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
Daylighting | Aug 18, 2022
Lisa Heschong on 'Thermal and Visual Delight in Architecture'
Lisa Heschong, FIES, discusses her books, "Thermal Delight in Architecture" and "Visual Delight in Architecture," with BD+C's Rob Cassidy.
| Aug 16, 2022
Cedars-Sinai Urgent Care Clinic’s high design for urgent care
The new Cedars-Sinai Los Feliz Urgent Care Clinic in Los Angeles plays against type, offering a stylized design to what are typically mundane, utilitarian buildings.
| Aug 15, 2022
IF you build it, will they come? The problem of staff respite in healthcare facilities
Architects and designers have long argued for the value of respite spaces in healthcare facilities.
AEC Tech | Aug 8, 2022
The technology balancing act
As our world reopens from COVID isolation, we are entering back into undefined territory – a form of hybrid existence.
| Aug 3, 2022
Designing learning environments to support the future of equitable health care
While the shortage of rural health care practitioners was a concern before the COVID-19 pandemic, the public health crisis has highlighted the importance of health equity in the United States and the desperate need for practitioners help meet the needs of patients in vulnerable rural communities.
Healthcare Facilities | Aug 1, 2022
New Phoenix VA outpatient clinic is one of the largest veteran care facilities in the U.S.
The new Phoenix 32nd Street VA Clinic, spanning roughly 275,000 sf over 15 acres, is one of the largest veteran care facilities in the U.S.
Building Team | Jul 12, 2022
10 resource reduction measures for more efficient and sustainable biopharma facilities
Resource reduction measures are solutions that can lead to lifecycle energy and cost savings for a favorable return on investment while simultaneously improving resiliency and promoting health and wellness in your facility.
Healthcare Facilities | Jun 22, 2022
Arizona State University’s Health Futures Center: A new home for medical tech innovation
In Phoenix, the Arizona State University (ASU) has constructed its Health Futures Center—expanding the school’s impact as a research institution emphasizing medical technology acceleration and innovation, entrepreneurship, and healthcare education.
Healthcare Facilities | Jun 20, 2022
Is telehealth finally mainstream?
After more than a century of development, telehealth has become a standard alternative for many types of care.
Codes and Standards | Jun 14, 2022
Hospitals’ fossil fuel use trending downward, but electricity use isn’t declining as much
The 2021 Hospital Energy and Water Benchmarking Survey by Grumman|Butkus Associates found that U.S. hospitals’ use of fossil fuels is declining since the inception of the annual survey 25 years ago, but electricity use is dipping more slowly.
