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Orthopedic and Dental Industry News Complete Archive »

Analyst Casts Doubt on Baby Boomers' Healthcare Spend, Though Orthopedics is Singled Out for Growth BY LAUREN UZDIENSKI, DECEMBER 17, 2009

Popular belief among analysts and investors is that retiring baby boomers will cause a spike in healthcare spending in the coming decade. Thomas Tobin, an analyst at Research Edge, begs to differ.

Tobin's research focuses on demographics, analyzing birth and mortality rates and calculating spending, by age group, on drugs, devices and services. Crunching the data led Tobin to an unconventional conclusion - healthcare "peaked" in 2002, and even though boomers are retiring in droves, a slowdown in health spending occurs after age 55 that would counteract some of the benefits of a larger patient population. Tobin found that annual average health spending more than doubles between 37 and 55, from $3,000 to $7,000. The growth rate slows after that, with spending approaching $9,000 annually by age 80, at which point it accelerates again on account of nursing home and intensive-care costs.

This data weighs on forecasts about boomers' influence on healthcare spending, and Tobin is critical of investors, as Forbes puts it, "flocking to makers of cholesterol drugs and operators of rehab facilities simply because they serve old folk."

Orthopedics has often turned to aging patient demographics to defend projected growth, and this is one sector Tobin agrees is set to benefit from increasing numbers of older patients. Per Forbes, Tobin notes that knee replacement procedures increase dramatically around age 67. This means that, based on boomer statistics, devicemakers should see a surge in demand in around five years.

Of course, we venture that there are a number of factors driving growth in orthopedics beyond the volume increases as baby boomers retire; these patients also have higher expectations for quality of life, which can in turn encourage new technologies as well as innovative treatments that address a condition earlier in the continuum of care. Additional demographic factors in orthopedics include obesity, which currently affects about a quarter of the U.S. population and is widely considered to be a contributing factor to spine and large joint ailments. Finally, addressing underserved markets offers further potential for growth, with all of these factors culminating to create a larger patient pool but also a more demanding one.

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