U.S. hospitals are expected to increase capital spending by approximately 9% in 2024, aiming to address the backlog of elective procedures delayed by the COVID-19 pandemic, according to a Baird survey of 38 health system CFOs representing over 600 inpatient facilities. The survey indicates a slowdown in capital spending growth from the 13% jump observed this year. Priorities for spending include procedural tools and endoscopic cameras, with a focus on items that can drive real-time revenues. Notably, orthopedic and soft tissue surgical robotic systems are considered less of a priority, with a preference for procedural tools despite leasing options provided by robotics manufacturers.
The survey results are seen as positive for orthopedic companies, particularly Stryker, as the potential for its Mako robot to drive share gains is highlighted. The CFOs forecast a low-single-digit growth in most orthopedic categories, while spending on endoscopic cameras, operating room equipment, and procedural tools is expected to receive the most significant bump.
Despite concerns about a potential slowdown in equipment purchases due to the macroeconomic situation, the 9% forecasted increase in capital spending is considered above pre-pandemic growth levels. Surgical robots, specifically those for soft tissue procedures, are predicted to see no increase in spending, but orthopedic companies may benefit from an uptick in spending on spine robotic systems. The analysts named Stryker, aiming to expand Mako into the spine market, as a potential beneficiary.
The survey suggests that Mako, identified as the market share leader, is expected to make further gains over the next two years. Stryker, Johnson & Johnson, and Smith & Nephew are forecasted to gain ground at the expense of Zimmer Biomet’s Rosa in the orthopedic sector. The CFOs also predict low-single-digit growth in most orthopedic categories, with interventional cardiovascular volumes expected to rise faster, potentially reaching mid-single-digit growth. However, the analysts remain cautious about the prospects of the cardiovascular sector, not yet calling for accelerated growth in fiscal year 2024.