Troubled economy cripples hospital spending

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Hospitals are stopping or postponing projects that could improve community healthcare and increase jobs, according to a survey from the American Hospital Association (AHA). The survey also found that the recession is making it difficult for hospitals to obtain funding for facility improvements or healthcare IT purchases.

The AHA said the vast majority of hospitals report that borrowing funds through tax-exempt bonds—the main source of borrowing for most hospitals—is “difficult or impossible.” In addition, loans from banks or other financial institutions are similarly difficult to obtain.  Hospitals' reserves, or savings, also have taken a hit due to falling stock prices, net income is down and philanthropic donations have slowed, leaving hospitals with less of their own funds to rely on to make needed improvements, the association said.

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. 

"From cancer centers to expanded emergency departments to EHR systems, hospitals are postponing or delaying projects that could greatly benefit healthcare,” said Rich Umbdenstock, AHA president and CEO. “Stopping these projects also means new jobs are not created within the healthcare field or for construction workers, contractors, IT specialists and others. The ripple effects of the capital crunch on employment are cause for great concern.”

The AHA said that stopping or postponing facility upgrades and IT investments has significant ramifications for communities served by these hospitals and for the healthcare system as a whole. 

According to the survey, the planned hospital projects now put on hold would have responded to a variety of healthcare needs:
• 43 percent of hospitals planned to expand and/or improve their emergency or   urgent care departments;
• 65 percent intended that their projects increase their ability to provide inpatient medical and surgical care; and
• 13 percent of hospitals reported they postponed projects related to inpatient behavioral health.

The vast majority of hospitals that have postponed projects have delayed updating their facilities, while more than six out of 10 hospitals have put clinical and IT projects on hold, the association said.

The AHA reported that hospitals with postponed projects reported facility upgrades and investment in clinical and IT projects would bring benefits to their communities:
• Approximately eight out of 10 hospitals have delayed projects to update or replace aging clinical equipment or use IT to automate clinical processes;
• Approximately six out of 10 hospitals reported that facility upgrades, clinical and IT projects would have increased patient care efficiency;
• Nearly 60 percent of hospitals said the IT projects put on hold would have improved care coordination;
• About half of hospitals are trying to meet growing demand for existing services through either facilities projects or purchases of clinical equipment.

The survey, “Report on the Capital Crisis: Impact on Hospitals,” provided data from 639 hospitals collected from late December 2008 to Jan. 6.