Thursday, September 1, 2016

Significant Divergence in Private Vs. Public Health Construction in July

The divergence between private and public health facilities construction continued in July. Overall, health facilities construction starts increased 0.3 percent in July, versus zero for other construction (Table I).

However, there was a significant difference between the private and public segments. Construction of private health facilities dropped 0.3 percent, versus an increase of 1.0 percent for other private construction. Construction of public health facilities increased a whopping 2.5 percent, versus a drop of 3.2 percent for other public construction.

Is this what they mean by “infrastructure” spending – broken bridges and roads, while more VA and county hospitals spring up?

For the twelve months from June 2015, there is a significant difference in trend between private and public construction. Private construction increased 4.4 percent, but private health facilities construction dropped 1.5 percent. Public construction dropped 6 percent, but public health facilities construction increased by 1.9 percent.

Overall, health construction dropped 0.8 percent, versus an increase of 1.6 percent for non-health construction. If the divergence between private and public health facilities construction persists, it will suggest investors expect VA, Medicaid, “uncompensated” care to grow as a share of U.S. health spending, versus private payment.

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