"It's industry wide," says John Desch, newly appointed to an executive sales solutions post at Philips. "Some things are out of our control but we're addressing it and we're changing how we go to market."

One bugaboo dealer/brokers are facing: plenty of near new equipment from failed centers is becoming available to them but, at the same time, there's a diminishing number of buyers ready to trade up or replace aging product. Says Nationwide's Manetta, "with the number of independent centers shrinking, sales of new equipment is down." In theory, however, that should be somewhat positive for those selling used product, often at one-third to more than one-half the cost of new equipment.

While hospitals have obviously fared much better under DRA, what looms is far from comforting. Over a year ago independent researchers released a report detailing ominous trends that still prevail.

For example, experts predict a shortage of 150,000-200,000 beds nationwide by 2012 because of profitability issues. (Source: J.D. Powers, JHACO, Hospital & Health Networks.

Among the report's other conclusions:

1) Bottom line performance is not improving, as cost cutting policies are not working. While hospitals have been going out of business at a rate of one hospital every 8 days for the last 30 years, a bankruptcy trend has been accelerating since 2005.

2) Cutthroat competition has become a way of life.

3) The public is losing confidence in hospitals. Approximately 35% of patients indicate they would not return to the same hospital, with 41% unable to recommend a hospital to their family. .

4) Staff satisfaction is low. Nursing shortages could run to nearly 1 million nationwide in less than five years. There are also looming shortages of pharmacists, lab technicians, and other technical employees.

5) Medical malpractice has grown at an annual rate that's 30% faster than for all other U.S. tort cases. The average malpractice settlement has more than quadrupled over the past couple of decades.

All in all, not an especially pretty sight, and one whose intensity varies depending on a hospital's location and existing legislation.

More Industry Headlines