Outlook for healthcare construction in 2017

May 15, 2017

 Architect Magazine reports that healthcare construction spending is projected to double in 2017 from $19.6 billion in 2016.There is also a significant projected expansion, renovation and construction of new healthcare facilities in 2017.

The 2017 Dodge Construction Outlook predicts that there will be a 7% increase in healthcare facility construction. In late 2016 there was a bit of a stall in healthcare construction as the market seemed to be waiting to see the outcome of the 2016 presidential election and the future of the Affordable Care Act. Dodge expects healthcare construction to pick up with a rise in offsite health clinics and the continued increase in need to serve the needs of the elderly and the aging Baby Boomers.

The increased need to provide health care to an aging population will translate into the need to build new facilities closer to the population to meet their needs and to meet the patients where they are. This could mean “micro-hospitals” that may be between 15,000 to 50,000 s/f and have between 5 and 15 inpatient beds for observation and short period stays. This new type of facility would be full service and open 24/7, which would differentiate them from urgent care facilities.

Health care construction is making a steady recovery, according to FMI (Fails Management Institute). Traditional large hospital projects are returning to the design phase with fewer large hospital projects in the works. FMI says that the bulk of the work will be renovation and additions as well as outpatient care. New facility designs are responding to the need for a patient-centered environment as well as reducing concerns for the spread of “supergerms.”

One factor that could accelerate positive growth in healthcare construction, as well as other types of construction, would be a reduction in government regulations on multiple levels. A decrease in regulations could speed up the overall planning, design, land development and permitting processes would get projects in line for start of construction at an earlier date. 

Health Facilities Management (HFM) and the American Society for Healthcare Engineering of the American Hospital Association conducted a survey and found the following: Increased attention to considering patient safety issues such as fall prevention; Increased inclusion of patients and community members in facility design decisions; and providers trying to figure out what makes patients satisfied with the care and experience they receive at a hospital.

Industry seems to be moving away from large-scale new construction. Out of responding acute care hospitals, less than 10% had new construction projects underway or in the works, and about 17% had replacement projects underway or in the works over the next three years.

Urgent care projects are underway or planned in the next three years as a lower cost alternative to expanding emergency departments. The urgent care model is relatively inexpensive and providers can do a short-term lease. 

Seems the consensus is a positive outlook in 2017 for healthcare construction and according to Dodge’s Chief Economist Robert Murray, the current period of growth will continue into 2018. 

Glenn Ebersole, P.E. is the market development manager at High Concrete Group LLC of Denver, PA. 

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