Less is more
Although the Affordable Care Act encourages reduced costs for health care facilities, this has been a concern for hospital administrators since the recession. Regardless of the election’s outcome, health systems may remain unsure of their projected revenues. In fact, many are predicting declines in revenue. “Nobody is able to make big commitments, because they can’t do financial modeling to see if these projects will pencil out or not,” said Sheila Cahnman, group VP and regional health care leader based in HOK’s Chicago office, who said her firm has done a considerable amount of strategic planning for health care clients in recent years, but that few are moving forward with major projects.
While their projects remain on hold, health care clients are re-evaluating their infrastructure plans. Cahnman says they are starting to look for ways to make improvements, including upgrading existing chassis so they can support lean operations or improved patient satisfaction. “They will continue to push for improvements to lean their operations and increase their bottom lines,” Cahnman concludes.
The aging Baby Boomers, new technology, demand for single rooms, and an increase in the consumption of health care will determine decisions about new facility design, size, and location. Money-saving strategies include new hospital projects minus the frills, including overloaded patient rooms and non-critical amenities, such as atriums, fountains, and courtyards. Furthermore, futurists are predicting a dramatic minimalist change for facilities, including hospitals rooms without beds and bathrooms, reserved for patients only in need of acute care.
Hospital facilities may also eschew traditional design elements for more efficient use of materials as well as for increased flexibility to accommodate multiple uses and changes in the future. “We’re building hospitals to allow for wiggle room in the future because there may be other reforms and technical advancements down the line,” said Martin Valins, a principal at Stantec’s Philadelphia office.
Already, many construction firms are seeing more and smaller primary care projects and outpatient facilities over hospital “mega-projects” (see SIDEBAR: Back to School). According to the FMI Corp.’s report, new construction will focus on ambulatory facilities and consolidation of small physician-owned facilities. Increasingly, physician practice groups are working from leased spaces or have their own buildings. Because of technological advancements, which have led to minimally invasive surgeries that don’t require overnight hospital stays, even surgeries can be performed in these outpatient facilities.
“We’re seeing a lot of the specialty boutique-type hospitals,” says John Wright, president, Alterman, Inc., which has specialized in the health care market since 1923, performing construction, renovation, and maintenance of electrical, voice/data/video, and security installations for major hospital and research facilities in the San Antonio area. “Those are being driven by developers with physicians groups that perform specialty surgeries and treatment.”
Health care research facilities are seen as a staple in healthy regional economies. San Antonio, which emphasizes its position as a health care innovator and destination, boasts several research facilities. “We see those types of projects too,” says Wright. “We do some work at Southwest Research Institute and the Texas Biomedical Research Institute. There has been a fairly steady stream of new projects at both those facilities.”
Changes in project delivery are also being made in order to save on construction costs. Many construction firms are exploring alternative project delivery methods, such as design-build and integrated project delivery (IPD) systems. For instance, in 2010, Alterman began preconstruction services and design-assist, using building information modeling (BIM), on the new University Hospital in San Antonio. Through this system, Alterman provided input during preconstruction planning and services, including schedule development, constructability reviews, cost reduction assistance, sustainability study assistance, and assistance in equipment selection.
The use of BIM gave the firm an advantage when competition for projects increased during the recession. “The amount of work did go down for a little while, and you had small- to mid-size contractors bidding work that typically they don’t bid,” says Wright. “They started getting into our market, so we were seeing competition we weren’t used to seeing.”
Wright explains that the recession more than any uncertainty regarding the health care act was responsible for this fight for projects. However, even with added competition, his firm’s health care division hasn’t slowed down. “I’ve seen more health care projects since the Affordable Care Act first started than we did before,” he says. “I haven’t seen it slow down.”
Currently, the firm is working on providing all electrical construction for the 1-million-square-foot, 9-story acute care tower at University Hospital including an emergency/trauma center with 53 treatment and 10 trauma stations, 336 new beds and 84 future beds, and 30 new operating rooms. Installation includes normal power consisting of two 35kV circuits, essential power consisting of three 2000kW, 4,160V diesel emergency generators, UPS, lighting, and fire alarm with voice evacuation notification. The project is expected to obtain LEED 2.2 Gold designation at its completion in January 2014.
Although the firm’s current project portfolio consists mainly of new construction, Wright expects renovation projects to pick up by the end of next year. “After the end of next year, I would say there’s going to be a little more renovation,” he says. “Right now, the majority of it is new, but there’s going to be a mix of both.”
For instance, the firm recently completed a 320,000-square-foot hospital for Christus, but the Christus Santa Rosa Children’s Hospital is going to be mostly renovation. Baptist Health System is preparing for both a new addition and some renovation.
In fact, many hospitals are choosing to renovate and expand rather than build replacement campuses. “Renovation continues strong,” says the FMI report. Changes to existing facilities will make them more efficient, more technologically advanced, and greener. According to the American Society for Healthcare Engineering (ASHE), 73% of construction is currently for facility renovation and modernization to be greener and more patient-friendly and to update IT infrastructure.