Florence Joffroy-Black and Dave Sheppard, MedWorld Advisors06.04.20
Acknowledging that hindsight can offer invaluable insight to any situation, we question the wisdom of shutting down elective procedures nationally to conserve precious resources for COVID-19 cases. But we realize it’s useless to debate that topic because the earlier decision cannot be reversed.
Having said that, medical offices and their surgery centers in many states remain closed. While it certainly was important to suspend elective procedures to “flatten the curve” of infections as the virus ran rampant in March, the medical industry has yet to comprehend the ramifications of the shutdown during this crisis. The table outlines some of the “elective procedures” postponed or cancelled in the United States due to COVID-19, according to the Centers for Medicare and Medicaid Services website.
The table provides only a glimpse of the procedures currently considered “elective” and the health risks associated with their postponement. At this point, medtech professionals must address the additional effects these postponements will have on the industry. One of the most significant impacts is the financial hit that outpatient clinics and hospitals face from unemployed doctors and nurses (no surgeries, no work).
These clinics (e.g., ambulatory surgery centers, etc.) and hospitals are the recipients of medical products; with fewer (if any) elective procedures being performed, however, the demand for devices decreases. And that means fewer sales for medtech manufacturers.
A recent survey of small and medium-size companies (including medtech firms) found that roughly 20 percent will need to either recapitalize or sell their establishment due to the COVID-19 pandemic.
In an outcomes-focused healthcare ecosystem, potential business closings would be unfortunate—mainly because it was totally avoidable. While New York City and a few other major metropolitan areas may have needed to shut down elective surgeries to preserve resources, most of the country had relatively empty hospitals. Although the overcrowded hospitals and daily body count in Manhattan boosted television ratings, it did not accurately reflect the situation in other parts of the United States. The steps needed to flatten the curve in New York City differed greatly from those required in Des Moines, for example.
We believe that approximately 90 percent of America could have and should have kept operating (literally and figuratively). In order to do that safely, however, social distancing and other precautions would have been necessary and will be necessary as the country slowly begins to emerge from lockdown.
For the medtech industry, the pandemic has separated companies into “haves” and “have-nots.” Among the “haves” are companies that participate in the respiratory segment. These firms have experienced a significant uptick in business due to both the health crisis itself and the federal government’s creation of equipment stockpiles for the current and future pandemics. We have no argument with these actions and believe it’s important for every healthcare institution to be adequately stocked to cover the nation’s collective medical needs.
The “have-nots,” on the other hand, include the companies (and their suppliers) that provide products used in elective procedures. As previously stated, there will likely be a tremendous non-COVID-19 healthcare crisis that evolves from the interruption of these surgeries. We would argue the description of these procedures is misleading because they are not truly elective when patient diagnosis, treatment, and outcomes are taken into consideration. It could be argued the only true elective procedures are cosmetic surgeries.
Consider, for example, patients needing a hip replacement. We believe it would be difficult to find anyone that is “electing” to have that procedure; in our experience, anyone having a hip replacement needs to have that surgery—it is not optional. Having observed these operations for years, we are somewhat confident no one would choose to have a total hip arthroplasty unless it was totally necessary.
Similarly, angioplasties or other types of cardiovascular or neurological procedures are seldom “elective,” as they are most often life-saving procedures that are necessary to improve and save lives. Moreover, there is a time element associated with these kinds of surgeries—patients who undergo these procedures need them to correct or treat a life-threatening condition.
As the medtech industry grapples with the long-term effects of this pandemic, its members need to be more vocal about the overall impacts of delaying elective procedures. Any initial acquiescence can be forgiven, as the COVID-19 pandemic is unprecedented; thus virologists and most medical experts agreed to err on the perceived side of safety.
But now that several months have passed and the number of daily infections is beginning to drop, the medtech industry must make its collective voice heard loudly and clearly. Surgeons, nurses, corporate executives, and advocacy groups can and should work together to communicate the negative outcomes of postponing elective procedures. The repercussions include:
No one in the medtech industry has ever experienced a fiscal crisis as calamitous as the one spawned by the coronavirus pandemic. Continued growth is necessary to improve the health, quality of life, and life expectancy of the world’s aging population.
The medical technology industry has always been considered a recession-proof and altruistic sector. It is mutually beneficial for both the industry’s bottom line and overall population health for customers to be considered “essential.” Most medtech manufacturing companies were granted “essential” status, but many of their customers—clinicians who use their products—are considered expendable right now (at least it seems that way). Such a dichotomy only exacerbates the challenges facing the industry from COVID-19.
The medtech industry needs to fight for itself, its customers, and its patients. And it needs to fight now, before the damage is irreversible.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She is currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
Having said that, medical offices and their surgery centers in many states remain closed. While it certainly was important to suspend elective procedures to “flatten the curve” of infections as the virus ran rampant in March, the medical industry has yet to comprehend the ramifications of the shutdown during this crisis. The table outlines some of the “elective procedures” postponed or cancelled in the United States due to COVID-19, according to the Centers for Medicare and Medicaid Services website.
The table provides only a glimpse of the procedures currently considered “elective” and the health risks associated with their postponement. At this point, medtech professionals must address the additional effects these postponements will have on the industry. One of the most significant impacts is the financial hit that outpatient clinics and hospitals face from unemployed doctors and nurses (no surgeries, no work).
|
Elective Procedure |
Is it truly elective? (scale of 1 to 10, with 10 being completely elective) |
Potential impacts of postponing procedure |
Should it be postponed? |
Other impacts |
Should these procedures continue during the pandemic? |
|
Most Cosmetic Procedures |
9 |
Minimal - with a few exceptions. |
Save the PPE until it’s safe to open up. |
Surgeons and nurses losing their jobs |
No |
|
Colonoscopy |
5 |
Cancer risk Undiagnosed IBS or other non-cancer ailments |
For a few months but not longer |
Surgeons and nurses losing their jobs |
Yes |
|
Cataract Surgeries |
5 |
Ability to see clearly |
For a few months but not longer |
Surgeons and nurses losing their jobs |
Yes |
|
Endoscopy |
4 |
Cancer risk Undiagnosed GERD and other highly uncomfortable health issues |
Weeks not months. |
Surgeons and nurses losing their jobs |
Yes |
|
Knee or hip replacement surgery |
3 |
Pain and ability to walk; If one is ready to have this procedure, they are in pain |
Weeks not months. |
Surgeons and nurses losing their jobs |
Yes |
|
Angioplasty |
2 |
Stroke and/or heart attacks; chest pain |
Days not weeks. |
Surgeons and nurses losing their jobs |
Yes |
|
Other Neuro / Heart Procedures |
1 |
Stroke and/or heart attacks; chest pain |
Are you kidding me? |
Surgeons and nurses losing their jobs |
Yes |
These clinics (e.g., ambulatory surgery centers, etc.) and hospitals are the recipients of medical products; with fewer (if any) elective procedures being performed, however, the demand for devices decreases. And that means fewer sales for medtech manufacturers.
A recent survey of small and medium-size companies (including medtech firms) found that roughly 20 percent will need to either recapitalize or sell their establishment due to the COVID-19 pandemic.
In an outcomes-focused healthcare ecosystem, potential business closings would be unfortunate—mainly because it was totally avoidable. While New York City and a few other major metropolitan areas may have needed to shut down elective surgeries to preserve resources, most of the country had relatively empty hospitals. Although the overcrowded hospitals and daily body count in Manhattan boosted television ratings, it did not accurately reflect the situation in other parts of the United States. The steps needed to flatten the curve in New York City differed greatly from those required in Des Moines, for example.
We believe that approximately 90 percent of America could have and should have kept operating (literally and figuratively). In order to do that safely, however, social distancing and other precautions would have been necessary and will be necessary as the country slowly begins to emerge from lockdown.
For the medtech industry, the pandemic has separated companies into “haves” and “have-nots.” Among the “haves” are companies that participate in the respiratory segment. These firms have experienced a significant uptick in business due to both the health crisis itself and the federal government’s creation of equipment stockpiles for the current and future pandemics. We have no argument with these actions and believe it’s important for every healthcare institution to be adequately stocked to cover the nation’s collective medical needs.
The “have-nots,” on the other hand, include the companies (and their suppliers) that provide products used in elective procedures. As previously stated, there will likely be a tremendous non-COVID-19 healthcare crisis that evolves from the interruption of these surgeries. We would argue the description of these procedures is misleading because they are not truly elective when patient diagnosis, treatment, and outcomes are taken into consideration. It could be argued the only true elective procedures are cosmetic surgeries.
Consider, for example, patients needing a hip replacement. We believe it would be difficult to find anyone that is “electing” to have that procedure; in our experience, anyone having a hip replacement needs to have that surgery—it is not optional. Having observed these operations for years, we are somewhat confident no one would choose to have a total hip arthroplasty unless it was totally necessary.
Similarly, angioplasties or other types of cardiovascular or neurological procedures are seldom “elective,” as they are most often life-saving procedures that are necessary to improve and save lives. Moreover, there is a time element associated with these kinds of surgeries—patients who undergo these procedures need them to correct or treat a life-threatening condition.
As the medtech industry grapples with the long-term effects of this pandemic, its members need to be more vocal about the overall impacts of delaying elective procedures. Any initial acquiescence can be forgiven, as the COVID-19 pandemic is unprecedented; thus virologists and most medical experts agreed to err on the perceived side of safety.
But now that several months have passed and the number of daily infections is beginning to drop, the medtech industry must make its collective voice heard loudly and clearly. Surgeons, nurses, corporate executives, and advocacy groups can and should work together to communicate the negative outcomes of postponing elective procedures. The repercussions include:
- The loss of jobs for the highly valuable (and needed) clinicians in our society.
- The possibility that some customers are financially weakened and may even go out of business, affecting patient outcomes.
- The combination of financially strapped customers and higher costs in the supply chain detrimentally impacting medical technology businesses.
- The loss of high-quality medtech jobs to produce products that improve patient outcomes and save lives
- The industry’s long road to recovery. Many medical device manufacturers have part of their customer base and/or supplier base overseas. As such, companies will have to incorporate and learn new methodologies of communication over the next six to 12 months while planning for future under a “new normal.” (Does that term sound familiar?)
No one in the medtech industry has ever experienced a fiscal crisis as calamitous as the one spawned by the coronavirus pandemic. Continued growth is necessary to improve the health, quality of life, and life expectancy of the world’s aging population.
The medical technology industry has always been considered a recession-proof and altruistic sector. It is mutually beneficial for both the industry’s bottom line and overall population health for customers to be considered “essential.” Most medtech manufacturing companies were granted “essential” status, but many of their customers—clinicians who use their products—are considered expendable right now (at least it seems that way). Such a dichotomy only exacerbates the challenges facing the industry from COVID-19.
The medtech industry needs to fight for itself, its customers, and its patients. And it needs to fight now, before the damage is irreversible.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She is currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
