Health Construction Spending Picks Up in August

After a few months lagging behind other construction, health facilities construction starts finally showed some life in August (See Table I). Although on a twelve-month basis it is still running slower than the booming construction market overall, health construction grew by 1.9 percent from July. Other construction grew by only 0.7 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. However, health facilities construction grew three times faster—2.1 percent versus 0.7 percent—than other building starts over one month.

Even public health construction, which had lagged massively in previous months, grew twice as fast as other public construction from July to June—1.0 percent versus 0.5 percent. This increase is dramatic because public health facilities construction had actually 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: Hospitals are often the least efficient location of care. Building more of them foretells increasing health costs.

John R. Graham is a former Senior Fellow at the Independent Institute.
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