Tightened U.S. Credit Markets Taking Toll on Hospital Projects
The hospital industry is "among those struggling with the credit scarcity that the federal government's latest financial bailout is meant to alleviate," the New York Times reports.
Richard Clark, CEO of the Healthcare Financial Management Association, said that hospitals are "not immune" to periods of economic downturn. Clark noted that like all businesses, hospitals rely on credit for building projects and to maintain liquidity.
For several years, hospitals have spent heavily on new equipment, buildings and renovations. The strategy was made possible by "easy access to credit from banks and bond markets," the Times reports.
However, "many hospitals have scaled back their ambitions as they scramble to protect their cash positions," according to the Times.
Hospitals -- some of which already have been forced to reduce expenditures -- "worry that if the financial crisis leads to a severe economic downturn, they will feel deep pain," the Times reports.
In addition, the U.S. economy is putting further pressure on hospitals because an increasing number of patients either are unable to pay the out-of-pocket portions of their bills or are uninsured.
Cutbacks by hospitals could have wider effects on suppliers of medical equipment and the construction industry, according to experts.
Experts also warn of negative effects on the labor market because, although hospitals have been "among the bright spots" in labor statistics, hiring has begun to wane (Abelson, New York Times, 10/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.