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Press Release

Hospitals Report "Capital Crunch" is Forcing Delays in Facility and Technological Upgrades...


More and more, hospitals are stopping or postponing "shovel-ready projects" that would not only improve community health care, but also increase jobs and support the local economy, according to a new survey from the American Hospital Association.  The survey 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 the 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 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.

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.  For example, in Baton Rouge, Louisiana, Woman's Hospital has delayed and may have to stop construction of a new facility that would help the hospital fulfill its state-appointed responsibilities to evacuate and care for infants during catastrophes, which they have done in the past during Hurricanes Katrina, Rita and Gustav.

"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," said AHA President and CEO Rich Umbdenstock.  "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."

Stopping or postponing facility upgrades and technology investments has significant ramifications for communities served by these hospitals and for the health care system as a whole.  According to the survey, the planned hospital projects now put on hold would have responded to a variety of health care needs:

  • 43 percent of hospitals planned to expand and improve their emergency or urgent care departments.
  • 65 percent intended that their projects increase their ability to provide inpatient medical and surgical care.
  • 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.

The vast majority of hospitals that have postponed projects have delayed updating their facilities, while more than 6 out of 10 hospitals have put clinical and information technology projects on hold.  These projects could have benefited patients, families and communities by improving quality of care, efficiency and coordination of care. 

Hospitals with postponed projects reported facility upgrades and investment in clinical and IT projects would bring benefits to their communities:

  • More than 8 out of 10 hospitals said they have delayed projects to update or replace aging clinical equipment or use IT to automate clinical processes.
  • More than six out of 10 hospitals reported that facility upgrades, and clinical and information technology projects would have increased patient care efficiency and improved quality of care.
  • Nearly 60 percent of hospitals said the IT projects that are put on hold would have improved care coordination.
  • About half of hospitals are trying to meeting growing demand for existing services through either facilities projects or purchases of clinical equipment.

The survey, Report on the Capital Crisis: Impact on Hospitals, provides data from 639 hospitals collected from late December 2008 to January 6, 2009.  Click here for a copy of the report.

About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at www.aha.org.

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