Hospital Expansions, Equipment Purchases Delayed Due to Recession
The recession has caused 45% of hospitals to postpone upcoming capital projects and 13% to halt expansion projects already in process, according to a survey released Thursday by the American Hospital Association, USA Today reports (Appleby, USA Today, 1/23). AHA surveyed 639 hospitals (Wisenberg Brin, Dow Jones/Wall Street Journal, 1/22).
In addition to delaying construction projects, hospitals have delayed equipment purchases, instituted hiring freezes and reduced staff. Troubled credit markets, weak investment portfolios, declining patient visits and unpaid medical bills have weakened many hospitals' abilities to fund projects. Jim Unland, head of the Health Capital Holdings, said, "With all the layoffs and the economy slowing down, many people are postponing anything even remotely elective." According to an AHA survey released in November, patient visits were flat or declined in the third quarter of 2008 and hospitals experienced an 8% jump in unpaid bills (USA Today, 1/23).
End of the 'Arms Race?'
Although some hospitals in better economic times spent money on needed projects, other facilities spent money on upgrades because they had available funds, according to Sheryl Skolnick of CRT Capital Group. She said the "almost irrational nuclear arms race" among hospitals to have the most advanced facilities has come "to a screeching halt" because of the recession (Dow Jones/Wall Street Journal, 1/22).
Debra Draper, associate director of the Center for Studying Health System Change, said, "I don't think it's the end of the medical arms race, but [the faltering economy] may have slowed it." Draper said that during the economic recession, hospitals in underserved areas may close, adding, "It will just create a further divide between the haves and the have-nots" (USA Today, 1/23).
Help from Congress
According to a letter from 130 members of Congress published on the AHA Web site, lawmakers are so concerned about how the economic downturn has affected U.S. hospitals that they have called for the stimulus package to include investment in hospital renovation, health care information technology and some hospital debt relief. Caroline Steinberg, vice president for trends analysis at AHA said, that because Medicare and Medicaid represent about 50% of hospitals' business, "what government does will have a huge impact on how hospitals fare" (Dow Jones/Wall Street Journal, 1/22).
The AHA report is available online (.pdf).
