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
| Sep 13, 2010
China's largest single-phase hospital planned for Shanghai
RTKL's Los Angles office is designing the Shanghai Changzheng New Pudong Hospital, which will be the largest new hospital built in China in a single phase.
| Sep 13, 2010
'A Model for the Entire Industry'
How a university and its Building Team forged a relationship with 'the toughest building authority in the country' to bring a replacement hospital in early and under budget.
| Sep 13, 2010
Data Centers Keeping Energy, Security in Check
Power consumption for data centers doubled from 2000 and 2006, and it is anticipated to double again by 2011, making these mission-critical facilities the nation's largest commercial user of electric power. With major technology companies investing heavily in new data centers, it's no wonder Building Teams see these mission-critical facilities as a golden opportunity, and why they are working hard to keep energy costs at data centers in check.
| Aug 11, 2010
Green Guide for Health Care launches pilot program, looks for participants
In first quarter 2010, the Green Guide for Health Care, in collaboration with Practice Greenhealth, is launching a one-year Green Guide for Health Care Operations Pilot Program for healthcare organizations engaged in any or all aspects of green operations initiatives, based on Green Guide v2.2 Operations section.
| Aug 11, 2010
JE Dunn, Balfour Beatty among country's biggest institutional building contractors, according to BD+C's Giants 300 report
A ranking of the Top 50 Institutional 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
EwingCole to merge with healthcare specialist Robert D. Lynn Associates
EwingCole, a nationally recognized architectural, engineering, interior design, and planning firm with more than 320 professionals, today announced that it will combine its practice with Robert D. Lynn Associates of Philadelphia, a 40-person firm with a robust portfolio of healthcare projects. The combination will create the Delaware Valley¹s largest and most comprehensive firm with an emphasis on healthcare architecture, and a national scope and presence.
| Aug 11, 2010
Jacobs, Arup, AECOM top BD+C's ranking of the nation's 75 largest international design firms
A ranking of the Top 75 International 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
Architecture Billings Index flat in May, according to AIA
After a slight decline in April, the Architecture Billings Index was up a tenth of a point to 42.9 in May. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. Any score above 50 indicates an increase in billings.
| Aug 11, 2010
Construction employment declined in 333 of 352 metro areas in June
Construction employment declined in all but 19 communities nationwide this June as compared to June-2008, according to a new analysis of metropolitan-area employment data released today by the Associated General Contractors of America. The analysis shows that few places in America have been spared the widespread downturn in construction employment over the past year.
| Aug 11, 2010
Jacobs, Hensel Phelps among the nation's 50 largest design-build contractors
A ranking of the Top 50 Design-Build Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
