CHICAGO - February 19, 2008 - Healthcare facilities across the nation are finding themselves at the center of a high-stakes game. Aging facilities, new technology, competition, and consumer demand are among the factors driving up the ante for new hospital construction or extensive renovation.

Keeping up comes with great risk and cost. Hospital and health facility construction project costs are rising at a record pace, doubling since 2004 and expected to exceed $60 billion annually by 2010. Furthermore, from the time a plan is realized, the facility's modalities could be outdated.

Discoveries about these soaring costs and the implications they will have on hospitals' capital position and ability to fund such initiatives are revealed in the Healthcare Financial Management Association (HFMA) and GE Healthcare Financial Services' fourth and final installment in the Financing the Future III series called Construction Trends and Capital Implications. Researchers surveyed key industry leaders to identify the trends and issues that are affecting future healthcare construction. The findings show a combination of factors are driving rehab and construction costs for the hospitals of the future, including:

• Continued shift of care to ambulatory care settings

• Inability of aging facilities to be retrofitted to meet tomorrow's needs

• Increase in patient volume due to aging baby-boomers

• Changes and demand for new technology

• Increasing competition from physicians and non-traditional (retail) healthcare providers

• New opportunities for hospital-physician alignments

• Changes in patient populations

"Consumer needs are also driving the hospital of the future," said Richard L. Clarke, DHA, FHFMA, President and CEO, HFMA. "Healthcare villages - where you can do everything from visit a doctor to visit a gym to enjoy a healthy meal on one campus - are an example of an emerging trend to meet those needs."

Hospitals are also going green. Not only are many new facilities more energy-efficient, but thanks to their materials and smart designs they're healthier for physicians, patients and nurses and can lower utility costs by 20 percent to 50 percent.

Yet the luxury of all these advancements doesn't come without a cost; thereby leaving many hospital executives to question where they will get the funds to compete.

"The construction boom is causing a huge surge in capital needs", said Randy Waring, Hospital Segment Leader at GE Healthcare Financial Services. "In today's volatile capital market, hospitals are looking at a wide variety of financing approaches, from traditional tax-exempt bond issues to private placements, physician joint ventures, third-party developer involvement, and other forms of private funding."

Whatever the decision, according to the report, one thing is clear: either they invest the capital needed or they run the risk of not remaining competitive.

Since 2003, HFMA's Financing the Future project has given healthcare providers the information they need to help their organizations have the resources necessary to provide safe, high-quality care for their communities. The project began with a series of reports highlighting strategies hospitals and other healthcare providers could use to improve access to capital.

With Financing the Future III, HFMA, in partnership with GE Healthcare Financial Services, sets out on perhaps its most ambitious effort to date: helping providers navigate key industry trends that affect hospitals' capital position and ability to fund important future initiatives. For each trend, a report will identify the current state and implications for the future. For more information about Financing the Future III and to access the complete archive of project reports, visit www.financingthefuture.org

HFMA is the nation's leading membership organization for more than 34,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members' positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant. HFMA offers educational and professional development opportunities; information on key issues affecting healthcare financial managers; resources, such as technical data, checklists, and research reports; and networking opportunities-all of which provide our members with the practical tools and ideas they need to ensure career and organizational successes. For more information, visit HFMA's web site at www.hfma.org

GE Healthcare Financial Services is the premier provider of capital, financial solutions, and related services for the global healthcare market. With $17 billion in assets, GE Healthcare Financial Services offers a full range of financing capabilities from equipment leasing and real estate financing to working capital lending, vendor programs, and acquisition financing. With a dedicated focus and a deep knowledge of the healthcare industry, GE Healthcare Financial Services collaborates with customers to create tailored financial solutions that help them improve their productivity and profitability. For more information, visit www.gehealthcarefinance.com

Media Contacts

HFMA
David Opon
708-492.3407
dopon@hfma.org

GE Healthcare Financial Services
Deia Campanelli
312-441-6169
deia.campanelli@ge.com