Health Facilities Exceed Other Construction in May

Census2April’s drop in health facilities starts looks to have been idiosyncratic. Health facilities exceeded other construction in May, as in March and February. While construction overall dropped at a seasonally adjusted annual rate of 0.8 percent, health construction increased 0.2 percent (See Table I below the fold).

The difference was especially apparent in private construction. Construction of private health facilities increased 0.5 percent, 0.8 percentage points more than other private construction, which declined.  Construction of public health facilities dropped 1.0 percent, but this was less than half the drop in other public construction.

For the twelve months from May 2015, there is a significant difference in trend between private and public construction. Private construction increased 4.7 percent, and private health facilities starts increased at almost exactly the same rate. However, while public construction declined 2.6 percent, public construction of health facilities dropped only 1.4 percent.

Overall, health construction increased 3.3 percent, versus only 2.8 percent for non-health construction. Notwithstanding other factors, this indicates health costs will continue to increase faster than other sectors of the economy because (as the old saying goes) “a bed built is a bed filled.”

20160701 TI

Comments (2)

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  1. Ron Greiner says:

    Congress has put out info last week on Obamacare’s Replacement – any thought on that John or are you taking the summer off?

    • Thank you for asking. I wrote an op-ed (not yet published) noting both House Republicans and Hillary Clinton are now in favor of tax credits. So, that is a small step in the right direction. If they can break gridlock, there may be movement.