Money on the move: Hospitals beginning to make capital investments

by Anne Zieger on October 5, 2010

capital investment graphicDuring the credit crisis of 2008-2009, hospitals all but dropped their capital improvement programs, in part because their access to the bond markets was trashed by market conditions. It’s easy to forget how ugly those times were, but here’s an example:  In one memorable stretch, Moody’s downgraded 18 hospital bond ratings within two months.

But times are finally changing, it seems. After years of struggle, hospitals have begun to invest in projects again, according to a study by the Premier Healthcare Alliance.

According to a new survey by Premier, a total of 69 percent of hospital execs said that capital budgets for 2010 stayed flat or increased compared with last year.  And 42 percent of respondents expected to see an increase in spending, vs. 32 percent seeing a decrease.

That being said, of hospitals whose budget was flat or decreased, many were doing some serious cost-cutting.  About 66 percent had already scaled back new construction projects and/or spending on clinical and information technology.   (Hard to imaging cutting back on an EMR budget at this point, but maybe they’re breaking contracts and settling for cheap?)

When asked how they were saving money outside of capital spending, top items included commodity pricing (27 percent) and pharmaceutical use (19 percent).

And what do the execs see as the biggest pressures on their operations overall?  Topping the list is health reform and EMR implementation and data storage.

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