United Hospital Fund Report Finds That New York City Hospitals Are Lagging Hospitals Nationwide in Capital Investment

Critical Updates of Physical Plant, Medical Equipment, and Information Technology Are Tied to Financial Success

Release Date: 12.22.2008
Contact: rdeluna@uhfnyc.org
Contact Phone: 212-494-0733

From 2000 to 2006, the “average age of plant” (an accounting term that measures the average age of all physical assets) rose dramatically in New York City's nonprofit hospitals from 10.7 to 14.2 years, or 33 percent; the corresponding national average rose a much smaller increment, from 9.4 to 9.7 years. New York City hospitals are struggling “to keep pace with capital investment…which is essential for future success,” according to a new report from the United Hospital Fund.

“Ensuring that infrastructure and equipment are kept up to date is an emerging long-term issue that the health care community and policymakers will need to watch carefully,” says James R. Tallon, Jr., president of the United Hospital Fund.

All categories of New York hospitals (academic, large, small, and safety net) experienced significant aging of physical assets. While the need for New York City hospitals to update their aging infrastructure is evident, the report notes “the operating surpluses to support those investments, or to support additional borrowing, do not appear to exist.”

The report also examines the financial condition of different types of New York City hospitals, finding that safety net hospitals, which treat a disproportionate share of uninsured and underinsured patients, experienced the greatest deterioration in financial performance. Academic medical centers had the best performance, but they still lagged their peers nationally.

In addition, the report presents a range of consequences that hospitals experience resulting from persistent financial losses. In addition to underinvestment in capital, consequences include higher operating costs, reduced ability to compete effectively, and potentially reduced quality of care.

“This report provides a snapshot of the state of New York City hospitals when our economy appeared to be healthy,” notes Mr. Tallon. “Since the collection of these data, hospitals are facing even greater pressures.”

Written by Steven Fass, senior financial analyst, and Sean Cavanaugh, director of health care finance, the United Hospital Fund report offers the following conclusion: “Without significant changes in public policy or market conditions, New York City is likely to see a continuation of current trends in hospital finances…and, in all likelihood, more bankruptcies and closures.”

The full report “The Deteriorating Financial Condition of New York City's Nonprofit Hospitals, and Its Effect on Capital Investment” is available.

About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose mission is to shape positive change in health care for the people of New York. ###