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
| Aug 11, 2010
RSMeans/RCD forecast 14% drop in hospital construction for 2009
RSMeans forecasts a 14% drop in hospital construction in 2009 compared to 2008, with $17.1 billion in registered hospital projects as of June 30, 2009. The Reed Construction Data unit finds renovation of healthcare facilities increasing, from 36% of projects in 2008, to 40% of projects in the pipeline in the first six months of 2009.
| Aug 11, 2010
ASHRAE introduces building energy label prototype
Most of us know the fuel efficiency of our cars, but what about our buildings? ASHRAE is working to change that, moving one step closer today to introducing its building energy labeling program with release of a prototype label at its 2009 Annual Conference in Louisville, Ky.
| Aug 11, 2010
10 tips for mitigating influenza in buildings
Adopting simple, common-sense measures and proper maintenance protocols can help mitigate the spread of influenza in buildings. In addition, there are system upgrades that can be performed to further mitigate risks. Trane Commercial Systems offers 10 tips to consider during the cold and flu season.
| Aug 11, 2010
McCarthy, Skanska among nation's largest healthcare contractors, according to BD+C's Giants 300 report
A ranking of the Top 50 Healthcare Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
AECOM, Arup, Gensler most active in commercial building design, according to BD+C's Giants 300 report
A ranking of the Top 100 Commercial Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Payette completes Penn State Hershey Cancer Institute
Payette, a leading architectural design firm specializing in complex buildings for medical and scientific research, academic teaching, and healthcare, announced today the Penn State Hershey Cancer Institute ribbon-cutting and dedication ceremony was held on June 26, 2009. The new 176,000 square foot Cancer Institute is located on the Penn State Milton S. Hershey Medical Center Campus in University Park, Pa.
| Aug 11, 2010
Perkins+Will master plans Vedanta University teaching hospital in India
Working together with the Anil Agarwal Foundation, Perkins+Will developed the master plan for the Medical Precinct of a new teaching hospital in a remote section of Puri, Orissa, India. The hospital is part of an ambitious plan to develop this rural area into a global center of education and healthcare that would be on par with Harvard, Stanford, and Oxford.
