Hospitals Invest Less in Updates, Renovations and Expansions
Over the past several years, hospitals have reduced their investment dollars. The response to these dropping investments has been fewer new construction projects, resulting in aging facilities. Since the recession, hospitals have been less likely to renovate, add new buildings, update equipment, or start other improvement projects. This trend is demonstrated by construction-in-progress figures.
From 2005 through most of 2007, mean construction in progress grew from $8 million per hospital to about $15 million. It then remained flat during the recession (2007-09) and fell more recently-to less than $13 million at the end of 2011. The mean figure is driven by larger projects such as replacing an entire campus and building new wings-multiyear projects with lengthy planning and construction phases that might have started before the recession and continued through it.
The spending represented by the mean data is driven up by a few very high values and does not represent the typical smaller hospital project. The typical U.S. hospital spends about $2 million per year, as demonstrated by median figures on construction and improvement projects. This figure has also been affected by financial strains. It was growing before the recession began in 2007, fell during the recession, and has been flat for several quarters since.
Exhibits 1 & 2
This report is based on key operational and financial indicators for nonfederal general acute-care hospitals that contributed quarterly data to the Truven Health Analytics ActionOI database. Hospital responses were weighted to make the sample comparable to the national distribution of all hospitals based on hospital class, location, ownership, and profitability. For more information, email David Koepke, PhD, at email@example.com.
Publication Date: Wednesday, August 01, 2012