Hospitals Struggle to Access Capital New Report: 'Financing the Future' Indicates the Picture Is Getting Bleaker CHICAGO, Oct. 27 /PRNewswire/ -- Facing a headwind of rising demand by aging babyboomers, many hospitals may not have access to the capital they need to renovate and expand their facilities for the future. Hospitals and health systems nationwide are having growing difficulty using traditional means to access capital to support the facilities and services needed to meet the burgeoning healthcare needs of their patients. In fact, according to a new report from the Healthcare Financial Management Association (HFMA) in partnership with GE Healthcare Financial Services, the number of hospitals defined as having broad capital access is dropping and the number of hospitals defined as having limited access to capital is dramatically rising. Between 2001 and 2002, the percentage of hospitals defined as having broad access to capital declined from 42% to 36%. However, the percentage of limited-capital-access hospitals rose even more sharply, nearly doubling from 11% to 19%, indicating a widening gap between hospitals in strong and weak financial health. Operating margins for both hospital types also declined, but by a much more significant amount for limited-capital-access hospitals, further separating the "haves" from the "have nots." This report, How Are Hospitals Financing the Future? Access to Capital in Health Care Today, is based on a meta study conducted by HFMA and PricewaterhouseCoopers LLP. Factors such as bed size, ownership, teaching status and geography are some of the key differentiators for hospitals in strong or weak financial health. The report shows that a number of U.S. states are home to a high percentage of limited access hospitals. Ironically, the states with a high concentration of limited-capital-access are also those that depend on healthcare as an industry to support the state economy, such as New York, Hawaii and the District of Columbia. This trend has raised several red flags, as the growth of the healthcare industry may be slowed in these regions, significantly affecting the local economies. Operational characteristics also vary between financially strong and weak hospitals, with utilization playing a key role in determining an institution's financial success. Between 1997 and 2001, broad-capital-access hospitals reported a 23% higher average daily census (ADC) than limited-capital-access hospitals, which suffered a 12% decline. Operating margins for both hospital groups also declined, but by a much more significant amount in the limited-capital-access sector. Despite these trends, capital is available -- even to hospitals with a shaky financial profile. Following a careful examination of key financial, demographic and performance characteristics associated with hospitals classified as having broad and limited access to capital, the report concludes that hospitals with poor financial profiles are more highly leveraged than hospitals with excellent financial profiles, thus indicating that these hospitals have been acquiring capital either from alternate sources or prior to the period examined. This report is the first in a six-part series from a project titled Financing the Future. The first report focuses on the current state of capital access: what are the sources, how are they changing, and what are the characteristics of hospitals with broad and limited capital access? The report also offers tools to help healthcare professionals know how to better access capital from various sources. Website: http://www.financingthefuture.org DATASOURCE: Healthcare Financial Management Association CONTACT: Terry Arya of Healthcare Financial Management Association, +1-800-252-4362, ext. 362, , or Deia Lofendo, Communications Manager of GE Healthcare Financial Services, at +1-312-441-6169 or

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