Device firms skid as health IT looks to bright future

As companies look forward to a bright future in some areas of health technology--namely, electronic medical records--other parts of the med-tech industry are watching sales slip.

Bloomberg: "UnitedHealth Group Inc., the biggest U.S. insurer, and McKesson Corp., the largest drug distributor, are vying for billions of dollars in added sales by bulking up their information-technology units. ... Bracing for added taxes and regulations, insurers are upgrading long-neglected systems used to enroll members, track care and process claims, Galimi said. They also face a 2013 switch to a new government-mandated system for classifying diseases. As a result, insurer spending on data technology will jump 24 percent by 2013, to $11.3 billion" (Nussbaum and Wechsler, 8/25).

The Associated Press/Bloomberg: Meanwhile, "Shares of medical device companies slumped Tuesday after market leader Medtronic Inc. said higher unemployment, combined with rising insurance fees and other changes in the health care sector will curb sales growth. Medtronic Inc., the world's largest medical device maker, reported fiscal first-quarter earnings Tuesday in line with Wall Street expectations, but weaker global demand for medical implants forced the company to slash 2011 earnings expectations" (Perrone, 8/24).

The (St. Paul, Minn.) Pioneer Press: Medtronic's four percent overall drop in revenue, coupled with an eight percent drop in its key heart device line, "which was steeper than projected, prompted the company to reduce its estimate of sales and profit for the remainder of its fiscal year, which ends in April. … More broadly, trouble in the usually recession-resistant health care sector is just the latest in a string of weak reports ranging from manufacturing to housing that has sent a chill through the markets amid worries that a rickety economic recovery might be crumbling" (Snowbeck, 8/25).

Also in health technology news, "The U.S. Department of Veterans Affairs on Tuesday announced a pilot program to link the VA's own electronic medical records with patient information from other hospitals and facilities where Indiana veterans seek treatment," the Indianapolis Star reports. "The initiative will use the Indianapolis-based Indiana Health Information Exchange, known as IHIE, to securely make veterans' health information accessible to physicians at VA and non-VA facilities alike. For instance, a doctor at Indianapolis' Roudebush VA Medical Center could access a lab result from Methodist Hospital" (Lee, 8/25).