- The number of elective operations has almost halved during the pandemic
- Smith & Nephew and other NHS suppliers have seen sales drop as a result, while facing the prospect of routine surgeries not returning to normal levels until 2021
The number of non-emergency surgeries performed by NHS England trusts almost halved last year, new figures reveal, as resources were funnelled towards tackling the Covid-19 crisis.
The data show for the first time the scale of the fall in activity in operating theatres across the country, after hospitals cancelled swathes of appointments to clear beds for coronavirus cases. The drop in operations has come as a blow not only for the many elderly and vulnerable people awaiting treatment, but also for the healthcare firms that depend on sales of surgical equipment for these procedures.
Over the past year, shares in FTSE 100 constituent Smith & Nephew (SN.) have dropped nearly 18 per cent, as it suffers from declining demand for its range of medical devices. With hospitals internationally once again putting routine procedures on the waiting list amid a resurgence of the coronavirus, companies around the world and across the UK’s diverse small-cap healthcare sector will also be hurting.
The Investors' Chronicle sent freedom of information requests to 145 NHS trusts across England asking how many elective operations, such as knee and hip replacements, they have performed. The 38 trusts that have since provided the data requested said they carried out 476,512 operation from March, the first month of the pandemic, to November. During the same period last year, they performed 900,691 such procedures.
NHS England already faced a huge waiting list going into the pandemic. Then in April, as the death count from Covid-19 reached its first peak and hospitals were told to postpone all non-urgent elective surgery, the number of elective operations performed by the 38 trusts plunged 82 per cent year-on-year, to 16,760. While this figure later started to inch back towards normal levels, as of November it was still more than a quarter below the figure during the same month in 2019.
Now, as recorded cases of Covid-19 reach new heights in the traditionally difficult winter period, any progress made by the NHS in tackling its mounting backlog of patients could be reversed. Last month, the number of Covid-19 patients in hospital exceeded April’s peak for the first time, before The Times reported that 29 out of 39 London hospitals were pausing all procedures besides cancer treatment and emergencies.
Hospitals around the world are facing a similar strain on their resources, as positive tests for coronavirus globally also surpass the number during the first peak. Last year, researchers estimated 28m elective operations worldwide would be cancelled during the first 12-week peak of disruption alone, including 2.3m cancer surgeries and nearly 0.5m Caesarian sections. Even if, after the pandemic ended, countries boosted the number of elective surgeries performed by a fifth compared to normal levels, they projected it would take an average of 45 weeks to clear this backlog.
‘A challenging year’
Several companies are feeling the squeeze on their profits, and can only hope patients are able to return to operating theatres soon.
The pandemic has been a boon for scores of healthcare firms, from makers of hand sanitiser to drug manufacturers. But it has slashed revenues for those who mainly produce equipment for the kind of procedures that have been put on hold as hospitals focus on the crisis.
This week, Smith & Nephew said it expected underlying full-year revenues to drop 12 per cent compared with the previous 12 months, as lower levels of elective surgeries depressed demand for its orthopaedic reconstruction, sports medicine, and ear, nose and throat products. In the second quarter of 2020, when hospitals faced the first surge in coronavirus patients, US medical device giants Stryker (US:SYK) and Zimmer Biomet (US:ZBH) both swung to a loss from profits of $613m and $205m respectively during the same period in 2019.
One problem with companies that supply equipment for elective procedures is that their businesses tend to be very focused on surgeries, said Adam Barker, a healthcare analyst at Shore Capital. Even after some returned to profit as non-urgent operations resumed – including Stryker and Zimmer Biomet – they face yet another drain on that key source of income in the coming months.
David Marsh, chief executive of Aim-traded Surgical Innovations Group (SUN), said up to 100 per cent of his business comes from elective procedures. The medical equipment company’s sales over the past year, he added, have probably mirrored the trend shown in the data compiled by the IC.
“As you can imagine, last year was a challenging year for us, to say the least,” said Mr Marsh. But he suggested the impact on elective surgeries has been moderated this winter, as hospitals are now more familiar with the virus and a lot of procedures are being outsourced to the private sector.
Returning to normal
However long it takes the NHS to recover from the winter disruption, experts anticipate it could be a long time before operating theatres can return to normal levels of activity.
Mr Barker suggested this would not happen until after 2021, with hospitals likely to keep beds free as they face the possibility of lingering coronavirus cases and a resurgence in flu patients next winter after lockdowns are lifted.
Even when beds are available, experts have raised concerns that many in need of elective surgery have been avoiding hospitals for fear of catching Covid-19. According to the Office for National Statistics, some 24,679 more people died at home in England between March and September compared to the five year average.
“It’s not just the hospitals,” said Mr Barker. “The people that go in tend to be older and more at risk of the virus. There tends to be a fear of going to hospital. How many will sit at home, still nervous about going in?”
The uncertain return to routine procedures could lead to some up-and-down results for businesses in the coming quarters, he added. Unsure of the incoming demand for their products, some may resort to stock-piling in preparation.
Ultimately, companies can expect to regain much of the income lost last year. Those who needed a hip replacement in 2020 will still need it in 2022. But the high number of people who have been dying away from hospital suggests at least a small proportion of the operations that did not happen will never be rescheduled.
“Tragically, we will see over the coming 12 months there will be an increase of [deaths above the normal rate] as a result of people not being treated,” said Mr Marsh. But, he added, “in terms of those requiring surgery it will be a relatively small number”.
Responding to the data obtained by the IC, a spokesperson for NHS England said: “It is a testament to the hard work of NHS staff throughout 2020 that the NHS has performed hundreds of thousands of elective procedures, returning to four fifths of the usual levels of activity despite also managing enormous Covid and urgent care pressures.
“While some hospitals have had to postpone elective operations again, the NHS continues to provide emergency care and cancer services across the country, and it remains vitally important for the public to play their part too by observing social distancing.”
