Hospitals are stopping or postponing construction projects that would not only improve community health care, but also increase jobs and support the local economy, according to a new survey released Thursday by the
.
The survey, to which 639 hospital CEOs across the country responded, showed that hospitals’ ability to obtain the necessary funds to upgrade their facilities or invest in new clinical and information technologies is severely restricted due to the “capital crunch” and current recession.
Hospitals primarily rely on borrowed money, philanthropy and reserves to fund capital projects to improve their ability to meet communities’ health care needs, but many now find it difficult to obtain funds from these sources, the survey found.
The vast majority of respondents reported borrowing funds through tax-exempt bonds — the main source of borrowing for most hospitals — which has become difficult or impossible.
In addition, loans from banks or other financial institutions are similarly difficult to obtain, according to the survey.
Hospitals’ reserves, or savings, also have taken a hit due to falling stock prices. In addition, net income is down and philanthropic donations have slowed, leaving hospitals with less of their own funds to make needed improvements.
Nearly half of hospitals surveyed have postponed projects that were to begin within the next six months and many have stopped projects that were already in progress.
There was evidence of this happening last week in Milwaukee when Columbia St. Mary’s Inc. announced it was slowing down construction of its new east side hospital because of the economy.
The decision left about 160 tradespeople without work and will mean the new hospital will now open in fall 2010 instead of January 2010, as originally planned.
“From cancer centers to expanded emergency departments to electronic health records systems, hospitals are postponing or delaying projects that could greatly benefit health care in communities across the country,” association president Rich Umbdenstock said in a written statement. “Stopping these projects also means new jobs are not created within the health care field or for construction workers, contractors, IT specialists and others. The ripple effects of the capital crunch on employment are cause for great concern.”
According to the survey, the planned hospital projects currently on hold would have responded to a variety of health care needs, such as:
• 13 percent of hospitals reported they postponed projects related to inpatient behavioral health, at a time when behavioral health care needs are more important than ever.