Despite surging costs, healthcare construction is gaining momentum. According to a recent report from the Federal Reserve Bank of St. Louis, hospital construction spending is at a near record high. This growth is attributed in part to the upcoming pandemic, a new standard of care, and the need to build new facilities.
Hospital construction projects and spending increased 3.9 percent in 2014, accelerating to 8.4 percent in 2016, and 9.1 percent in 2017. According to FMI Capital Advisors, healthcare construction projects will grow at an average rate of 6.7 percent over the next five years. However, the construction industry is not immune to economic downturns. Some sectors are prone to fluctuations, including streets, highways, water and wastewater, and conservation and development.
While Texas, California, and Florida lead the list of states with the highest new construction projects, Illinois and New York are the most likely to increase their health construction spending. According to the study, Illinois is expected to increase spending by the most, by nearly $381 million over last year. In addition, Texas, California, New York, Pennsylvania, and Illinois have the highest increases in health care construction spending.
Hospital construction projects are getting more innovative. The use of recycled materials is growing. Additionally, hospitals are increasingly investing in 3D-printed walls and floors. Furthermore, hospitals are conducting energy, safety, and sustainability audits. This is essential for meeting sustainability goals, as well as improving the efficiency and reliability of equipment. Investment in packaged HVAC systems, air handlers, and temperature/humid controls is also growing.
One healthcare provider with over 100 hospitals faced mounting capital expenditures. Its patients were demanding high-end, modern facilities, and expensive technology. However, there was only limited standardization in design across its hospitals. With the help of McKinsey, the healthcare provider was able to maintain a high level of quality while reducing capital expenditures.
While full-scale hospitals take months to construct, emergency hospitals can be built in a matter of days or weeks. These hospitals are not meant for long-term use and may pose safety risks. They also typically do not have operating theaters or long-term care. Unlike full-scale hospitals, emergency hospitals are not commonly located in U.S. cities, so they require more investment.
The average cost of medical equipment in a hospital ranges from $300 to $400,000. It is important to understand that not all hospitals require the same equipment. Hospitals in rural areas need more expensive equipment, while those in metropolitan areas may specialize in a particular field. So, the amount of medical equipment that a hospital needs depends on its location, specialty, and size.