Currently Reading

Healthcare construction weathers the recession

Healthcare construction weathers the recession

August 11, 2010
This article first appeared in the 200912 issue of BD+C.

Healthcare construction spending grew at a compound rate of more than 10% for seven years through mid-2008, but has stalled since then. The stall, however, still represents better growth than almost any other construction market during the recession, which deepened as a result of the fall 2008 credit freeze.

During the stall, hospital construction spending increased 9% from the period before the credit freeze, while spending for nursing homes and other residential care facilities dropped 20% and spending for specialized medical office buildings fell 17%. Hospital construction spending is projected to remain steady through 2010, rising only as a result of higher project costs.

Hospital managers are enjoying a steadily rising revenue stream from patient care, but offsetting that are concerns about possible cuts in fees from states for “free care” and cuts in Medicaid and Medicare. As a precaution, some projects have been trimmed back or deferred.

The recent slowing trend for medical offices and residential care buildings parallels trends in other developed financed sectors, although the slowdown began later and so far has been less severe. Some developers lost credit access because of weakened income and balance sheets. Others lost credit access because lenders are concerned about cash flow coming from new capacity in a depressed economy. Bank examiners have also been steering regional and local lenders away from nonresidential mortgages. As a result, those two small commercial healthcare sectors will continue to decline, along with other commercial properties, through the winter. Following that, they will decline further because spending for other commercial properties will have begun to expand and projects in the pipeline will have fallen substantially.

Look for healthcare construction spending to return to a 10% annual growth pace in 2011, reflective of the usual cyclical surge after a recession. The rebound for hospital construction spending results from delayed stimulus plan funding and the resumption of work that was put on hold while healthcare was debated in Washington. —Jim Haughey, BD+C economist

Related Stories

Products and Materials | May 31, 2024

Top building products for May 2024

BD+C Editors break down May's top 15 building products, from ​​​​​​​Durat and CaraGreen's Durat Plus to Zurn Siphonic Roof Drains.

Construction Costs | May 31, 2024

Despite challenges, 2024 construction material prices continue to stabilize

Gordian’s Q2 2024 Quarterly Construction Cost Insights Report indicates that supply chain issues notwithstanding, many commodities are exhibiting price normalization.

Products and Materials | Apr 30, 2024

Top building products for April 2024

BD+C Editors break down April's top 15 building products, from CLiC On-demand Privacy Glass to NovaCore Thermal Insulated Sheathing.

ProConnect Events | Apr 23, 2024

5 more ProConnect events scheduled for 2024, including all-new 'AEC Giants'

SGC Horizon present 7 ProConnect events in 2024.

75 Top Building Products | Apr 22, 2024

Enter today! BD+C's 75 Top Building Products for 2024

BD+C editors are now accepting submissions for the annual 75 Top Building Products awards. The winners will be featured in the November/December 2024 issue of Building Design+Construction. 

Products and Materials | Mar 31, 2024

Top building products for March 2024

BD+C Editors break down March's top 15 building products, from multifamily-focused electronic locks to recyclable plastic panels.

Plumbing | Mar 18, 2024

EPA to revise criteria for WaterSense faucets and faucet accessories

The U.S. Environmental Protection Agency (EPA) plans to revise its criteria for faucets and faucet accessories to earn the WaterSense label. The specification launched in 2007; since then, most faucets now sold in the U.S. meet or exceed the current WaterSense maximum flow rate of 1.5 gallons per minute (gpm). 

Products and Materials | Feb 29, 2024

Top building products for February 2024

BD+C Editors break down February's top 15 building products, from custom-engineered glass bridges to washroom accessories.

Windows and Doors | Feb 28, 2024

DOE launches $2 million prize to advance cost-effective, energy-efficient commercial windows

The U.S. Department of Energy launched the American-Made Building Envelope Innovation Prize—Secondary Glazing Systems. The program will offer up to $2 million to encourage production of high-performance, cost-effective commercial windows. 

Products and Materials | Jan 31, 2024

Top building products for January 2024

BD+C Editors break down January's top 15 building products, from SloanStone Quartz Molded Sinks to InvisiWrap SA housewrap.


More In Category


Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021