Healthcare executives plan further expansions

Still faced with the need to replace obsolete facilities and mounting demand for services created by an aging Baby Boomer population, healthcare officials are planning to keep project pipelines bulging and funding spigots open wide, at least for the next several years. In a recent survey on capital planning and facilities management issues of 200 senior healthcare executives, 69% said that they expected their institutions to undertake major expansion within the next three years. Larger institutions with heftier capital budgets are even more likely to embark on expansion within that time. Eighty-nine percent of executives at institutions with budgets of $5 million or more said the probability was high that their institutions would commence a major capital facility expansion program.

The online survey, which was conducted by Bayer Consulting, White Plains, N.Y., for Turner Construction Co., New York, is another indication of the staying power of healthcare, one of the most robust of the nonresidential building sectors in the past few years. Healthcare construction spending growth rates have been in or near double digits recently (17.4% in 2002 and 7.9% in 2003), and this year spending is forecast to grow by another 9.3%, according to Jim Haughey, economist for BD&C's parent company Reed Business Information.

The healthcare boom "shows no signs of slowing down," said Robert Levine, Turner's vice president of healthcare, upon the survey's release. Even segments of the market, which had been shrinking, appear to be making a comeback. While the trend in healthcare has been toward outpatient procedures, for the first time since 1975, the number of acute-care beds in the U.S. is on the rise, said Levine.

As one might expect from healthcare executives who foot the bill for projects, reducing cost ranked as the most important consideration when planning a capital project, just ahead of maintaining quality, followed then by design excellence, maximizing the program, completing projects more quickly, soliciting input/building consensus, reducing risk, and improving staff communications.

Although lump sum bid is still the most-used method for managing capital construction projects, executives gave it significantly lower ratings than construction manager-at-risk and design-build in its effectiveness in maintaining project quality and completing projects more quickly. Seeing lump sum bid as having "clearly outlived its usefulness," Levine said that he expects more healthcare companies to use construction manager-at-risk on larger projects.