Category: Hospitals

Health Construction Boomlet Continues

Census2The boomlet in health construction, first noted in last month’s Census Bureau release, continued in March. Health facilities construction starts grew 1.6 percent, while other construction grew only 0.3 percent (Table I).

The rate of growth was significantly greater for public health facilities (2.3 percent) than private health facilities (1.4 percent). Further, the relative growth was much larger for public health facilities, because non-health public construction declined by 2 percent, while non-health private construction grew 0.7 percent.

This is the second month of uptick in health facilities construction. Over the last twelve months, health facilities construction starts have grown only half as fast as non-health starts (4.1 percent versus 8.2 percent). It is too early to say whether the boomlet in health facilities construction indicates a trending upturn. However, it suggests health systems are beginning to be optimistic about their abilities to continue to extract revenue from the system.

Boomlet in Health Construction In February

Census2Construction of new health facilities enjoyed a boomlet in February, growing 2.0 percent, while other construction shrank 0.6 percent (Table I).

The rate of growth in construction starts was similar for both private and public health facilities, at 2.0 percent and 1.7 percent. However, the relative growth was much larger for public health facilities, because non-health public construction declined much more than non-health private construction (a drop of 1.8 percent versus a drop of 0.2 percent).

This is the first uptick in health facilities construction in a while. Over the last twelve months, health facilities construction starts have lagged other construction starts by 7.2 percent (10.5 percent growth versus 3.3 percent growth). It is too early to say whether February’s boomlet in health facilities construction indicates a downturn. However, it suggests health systems are beginning to be optimistic about their abilities to continue to extract revenue from the system.

Two Thirds of Patients’ Hospital Debts Unpaid

Doctors Rushing Patient down HallHolly Fletcher of The Tennessean has written a very informative feature on the hospital revenue cycle, including a seven-deck slideshow that translates the process into layman’s terms. (The Tennessean is the best daily newspaper for understanding hospitals, because Nashville is home to over for-profit hospital chains which control 60 percent of the beds in that industry, so the journalists know what they are talking about.)

Ms. Fletcher describes an insane system of billing which has been focused on getting dollars out of the byzantine bureaucracies we call health insurers. The main economic reason insurance should be for rare, unforeseen, catastrophic events is that claims processing is expensive. It is not just shuffling paper around, but also managing fraud, waste and abuse. This adds to what is called the “load” of insurance.

When it comes to getting money from patients directly, hospitals are hopeless, with two thirds of their accounts receivable remaining unpaid: “Billing practices are not designed to collect small, incremental payments from hundreds or thousands of patients. They are designed to bill a handful of large entities — insurance companies — not individuals who walk in the door.”

One might think this was a problem that is not too difficult to solve: Just call the supermarket or department store and ask them to recommend a point-of-sale technology vendor.

Health Construction Still Very Weak in January

Census2Construction of new health facilities remained very weak in January, shrinking 0.1 percent since December, while other construction grew at 1.6 percent (Table I).

The rate of decline in public health facilities continued to be dramatic at 5.0 percent, versus booming 4.8 percent growth in other public construction starts. Private health facilities construction grew 1.3 percent in slow private construction market, which grew just 0.5 percent.

Over the last twelve months, health facilities construction starts have lagged other construction significantly. This suggests health systems are pessimistic about their ability to extract further revenue from the system.

Health Construction Collapses in December

Construction of new health facilities collapsed in December, shrinking 3.2 percent since November, while other construction eked out growth of 0.2 percent (Table I).

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Most of the decline occurred in public health facilities, for which construction starts shrank 7.3 percent, versus 2.2 percent growth in other public construction starts. Private health facilities construction shrank 1.9 percent in a shrinking private construction market.

Over the last twelve months, health facilities construction starts have lagged other construction significantly. This suggests health systems are pessimistic about their ability to extract further revenue from the system.

Private Health Construction Leads Slow Building Market

New construction starts turned negative last November, slowing -0.4 percent from September. Health facilities construction shrank only -0.1 percent (Table 1).

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Big Jump in Public Health Facilities Construction in October

After a significant drop in September, health construction starts increased significantly in October: A 1.3 percent increase versus a 1.0 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is still positive, but has been running slower than the booming non-health construction market: 6.1 percent versus 13.3 percent.

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Significant Drop in Private Health Facilities Construction in September

After an uptick in August, health construction starts declined significantly in September: A 0.1 percent decline versus a 0.6 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is positive, but running slower than the booming non-health construction market: 9 percent versus 14.3 percent.

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The short-term decline occurred entirely among private health facilities, for which starts declined 0.3 percent. When looking only at private construction, health facilities and other building starts are at about the same rate of growth for the twelve-month period. Maybe it was time for a breather in September.

Hospitals’ Uninsured Patients Rising Again

Remember how Obamacare was supposed to reduce the burden of so-called “uncompensated care” from uninsured patients that was driving hospitals bankrupt? Well, two years into Obamacare it hasn’t worked out that way:

Hospital operator HCA Holdings Inc on Tuesday said more patients are coming through its doors who have lost their health insurance, most likely because they stopped paying for it.

The largest U.S. for-profit hospital chain said it admitted more uninsured patients in the third quarter who had previously registered with health insurance, compared with a year ago. They included people who bought coverage from marketplaces set up under President Barack Obama’s Affordable Care Act, but then dropped it.

“We believe this is likely due to non-payment of premiums,” HCA Chief Financial Officer Bill Rutherford said on the company’s earnings call.

Overall, the company admitted 13.6 percent more uninsured patients in the third quarter. It was the second straight quarterly increase in uninsured admissions, reversing a downward trend since the insurance exchanges opened for business in early 2014

(Susan Kelly, “HCA says some patients dropping their new insurance coverage,” Reuters. October 27, 2015.)

Protecting hospitals’ revenues by increasing the number of insured Americans was never actually a legitimately important goal of health reform, although hospitals are very successful at making that case. Now, it looks like Obamacare doesn’t even do that.

Health Construction Picks Up in August

After a few months lagging behind other construction, health facilities starts finally showed some life in August (See Table I). Although on a twelve-month basis health facilities construction is still running slower than the booming construction market overall, health construction grew by 1.9 percent from July. Other construction grew by only 0.6 percent.

20151002 Construction

When looking only at private construction, health facilities and other building starts are at about the same rate of growth for the twelve-month period. However, health facilities construction grew three times faster – 2.1 percent versus 0.7 percent – than other building starts over one month.