Central Florida Hospitals Less Affected by Economic Slowdown

DAVID ROSENFELD

Central Florida Hospitals Less Affected by Economic Slowdown | Orlando medical construction, University of Central Florida College of Medicine, Lake Nona, Burnham Institute for Medical Research, Orlando VA Medical Center, Nemours Children's Hospital, M.D. Anderson Cancer Research Institute, Dr. P. Phillips Hospital, Sean Snaith PhD, Florida Hospital, David Rosenfeld

University of Central Florida President John Hitt presents the findings of a recent study showing the UCF medical school and other local developments could add up to 30,000 new healthcare jobs.

Capital Improvements Approved before Credit Meltdown Raise Prognosis

At a time when mass layoffs and an economic slowdown plagues the Florida healthcare industry, recent developments in Central Florida may actually add up to 30,000 new jobs and $7.6 billion to the local economy over the next several years, according to a study by Arduin, Laffer and Moore Econometrics.

The study analyzed the economic impact of the University of Central Florida's new College of Medicine and a burgeoning "medical city" in Lake Nona that includes the Burnham Institute for Medical Research, Orlando VA Medical Center, Nemours Children's Hospital and M.D. Anderson Cancer Research Institute.

"A lot of dominos have fallen quickly around the new med school that's made some impact," said Sean Snaith, PhD, an economist at UCF and director of the Institute for Economic Competitiveness. "In Central Florida that's one of the key reasons we haven't been impacted as much as the rest of the state."

Capital improvement projects recently completed or scheduled for completion in the next several years throughout the Orlando-area evaded the ongoing economic slump, having gained funding before overall credit markets dried up. Orlando Health's Dr. P. Phillips Hospital completed in November, for example, increased its workforce by 70 employees or about five percent, said Joe Brown, media relations manager.

"Although we have not experienced any layoffs, we implemented a hiring freeze in December," Brown said. "For the most part, this includes new hiring in non-clinical areas. Clinical areas are evaluated on an as-needed basis."

Hospital administrators, meanwhile, expect utilization of healthcare services to decline as people forgo elective procedures. At the same time, the number of uninsured and under-insured patients treated at hospitals continues to increase the amount of uncompensated care.

Many veterans for the first time are turning to VA hospitals for care where they had previously relied on private insurance. The Orlando VA Medical Center experienced a 10-20 percent spike in patient enrollment in December, having signed up 624 new patients with January expected to exceed that amount, said Courtney Franchio, public affairs officer.

"Many veterans who previously did not need our services are now enrolling due to job losses and financial hardships," Franchio said.

Employment also increased at the Orlando VA. In less than two years, the medical center added nearly 600 workers, Franchio said. A new VA hospital in Lake Nona plans to be completed on schedule by fall 2012.

Tourism in the Orlando area helps to stabilize the Central Florida market, said Eddie Soler, executive vice president and CFO at Florida Hospital, which expects to hire 800 new nurses this year – 600 replacement and 200 new positions.

Capital improvement projects slowed for Orlando's largest hospital system, as planned. Since 2003, Florida Hospital built three new patient towers including the 15-story Ginsburg Tower completed in November at Florida Hospital Orlando. Over the next three years, Florida Hospital will undertake several new construction projects, Soler said.

"While we haven't put anything on hold, in one instance we were ready to start construction but delayed that because of the economy," Soler said.

By re-bidding construction contracts for a 7-story, $37 million medical office building, Florida Hospital expects to save roughly $1 million through a 90-day delay.

"With a slow down in construction, material and labor costs have dropped," Soler said. "When we were building our other towers, we were experiencing inflation in costs of materials."

In another sign of the times, Florida Hospital's parent company, Adventist Health System, in November had trouble financing $300 million in debt among a troubled banking industry. In December, the hospital system floated $70 million in debt, solving the problem for the time being, Soler said.

Banks are continuing to lend, though much more selectively, said Ivy Bibler, senior vice president for Bank of America's non-profit healthcare group. "We are looking at an industry that has a negative outlook right now because of healthcare reform, because of the economy in general and other issues that have created a lot of concern for the industry going forward," Bibler said.

Bruce Reuben, president of the Florida Hospital Association traveled to Washington DC in mid-January to support enhanced reimbursements under Medicaid as part of the proposed economic stimulus package urged by President Barack Obama. Reuben predicted that Congress would approve more than $15 billion in increased matching funds to the Florida Medicaid program over two years.

"All of the hospitals are faced in some degree or another with this set of challenges caused by all of the things that have happened in the economy," Reuben said. "This is definitely the biggest financial crisis I've seen since the 1980s. This is the biggest and appears to be the most sustained."

With all the hardship, Snaith – the UCF economist – sees a silver lining. "Recessions are part of the natural cycle of the economy," Snaith said. "Just like forest fires clear out dead wood and underbrush to allow new growth to take place, this process – as unpleasant as it is – may help to realign resources in the economy."