The elephant in the room
According to FMI Corp.’s report, the driver for growth in the health care market for the remainder of this year and into next isn’t necessarily the economic recovery, and the June 28 Supreme Court decision hasn’t put any fears to rest. “This is a factor of baby boomer demographics more than an economic boom,” says the report. “The national health care law, reaffirmed by the Supreme Court, will continue to be the elephant in the room that could add millions of new insured needing health care, depending on what the next Congress will do after the elections.”
Richard J. Ducci, president and CEO of Ducci Electrical Contractors, Inc., Torrington, Conn., agrees that the aftermath of the Supreme Court decision could be more detrimental to the health care market than any controversy leading up to it. “The decision on its own hasn’t changed anything,” Ducci says. “The projects we’ve been working on and bidding have been on the books and were budgeted long before the Supreme Court ruling. There’s more a question of the overall uncertainty since this thing has been kicking around for the last couple of years, really.”
There’s now an urgency, says Ducci, to get these projects out to bid and get them built. “Nobody really understands what this thing is going to mean,” he says. “There’s a lot of speculation, and health care facility administrators don’t want to be left in the dark in two or three years with that project they had in the works and not be able to get it out. So, long before the Supreme Court ruling, there was some impetus to get these things out and built because of that expected
uncertainty once this thing all plays out.”
Despite the trend toward smaller, sleeker facilities, in 2010, Ducci Electrical Contractors finished the electrical contract on the 500,000-square-foot, $34-million Yale New Haven Hospital Smilow Cancer Center. The project included radiology and diagnostics departments, operating room suites, and several floors of patient rooms. The project, which required the demolition of the existing hospital facility and construction of the brand new hospital, took more than three years to complete.
Ducci Electrical Contractors’ scope of work included installation of all MEP systems, nearly 3-million feet of copper wire, and 12,500 fixtures. Ducci performed 3D CAD drafting and located every piece of equipment, duct, pipe, medical gases, and other utilities on a 3D BIM system. During this, the firm installed massive amounts of switchgear, roof-mounted generators, and all other MEP equipment with well-coordinated move-in paths and final locations. Particular challenges included the downtown site with no on-site storage or office space.
During the recession and the controversy surrounding the Affordable Care Act that followed, Ducci remained active in the health care market with projects such as this one. “We’ve done an extraordinary amount of health care work over the past many, many years,” says Ducci. “Like many kinds of work, it ebbs and flows over time, but in the last three or four years, we’ve done an enormous amount.”
In addition to the New Haven Hospital, the firm completed contracts on two big projects and some other small ones. Ducci also expects several projects to come to bid within the next six months to a year. “There’s been a tremendous amount of health care work in Connecticut in the last two or three years, and there will be in the next couple of years out,” says Ducci, who is less optimistic about health care spending once the Affordable Care Act goes into effect. “I think after that, then you’re going to really see the repercussions of it. Then, I think you’re going to see a drop-off.”
Ducci is predicting a dramatic decline in three or four years. “We’re budgeting tens of millions of dollars for new projects soon,” he says. “Those are all happening inside of the next year. So far, in this market in large health care, there’s been no drop-off in this state. Now, what’s going to happen in three or four years, that’s anybody’s guess. But my guess is we’re going to see things slowing down.”