The Affordable Health Care for America Act (HR 3962) as passed in 2009 is yet to be fully implemented, and a number of health care-related companies are still trying to understand its impact on their business. Firms involved in the design and construction of health care facilities are also trying to gauge the law’s ramifications on their business.
Generally speaking, changes in the way health care services are delivered have historically been good for the design and construction industry because health care facilities, systems and companies are constantly trying to upgrade their delivery methods to comply with the latest technology or reimbursement opportunities and stay ahead of their competition.
The Affordable Health Care for America Act has been the subject of intense debate, particularly during this political season, but regardless of its merits or detriments, it is the law of the land, having been passed by both the Senate and House, signed by the President and upheld by the Supreme Court. Future administrations may be able to tweak this law but for the most part will have to work within its provisions and subsequent interpretations as they are determined.
In theory, insurance for all Americans should increase overall reimbursements for health care systems and reduce the number of non-paying customers. But not all reimbursement structures are created equally, and some entity still has to provide funding and a reimbursement structure that health care systems can understand.
Until the mechanisms of the process can be further defined, health care systems will have difficulty assessing the law’s total impact on their business. Some health care operators are proceeding with capital projects based on their prediction of the law’s ultimate results while others are holding off until more information is available. The election in November will not necessarily provide additional clarity.
For the construction industry, health care has been a relatively steady market sector in the past 10 years during the highs and lows of this economic cycle and is carrying many firms during the current recession. Our industry needs to experience a resurgence of other sectors of our business. If health care costs rise for businesses across the country as a result of this legislation, then their ability to expand will be even more challenged, making the growth of capital projects more difficult, regardless of the market sector.
Any such pressure on businesses that creates a significant downward pressure on capital projects will affect the construction industry negatively at a time when we need some good financial news.
Financially challenged health care systems will be equally challenged to continue funding capital projects, especially if the impact of the legislation is not clear. Investing in capital projects that will not benefit from the final implications of the legislation will have long-term negative effects on a system’s profitability. Not starting capital projects due to this uncertainty will ultimately have the same impact on construction revenues.
Regardless of whether the law will ultimately be beneficial or detrimental for health care systems and consumers, the uncertainty surrounding the details of the law’s implementation may have substantial negative consequences for the construction industry. Because this law will have a lasting impact on the very way our industry earns a living, the effects of the law on the construction portion of our economy should be addressed as a campaign issue, and whoever is elected should provide the clarity necessary to have a positive impact on health care-related businesses.
Jack Darnall is a regional president at Brasfield & Gorrie.