Significant Drop in Private Health Facilities Construction in September

After an uptick in August, health construction starts declined significantly in September: A 0.1 percent decline versus a 0.6 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is positive, but running slower than the booming non-health construction market: 9 percent versus 14.3 percent.

The short-term decline occurred entirely among private health facilities, for which starts declined 0.3 percent. When looking only at private construction, health facilities and other building starts are at about the same rate of growth for the twelve-month period. Maybe it was time for a breather in September.

The situation is different for public health facilities, for which construction starts increased 0.5 percent in September. Nevertheless, other public construction increased fraction more. This is the second month public health facilities construction has grown. It had declined in previous months, which remains apparent in the twelve-month negative rate of growth.

If this reflects a pick-up in building Veterans Health Administration hospitals, that is a problem, because the VHA remains racked with scandal and problems. As for private health facilities: We should not lament a slowdown in construction starts. Hospitals are often the least efficient location of care. Building more of them foretells increasing health costs.