Capital spending gap widens between large, small hospitals

Large hospitals spent more on capital projects last year to stay competitive while small hospitals tightened their budgets, according to Moody’s.

The ratings firm tracked financial data for 209 hospitals across the U.S., finding the gap in capital spending grew between the largest and smallest hospitals last year.

Below are the key findings:

Large hospitals

• Largest hospitals spent $498 million on capital projects last year
• Capital spending increased 9% among the largest 50 hospitals to 1.4x depreciation

“Competitive markets and the need for further expansion continued to drive spending [for large hospitals],” the Moody’s report noted.

Small hospitals

• Smallest hospitals spent $23 million on capital projects last year
• Capital spending dropped 16% among the smallest 50 hospitals to 0.9x (below the level of depreciation)

“The continuation of challenged operating performance for many will further delay capital investment in the near term [for small hospitals],” according to the report.

Moody’s noted the average age of plant hit a five-year high in 2024 for both large and small hospitals. The median age of plant was flat for large hospitals at 11.2 years and increased for small hospitals to 15.1 years. The median age of plant for hospitals overall was 13.2 years.

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