Uncertain Fate of PPACA Causes Hospitals to Halt Projects, Stop Hiring

Health care job growth is down 23% compared with last year

The uncertainty surrounding the Republican effort to replace the Patient Protection and Affordable Care Act (PPACA) is forcing some hospitals to delay expansion plans, cut costs, or take on added risk to borrow money for capital investment projects, according to a Reuters report.

Hospitals typically lay out multiyear operating plans that prioritize investments, such as new clinics, medical wings, technology or other projects that help draw in more patients and increase revenue. Denver Health Medical Center, for example, opened a new $26.9 million clinic in the city in 2016 to provide care to an area lacking in health services and saw more patients within six months than it had expected over two years. The health system planned to build or remodel five more facilities based on the new clinic’s success.

But since the Republican sweep in the November election, Denver Health has deferred $73.7 million in construction projects that had been planned to serve more low-income residents, many of whom were newly insured under the PPACA.

The act’s likely overhaul puts many hospitals in the uncomfortable position of being unable to predict how many of their patients will be insured and what type of coverage they will have in the future. As a result, many are more wary than in previous years to invest in expensive capital projects, issue debt, or expand into new regions, according to Reuters.

So far in 2017, hospital jobs grew by 8,775 monthly on average in the U.S., compared with 11,413 jobs for the same period last year, Bureau of Labor Statistics data show.

The uncertainty has also seeped into the municipal bond market, where nonprofit hospitals access capital, Reuters notes. The sector sold 36% less debt for new projects so far in 2017 compared with the same period last year, while the rest of the municipal market increased the amount of new money issued by 23%.

Source: Reuters; March 23, 2017.