Price Pinch Zaps Zimmer

Without those changes, he said, Zimmer would be looking to generate around 40 cents more in profits and approach its original 25% growth target for next year.

Still, TheStreet.com was already warning about pricing pressures in the U.S. market during the so-called "older times" four months ago. Back then, TheStreet.com reported, at least one hospital system had managed to negotiate price cuts of 45% on artificial hips and secure similar discounts on artificial knees as well. A few bearish analysts had started focusing on implant pricing, too, and many others have steadily followed suit.

But in the end, it seems, the market waited for signals from Elliott himself. It was only after he grew noticeably cautious, after all, that ortho stocks really began to sell off.

For his part, Elliott seemed to challenge the idea that some had offered earlier warnings and question their "bizarre rush" to claim that they had.

"They weren't even saying that a month ago," he said. "We say, 'Check the record.'"

'Fact vs. Fiction'

Ultimately, Elliott labeled the whole notion one of five "myths" swirling around the orthopedic industry today. But he chose another as his favorite myth of all. He cast doubt on the widespread belief that most hospitals lose money on joint replacements for Medicare patients. For that to happen, he said, the hospitals must be "really poorly run" and operate in an academic setting. They must be securing only the base $10,000 reimbursement from Medicare. And they must be using only expensive higher-end implants.

Yet Bernstein analyst Bruce Nudell still cannot see how hospitals really make money on those cases. He estimates that hospitals collect just $11,000 for each Medicare joint-replacement surgery and wind up spending more than half of that -- about $6,000 -- for the implants themselves. After that, he notes, they have only $5,000 left to cover the costs of a major surgery and an estimated four-day hospital stay.