With Credit Still in the Deep Freeze, Time is Right for a Modern Hill-Burton Act
On Aug. 13, 1946, in a watershed moment for healthcare in the U.S., President Harry Truman signed the Hospital Survey and Construction Act, better known as the Hill-Burton Act for its sponsors, Sens. Lister Hill of Alabama and Harold Burton of Ohio. Among other provisions, the law provided federal grants and low-cost loans to hospitals to improve the physical plant and accessibility of the nation’s healthcare system. In short order, Hill-Burton stimulated an enormous hospital construction boom that brought healthcare within the geographic reach of almost every American.
Indeed, when renewing Hill-Burton 18 years later, President Lyndon Johnson said, “We are supporting, as no nation on Earth has ever supported, the strength of our medical profession. … I believe that we are pursuing a sensible and yet a most responsible course.”
      Fast-forward to October 2008. As Congress worked on the fine print of a massive bailout of the financial services industry, a New York Times article declared that lending relief for capital-starved hospitals “cannot come too soon.” The tax-exempt market has virtually frozen solid with no signs of thawing, and the troubles at Fannie Mae and Freddy Mac have cast a pall on lending opportunities across all sectors. 
      Especially troubling for hospitals, many potential investors in municipal bonds now view traditional credit enhancements—such as bond insurance—as unreliable. These snowballing developments are not occurring in a vacuum. Rather, they threaten to exacerbate the fiscal problems that were plaguing America’s hospitals long before the stock market plunged, including relentless Medicare and Medicaid funding cuts, soaring medical malpractice costs, unsustainable pension fund contributions and the swelling ranks of the uninsured. Absent a financing mechanism to ensure they have the resources to care for their patients and serve their communities, many hospitals will soon have no choice but to eliminate services, lay off workers and possibly shut their doors.
      The closing of a restaurant or supermarket or retail store is one thing. The closing of a hospital, whose mission is to care for everyone who walks through its doors, regardless of their ability to pay, is quite another.
Perhaps more than any other time in their history, hospitals need ready access to capital.
They need a 21st century Hill-Burton.
      For hospital after hospital, access to capital is either crippled by inordinately high interest rates or nonexistent funds. These are often the same institutions that care for large numbers of uninsured and underinsured patients and serve as both family doctor and social anchor for their communities. Many are the largest employer in the area. They are indispensable but they cannot maintain healthy bottom lines.
      Many reports over the past few years have cited a laundry list of obstacles to hospitals’ financial health, including the cost of capital projects, the collapse of the auction-rate market, costly debt restructuring and a greater reliance on government and self-pay patients.
      From Maine to California, financially strapped hospitals with high capital needs are putting off sorely needed construction projects. The singular goal of hospital construction, whether building brand new facilities or renovating and expanding existing plants, is better patient care. These projects create increased outpatient and inpatient capacity, more efficient emergency rooms and the launch or upgrading of services.
      Similarly, hospitals are being forced to delay purchasing state-of-the-art medical equipment and information technology to the detriment of patient outcomes.
      Grants and low-cost loans via a new Hill-Burton would extend America’s hospitals a lifeline at a dire time, demonstrate the federal government’s commitment to the nation’s healthcare system and affirm President Johnson’s 1964 declaration that “good medical practice and good facilities are inseparable.” Priority should be given to hospitals that disproportionately serve the uninsured or underinsured, provide vital community services and/or deliver state-of-the-art care, research or training.
The perception of a hospital’s role and obligations has changed, particularly since the Institute of Medicine’s 1999 report on patient safety, To Err is Human, and a subsequent report on healthcare quality, Crossing the Quality Chasm. Both led to demands from virtually all healthcare stakeholders that hospitals address the urgent need to improve quality. But meeting new demands—and sometimes mandates—for data collection for quality measurement, computerized order entry and electronic medical record systems (to name a few) are an enormous financial challenge for hospitals. A modern Hill-Burton would be invaluable to those that lack the capital to improve quality and patient safety.
      Finally, a new Hill-Burton would spur a proliferation of “green” hospitals featuring earth-friendly construction materials and large windows that allow more natural light—changes that may bring more benefits than just energy conservation. Many healthcare architects and hospital officials believe brighter buildings more in tune with the environment help patients heal faster.
      Whether the stock market is sky high or falling fast, hospitals never close their doors. They need and deserve the government’s strong support. No less than in 1946 or 1964, a new Hill-Burton would be both sensible and responsible healthcare policy.