Subsidizing hospital expansion with taxpayer “Private Option” money

Scare tactics are being used by Arkansas supporters of Obamacare Medicaid Expansion (currently called “Private Option”). They claim Arkansas taxpayers must fund big government Medicaid Expansion program in order to “save” hospitals. To them it is all about the cost of “uncompensated care” which includes about anything a hospital wants to claim. (More about uncompensated care claims in a future article.)

A reader wrote to CFA saying:

While going to my doctor’s office, I drove past [name omitted] Hospital, and noticed a lot of new construction. I was curious what was being done so I search for articles on my smart phone while sitting in my doctor’s waiting room. It is amazing how many hospitals are being built or expanded. If hospitals are on the brink of closure and need taxpayers to pay for Obamacare Private Option, how are they able to do so much construction while small business owners are struggling to survive President Obama’s terrible economy?

Expansion, especially over- expansion, effects a hospital’s bottom line. Empty beds and underutilized facilities add to operating costs. Construction financed with debt also affects the bottom line.

We want hospitals to do well, but as taxpayers we think the reader has a good question. How is hospital construction affecting hospital balance sheets and the hospitals’ “need” for Arkansas taxpayer money?

We also thank the reader for providing example articles spotlighting hospital construction and expansion in Arkansas. You probably are aware of other hospital expansion projects.

• NEA Baptist Memorial Hospital – Construction in Jonesboro. Estimated at $400 million. http://talkbusiness.net/2010/07/construction-underway-on-400-million-jonesboro-hospital/
• Baptist Health – Plans New Hospitals in Conway, Malvern. Jan. 6, 2014 http://www.arkansasbusiness.com/article/96408/baptist-health-plans-for-growth-with-new-hospitals-in-conway-malvern, and a related article, Baptist Health of Little Rock to build a 100-bed hospital in Conway. Expected to open 2016. – http://www.arkansasbusiness.com/article/95567/baptist-health-to-build-hospital-in-conway-by-2016, also article on collaboration with some 30 Conway-based physicians to design and develop the new medical center. “Today’s topping-out ceremony is a long time coming and is physical evidence of the perseverance by a dedicated group of physicians and steering committee who have worked closely with Baptist Health on this project,” said Dr. Ben Dodge, orthopedic surgeon and chairman of the Physician Steering Committee. “We now look forward to the subsequent opening of Baptist Health – Conway in early 2016.” http://www.thv11.com/story/news/health/2015/07/15/baptist-health-conway-center/30191611/
• Mercy Hospital Fort Smith Arkansas – Began work on a $42 million, 24-bed orthopedic hospital. https://www.billianshealthdata.com/news/vitals/Articles/10.1.12/Hospital_Construction_Mercy_Fort_Smith_Arkansas
• “Drew Memorial Hospital – successfully completed the first phase of its $40 million modernization plan in the spring of 2012. The $14 million expansion included 49 state of the art Inpatient suites and an Allied Health Building with a Cancer care and infusion Center, a 4 bed Sleep disorder center, an Intensive Outpatient Geriatric Psychiatric Center, and a Rehabilitation Center. We are excited to move to phase two of our modernization plan to be completed in 2014. Phase two is a $15 million This includes a new state of the art surgery center with four (4) operating rooms and two (2) special procedure rooms. Along with a twenty (20) bed inpatient geriatric psychiatric unit. http://www.drewmemorial.org/construction_update.aspx
• Washington Regional Medical Center in Fayetteville – Awards contract for a $46 million expansion Feb 17, 2015 http://www.al.com/business/index.ssf/2015/02/post_224.html
• White River Medical Center – Emergency Room Expansion Update http://www.whiteriverhealthsystem.com/news/wrmc-emergency-room-expansion-update. Also an article on additional project, Medical Complex Satellite ER Construction to Begin http://www.whiteriverhealthsystem.com/news/wrmc-medical-complex-satellite-er-construction-begin
• Baxter Regional Medical Center – Second phase begins for Women & Newborn Center https://www.baxterregional.org/press_view.php?id=147

The company Construction Market Database (CMD) claims its database includes “hospital projects that have been built over the past five years in Arkansas.”  The database appears to have major gaps (for example, few of the projects listed by our reader are included on the CMD list), but we include the list for your information. Also note: Some projects on the CMD list are for the construction of clinics, offices, dormitories, etc. and the list includes government hospitals and clinics.

Some politicians say, “Arkansas needs Obamacare Medicaid Expansion to ‘save’ Arkansas hospitals.” It is time for the politicians to tell us which hospitals are supposedly being saved and to account for all the factors contributing to hospitals financial health. If the politicians can’t, they need to quit using hospitals as a scare tactic to pass their big government program. 

Also see the CFA article: “Is it about SAVING hospitals?”