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
Healthcare Facilities | Aug 23, 2017
Demographics and consolidation drive demand for medical office buildings
In its first-ever report on this sector, CBRE provides detailed analyses of 30 markets.
Giants 400 | Aug 18, 2017
Life after Obamacare
Hospital systems are finding ways to get facilities built with a lot less money.
Healthcare Facilities | Aug 11, 2017
Healthcare's digital evolution
Healthcare exemplifies how technology innovations like digital connectivity and artificial intelligence are playing out in ordinary life.
Healthcare Facilities | Aug 9, 2017
3 things to know about the state of the healthcare industry
CRTKL’s Ray Brower talks design and technology trends and recaps his recent BisNow panel.
Healthcare Facilities | Aug 8, 2017
Kansas’ only medical school receives new 171,000-sf building
The building was designed to enhance the medical campus’ existing facilities, curriculum, and classrooms.
Healthcare Facilities | Aug 2, 2017
8 healthcare design lessons from shadowing a nurse
From the surprising number of “hunting and gathering” trips to the need for quiet spaces for phone calls, interior designer Carolyn Fleetwood Blake shares her takeaways from a day shadowing a nurse.
Healthcare Facilities | Aug 2, 2017
The Patient-Centered Care Learning Center will help address the shortage of doctors in Missouri and the U.S.
The new BNIM-designed facility brings almost 100,000 sf of space for patient-centered care and classrooms.
Healthcare Facilities | Aug 1, 2017
An animal care facility expands with a human touch
New equipment and surgery suites exceed what’s found in most vet clinics.
Senior Living Design | Jul 31, 2017
How technology will change senior care
When a family member can no longer be cared for in their current home, they require specialized care that is only available in a long-term care center.
Healthcare Facilities | Jul 25, 2017
Healthcare technology: Preparing for the world of tomorrow
This article outlines the current data center landscape in the healthcare sector, industry trends, and challenges and opportunities new technologies present to the healthcare space.