Premier: Growth in Health System Capital Spending Projected to Dip as Patient Admissions Drop

June 24, 2013
According to the fall 2012 Economic Outlook from Charlotte-based Premier Healthcare Alliance, hospitals and health systems nationwide are projecting the growth of their capital expenditure budgets will drop below 2010 levels as they anticipate patient admission reduction.

According to the fall 2012 Economic Outlook from Charlotte-based Premier Healthcare Alliance, hospitals and health systems nationwide are projecting the growth of their capital expenditure budgets will drop below 2010 levels as they anticipate patient admission reduction.

Forty-one percent of 617 survey respondents – primarily hospital C-suite, and materials and practice area managers – are projecting their capital spending to increase compared to last year. This is down from 42 percent in fall 2010 and a two-year high of 46 percent in spring 2011. More specifically, when respondents were asked about the area in which they expect to make the largest capital investment over the next year, 43 percent cited healthcare information technology (HIT) and telecommunications, up from 34 percent in spring 2011.

Investments in imaging, lab, and surgical and clinical equipment are forecasted to drop by more than 23 percent compared to just six months ago, according to survey results. Product standardization – reducing the number of vendors that supply like products – was cited most often (almost 33 percent) as the top area to which hospitals are dedicating the most resources (financial, labor) to improve their supply chains. Reducing costs for physician preference items was cited by more than 27 percent.

An ongoing factor driving the dip in capital spending is reimbursement cuts, cited by 74 percent of respondents as the number one trend impacting their hospital. Another factor could be an anticipated reduction in patient admissions. Twenty-four percent of respondents believe their patient admissions will decrease, more than double what was projected in fall 2011 (12.4 percent).

“Whether due to lower reimbursement or fewer patients, health systems are making tough choices on how to most effectively and efficiently provide care,” Premier President of Supply Chain Services Durral Gilbert said in a statement.  “It is clear they consider the value-analysis process of using integrated data to improve outcomes and reduce costs paramount in the current healthcare environment.”

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