CHICAGO, September 02, 2004 - The deteriorating financial condition of hospitals is making access to capital more difficult, resulting in a widening gap between the haves and have-nots. This troubling picture may force hospitals with limited access to capital to fall further behind, lead to facility closures, and cause quality to suffer in those institutions failing to keep up with technology improvements.

On the heels of research findings about the challenges hospitals will have to fund future capital needs, a new report explores how these financial challenges will shape the healthcare industry. What will the future health system look like? What can hospitals do to survive - and even thrive? And what should the government's role be in helping hospitals deal with shrinking access to capital?

A diverse panel of thought leaders with unique points of view about the future of health care, particularly as it relates to capital, answered these questions. The experts include three hospital system CFOs, a healthcare executive and author, a managing director at a healthcare ratings group, the president of the Center for Studying Health System Change, and a healthcare financial services thought leader. Their thoughts are contained in the final report of Financing the Future % a series led by the Healthcare Financial Management Association (HFMA) in partnership with GE Healthcare Financial Services. HFMA and PricewaterhouseCoopers conducted the research for this study.

E. Preston Gee, senior vice president of strategic planning at St. David's HealthCare Partnership says, "I think the endangered species are the second- and third-tier hospitals in metropolitan areas. In 10 years, 20 percent of these hospitals will close."

Recommendations for hospital leaders include strategic deployment of resources, outsourcing, engaging in joint ventures, and rationalizing assets. Hospitals should also focus on a few core service lines - or the things they do best, rather than stretching themselves too thin. Technology, too, will play a strong role in a hospital's success. Hospitals that invest in the digital hospital concept and IT systems will be ahead of the curve.

"Hospitals must focus on their core business, listen to their patients and physicians, and establish their value proposition with insurers," said Randy Fuller, hospital segment manager for GE Healthcare Financial Services.

The panel has thoughts on what role the government should play in helping hospitals deal with the capital gap. Fixing the payment system is primary among the suggestions, followed by grants or subsidies for technology implementation. The experts also say they would like to see more government attention to quality issues and tort relief.

The report, titled "How Are Hospitals Financing the Future? Where the Industry Will Go from Here," is part of Financing the Future. The project provides information, insights, strategies, and tools to help hospitals finance their future. The findings of Financing the Future are based on research conducted by HFMA and PricewaterhouseCoopers.

To order this report, or previous reports, contact HFMA at (800) 252-4362, and press option 2, or visit www.financingthefuture.org. Press inquiries should contact Terry Arya at (800) 252-4362, ext. 362, or via email at tarya@hfma.org, or Deia Lofendo at (312) 441-6169 or deia.lofendo@ge.com.

The purpose of Financing the Future is to give healthcare professionals the information, strategies, and tools they need to seize the opportunities presented by increasing demand for services as well as innovations in technology and care delivery. Seizing these opportunities requires capital, yet rising costs and inadequate payment make accessing capital more challenging than ever. Financing the Future brings together key stakeholders in the industry to quantify capital need and access, identify best practices for capital planning, provide tools for determining capital need, recommend innovative techniques for capital access, and suggest areas for policy change.

HFMA is the nation's leading membership organization for more than 33,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members' positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant. HFMA offers ideas that work including professional development opportunities, information on key issues, technical data and networking opportunities, with the ultimate goal being to create a more supportive environment in which members do their business. For more information, visit the Association's Web site at www.hfma.org.

Healthcare Financial Services, a unit of GE Commercial Finance, is a provider of capital, financial solutions, and related services for the global healthcare market. With over $13 billion of capital committed to the healthcare industry, GE Healthcare Financial Services offers a full range of capabilities from equipment financing and real estate financing to working capital lending, vendor programs, and practice acquisition financing. With its knowledge of all aspects of health care from hospitals and long-term care facilities to physicians' practices and life sciences, GE Healthcare Financial Services works with customers to create tailored financial solutions that help them improve their productivity and profitability. For more information, visit .

Media Contacts

Deia Campanelli
GE Healthcare Financial Services
312-441-6169