If you have not read the first and second parts of this article, please follow the prior links.  By now, you should be getting a quick  glimpse of the trends that are influencing health care companies operations and decisions.  In my first article I discussed how the government’s and FDA’s agendas are affecting the health care industry, and in my second article,  I examined recent M&A activity, generic competition, and trends within the CRO industry. In this article, I will touch over the things that are plaguing Managed Care Organizations (MCO) and Medical Supplies companies and forces that are inspiring growth in Health Care IT.

Decline in Hospital Admissions

The decreasing number of people admitted into hospitals is hindering the managed care industry.  Although the healthcare industry has been typically perceived as recession-proof, due to the increase in unemployment and the decline in the amount of disposable income each family has, people have not been rushing out to the hospital as quickly as they were before the recession.  Since hospitals have fewer patients coming in, they generate less cash, and in response, hospitals decreased inventory levels of every day items.  Companies like Baxter (BAX) and Becton Dickenson & Co (BDX) have really felt the pinch on sales as hospitals cut costs by not refilling inventory back to previous levels.  BDX’s medical device segment, BD Medical, experienced a 3% decline in sales during fiscal Q2 2009 in response to the decreased inventory levels.  However, once hospital admissions start increasing, hospitals will need to increase their inventory level to reflect the number of patients admitted.