Blog: Hospital construction delayed; blame the economy, reform

Indiana University Health wouldn't say anything more about shelving expansion plans for Methodist Hospital other than a brief e-mail that contained this:

“Because of several external factors, such as lingering recession and healthcare reform-related uncertainties, IU Health has delayed the construction until it can fully ensure the design of the new critical-care bed tower will align with the future healthcare environment.”

The statement went on to say that “the design and timing of future construction is uncertain.” Plans had called for a critical-care bed tower to meet patient demand.

It may be that Indiana University Health system has recently experienced the slowdown in hospital admissions from the weak economy and a growing number of patients treated under observation, an outpatient service.

One snapshot shows largely flat volume at hospitals in the years since the recession. Hospital admissions increased 0.1% in 2011 among hospitals with Moody's Investors Service credit ratings. Admissions dropped 0.4% the prior year and were flat in 2009.

Indiana University Health reported admissions grew 1.5% during the first nine months of last year. But the prior year, admissions grew 5.6%.

But hospitals face forces other than the economy that may prolong weaker demand. Emerging payment models that seek to slow health spending, such as accountable care, may further drag on hospital use and revenue, healthcare executives say.

One last note: The Indianapolis-based system's construction freeze also underscores another trend to emerge since the recession. As I have previously reported, hospitals have scaled back on construction and have instead invested more in physician deals, other acquisitions and technology.

You can follow Melanie Evans on Twitter: @MHmevans.