Health care industry leaders in Tennessee and Georgia are beginning to see a light at the end of the recession's long tunnel, resulting in a noticeable jump in major medical projects.
"The market is kind of slowly coming out," said Jim Brexler, chairman of the Tennessee Hospital Association and president and CEO of Erlanger hospital. "We're all kind of looking back at our capitalization plans" to be ready to implement stalled projects.
The recession, which economists say began in December 2007, hit hospitals as growing ranks of unemployed Americans lost insurance and couldn't pay for their medical care.
Even those with insurance delayed elective treatments and surgeries, which can be the most lucrative for health care providers, hospitals officials said. As credit markets tightened, hospitals also struggled to borrow for planned capital projects.
But credit is beginning to loosen, and unemployment rates appear to be stabilizing, experts say.
Nationally, the value of health care construction projects that have broken ground so far this year is up 5 percent over last year, said Lindsay Fernald, economist with McGraw-Hill Construction, which monitors U.S. construction activity.
The value of such projects in Tennessee is down 17 percent, she said, but construction appears poised to pick up in the coming months.
Requests for state approval of major medical products in Tennessee have increased three- or four-fold this year, said Jim Christoffersen of the Tennessee Health Services and Development Agency, which grants certificates of need for health care facilities.
MAY UNEMPLOYMENT* U.S.: 9.7 percent, down 0.2 percent from April* Tennessee: 10.4 percent, down 0.1 percent from April* Georgia: 10.2 percent, down 0.1 percent from AprilSource: Tennessee and Georgia labor departmentsHEALTH CARE CONSTRUCTION Value of health care construction projects that have broken ground through May:* U.S.: $7.8 billion, up 5 percent from last year* Tennessee: $102 million, down 17 percent* Georgia: $317 million, up 61 percentSource: McGraw-Hill Construction
In 2009 the agency approved 65 medical projects valued at $151.5 million, compared to $1.1 billion from 81 projects in 2008, figures show.
"Things are picking up again," Mr. Christoffersen said. "I've learned just talking to health care providers that folks are beginning to look forward, and the money is freeing up."
In Georgia, Ms. Fernald said the value of construction projects that have broken ground so far this year is up 61 percent from last year. But she added that, in a small state like Georgia, a few major projects could quickly result in a large percentage increase.
That increase seems surprisingly high to Kevin Bloye, spokesman for the Georgia Hospital Association, but he said a number of stalled hospital expansion and building projects are getting going again.
"There is some activity, whereas if you had talked to me a year and half ago, it was all quiet," he said. "There are some signs that we're emerging (from the slump,) but I think it's slow."
HOSPITAL PROJECTS
In Fort Oglethorpe, Hutcheson Medical Center isn't seeing any let-up in the number of uninsured patients, said President and CEO Charles Stewart.
The hospital's biggest project today is the recent addition of a wound care center with a hyperbaric oxygen chamber, but that joint venture with a national company required little financial investment from Hutcheson, Mr. Stewart said.
"We're very hopeful, but (the recovery ) is not really beginning to impact us yet," he said. "Based on percentage of patients we're seeing come to the ER and hospital, we're not seeing improvement in the number of people who have insurance yet."
Erlanger hospital is moving ahead on a long-delayed project to expand services and add an emergency room at Erlanger East on Gunbarrel Road. The cost is $68.7 million, but $17 million of work already has been completed, and Erlanger is implementing the rest of the plan piecemeal, officials said.
This year the hospital also is starting a $10 million health and wellness center at the Volkswagen plant.
Parkridge Medical Center expects to spend nearly $7 million to buy and reopen the former Cumberland Hall mental health facility. It's part of a plan to refocus its existing psychiatric facility, Parkridge Valley, on children and adolescents.
But that project was born out of necessity, not optimism about the economy, said Darrell Moore, president and CEO of Parkridge Health System.
"Outside ourselves and Moccasin Bend, there's really no one else regionally that does inpatient (psychiatric) services," Mr. Moore said.
Memorial Hospital's ambitious $320 million renovation and expansion plan, announced in 2006 and originally scheduled for completion in 2012, has been stalled for years.
The hospital now expects to begin moving forward with the project by late summer or early fall, said Jim Hobson, Memorial president and CEO.
Memorial also is wrapping up work on a $20 million medical complex in Ooltewah, which includes a 14,000 square-foot imaging facility and 11,000 square-foot physician office complex, he said.
"Across the general economy you are seeing things tending to stabilize to some level," Mr. Hobson said. "That's part of what's starting to allow hospitals and health care delivery systems to actually be able to start to move on different projects they may have planned some time ago."
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