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What Lies Ahead for Capital Expense Budgets?

Karen Minich-Pourshadi, for HealthLeaders Media, March 7, 2011

While the L.E.K. Consulting report may indicate a shift toward budgetary growth in the future, healthcare leaders’ collective feelings toward capital spending may stay on pause for a bit longer. In an upcoming HealthLeaders Media Intelligence Report on Capital Planning survey respondents indicated they anticipate more capital budget decreases ahead. Nearly 52% of large-size healthcare facilities (500-beds or more) and 46% of small facilities (those with 199 or fewer beds) have cited decreases to their capital budgets in the past year; though only 27% of mid-size hospitals or health systems (those with 200–499 beds) experienced decreases in the past year, and 48% reported their capital budgets have remained the same over the past year.

Declining or stagnant capital budgets aren’t just a 2011 issue, either; it’s been an ongoing situation for all healthcare facilities over the past three years. More than half (52%) of large-size healthcare providers report their budgets have been declining over that period, as did 46% of small-size providers. Additionally, 28% of their midsize peers reported capital budget declines and 30% reported their capital budgets stayed the same during that time.

Larger facilities saw the largest cuts to their capital budgets with more than 88% of large-size facilities reported budget cuts of 11% to 20%. Small and mid-size facilities fared a little better with 38% of smaller facilities and 18% of mid-size hospitals reporting cuts of 1%–10%.

Nevertheless, invariably after several years without large medical equipment purchases and capital build projects, many hospitals and health systems can no longer wait to move forward. Those that do decide proceed, however, won’t necessarily be doing so in the same vein as years past.

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1 comments on "What Lies Ahead for Capital Expense Budgets?"


Linda Ollis, FACHE (3/8/2011 at 10:57 AM)
Hospitals and healthcare providers are certainly not exempt from the effects of an economic slowdown and protracted recovery from the recession. In fact, we need to be aware of another trend already developing in the consumer/demographic segment [INVALID] that of the widening gap between the have's and the have-nots. Decreased capital spending by smaller hospitals and safety-net hospitals who have assumed an increasing share of the underinsured and uninsured will place them at even greater risk of failure. And this risk, at a time when baby boomers are poised to make even greater demands on the healthcare system is one we should take seriously. Congress should stop blocking the progress on healthcare reform as it's clear how dire the situation will become due to inaction.