Significant Drop in Health Facilities Construction in October
Construction of health facilities slowed in October, while other construction increased a little. Overall, health facilities construction starts declined 3.1 percent, versus an increase of 0.7 percent for other construction. Health facilities construction accounted for almost 6 percent of non-residential construction starts. However, while both private and public health facilities construction both declined, there was divergence between private and public non-health construction.
Construction of private health facilities dropped 3.3 percent, versus a drop of 2.1 percent for public health facilities. Private health facilities construction starts accounted for almost 8 percent of private nonresidential construction starts. Construction of private non-health facilities declined by 2.0 percent, while construction of public non-health facilities increased 2.9 percent. It looks like the government has finally pulled back spending on public and VA hospitals.
(See Table I below the fold.)
For the twelve months ending last October, there was a significant difference in trend between private and public construction. Non-health private construction increased 4.8 percent, but private health facilities construction only 2.2 percent. On the other hand, non-health facilities public construction dropped 0.7 percent, but public health facilities construction increased by 0.6 percent.
Overall, health construction rose 1.9 percent, versus an increase of 3.4 percent for non-health construction. This suggests investors are nervous about future revenue growth in hospitals and other facilities.
Does health care include long-term care facilities? With an aging population, the demand for nursing homes and assisted living facilities is expected to rise, but are people instead sheltering in place, with home care?
Plus the long-term care insurance market has shrunk, so people are less likely to be able to afford LTC outside the home.