flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

Decline expected as healthcare slows, but hospital work will remain steady

Decline expected as healthcare slows, but hospital work will remain steady


By Jim Haughey, BD+C Economist and Chief Economist with Reed Construction Data | August 11, 2010
This article first appeared in the 200908 issue of BD+C.

The once steady 10% growth rate in healthcare construction spending has slowed, but hasn't entirely stopped.

Spending is currently 1.7% higher than the same time last year when construction materials costs were 8% higher. The 2.5% monthly jobsite spending decline since last fall is consistent with the decline in materials costs. A 7% decline is expected in the next six months, consistent with the year-to-date drop in the value of healthcare construction starts, which includes a 66% plunge in June.

The June drop is partly random but also reflects concern by healthcare project managers about how the outcome of the current healthcare debate in Congress will affect their operations. Specifically, they are concerned about reimbursement rates from federally operated or regulated insurance plans. With no final plan ready for a vote in early August, expect the cautious spending to continue through the summer.

Healthcare construction spending is currently 1.7% higher than the same time last year, led by hospital work, which is 14% higher than a year ago.


All options being considered in Washington envision expanded healthcare services that would require additional facility capacity by 2011—but financing for the expanded services remains fuzzy. Half the added cost appears to be vague promises of $40 billion plus annual fee cuts by hospitals and drug companies. Significant growth in healthcare construction will not resume until the healthcare financing arrangements are final and judged to be realistic.

Hospital construction spending is currently 14% higher than a year ago, while spending for other healthcare facilities, including specialized office buildings and residential care facilities, is off 25% from last year. The developers of these buildings react to a recession much as developers of commercial buildings do: They pull back when they see falling rental and occupancy rates. By this time next year, expect spending for medical office buildings and possible residential care facilities to be expanding again in a growing economy while spending for hospitals is expected to still be stuck at current levels.

Related Stories

Sponsored | Windows and Doors | Nov 21, 2017

Daylighting promotes healing and wellness at the Florida Hospital for Women at Orlando Campus

Growing research demonstrates that patients recover faster and better from illness or surgery in settings that offer abundant daylight and views to the outdoors.

Healthcare Facilities | Nov 6, 2017

Design isn’t enough to foster collaboration in healthcare and research spaces

A new Perkins Eastman white paper finds limited employee interaction at NYU Winthrop Hospital, a year after it opened. 

Healthcare Facilities | Oct 25, 2017

Creating child-friendly healthcare spaces: Five goals for success

Children often accompany parents or grandparents in medical settings; what can we do to address their unique needs?

Greenbuild Report | Oct 23, 2017

NZE and carbon neutral

An Army hospital in the Mojave Desert sets a new bar for sustainable design.

Designers | Oct 10, 2017

Merging artwork and building design

With many hospital projects, art can be a construction-phase afterthought.

Healthcare Facilities | Oct 5, 2017

Architectural best practices for behavioral health: A case study at VCBR

Confined treatment centers for civilly-committed individuals.

Healthcare Facilities | Sep 29, 2017

Having a vision

The ability to clearly communicate specific priorities to your team is among the most important tasks the owner’s leadership team will perform.

Healthcare Facilities | Sep 21, 2017

Boat dealership becomes Tempe’s newest health clinic

The new space was designed with community input to be used by patients and non-patients alike.

Healthcare Facilities | Sep 19, 2017

Small UCHealth hospital in Longmont, Colo., designed with ability to grow over time

UCHealth Longs Peak Hospital opened for first patient on August 31.

Laboratories | Sep 12, 2017

New York City is positioning itself as a life sciences hub

A new Transwestern report highlights favorable market and regulatory changes.

boombox1
boombox2
native1

More In Category

Healthcare Facilities

Watch on-demand: Key Trends in the Healthcare Facilities Market for 2024-2025

Join the Building Design+Construction editorial team for this on-demand webinar on key trends, innovations, and opportunities in the $65 billion U.S. healthcare buildings market. A panel of healthcare design and construction experts present their latest projects, trends, innovations, opportunities, and data/research on key healthcare facilities sub-sectors. A 2024-2025 U.S. healthcare facilities market outlook is also presented.




Mass Timber

British Columbia hospital features mass timber community hall

The Cowichan District Hospital Replacement Project in Duncan, British Columbia, features an expansive community hall featuring mass timber construction. The hall, designed to promote social interaction and connection to give patients, families, and staff a warm and welcoming environment, connects a Diagnostic and Treatment (“D&T”) Block and Inpatient Tower.

halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021