After reaching $30 billion in 2008, the health care construction market fell to $24.4 billion in 2010 and $23.0 billion last year, according to McGraw-Hill Construction’s (MHC) Dodge Project Center. Through May of this year, total starts (in square footage) dropped 24%, out of which hospital construction was down by 30%. “Hospitals appear to be taking the brunt of the cuts,” said Jennifer Coskren, a senior economist with MHC, who attributes the declines to an increase in hospital mergers and continued uncertainty about the economy, as well as the debate over health care reform legislation.
However, on June 28, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act, the health care law of 2010. Coskren told Architectural Record the ruling should help jump-start projects, even while the economy continues to limp along. “Now that the uncertainty is gone, thanks to the Supreme Court upholding the constitutionality of the law, we feel that the industry will be able to move more confidently ahead with capital expenditure plans,” she said. “Demand for health care services is expected to increase, thanks to the more than 30 million people who now will have access to health care insurance.”
In fact, in its “2nd Quarter 2012 Construction Outlook Report,” FMI Corp., engineering and construction management consultant, is forecasting growth in the health care sector. The firm is expecting health care construction to rise 3% in 2012 and, by 2015, to strengthen to double digits, achieving record highs around $52.6 billion (Figure).
Despite this, some industry executives are less certain about the future of the construction health care sector. Although they predict the health care industry will see an increase in construction projects if the law continues to be upheld, there remains serious political opposition to it in Washington, D.C. Congressional Republicans are pledging to repeal the law, and although President Obama has vowed to veto any such measure, November’s presidential election is fast approaching.
Indeed, many hospitals are in holding patterns as they “try to determine the future,” according to Dan Noble, executive VP and director of design at HKS Architects and current president of the AIA’s Academy of Architecture of Health. Noble told Architectural Record the Supreme Court’s decision helps, but it doesn’t fully solve the problem. “If the Supreme Court ruling falls in line with the November election there will be a greater chance of getting something done,” he said. “This, in turn, will allow our clients to move forward, benefiting all design professionals big and small.”