Healthcare Construction: Drivers, Challenges, and Solutions

Sept. 1, 2008

Learn about the key drivers and challenges facing healthcare construction

Most building owners and managers would rather do something other than venture into a building construction project or - worse - a renovation project. In most healthcare facilities, construction projects are a necessary evil. Whether it's a minor finish, a technology upgrade, or a campus-wide building program, construction projects can be expensive, unpredictable, inconvenient, and seem to last forever.

The Drivers of Healthcare Construction
Despite these frustrations, what are the driving forces for the owners and facility managers who undertake construction projects? The main drivers, all of which are particularly active in the current healthcare delivery system, are listed here.

Market pressures and competition. Competition among healthcare companies is a strong force in determining facility make-up. The look, feel, and function of a healthcare building can have a significant effect on the decision of a patient to select that healthcare provider, and on the decision of an employee to work there.

Some recently built or renovated healthcare building entrances give the impression of a fancy hotel vs. a place where clinical procedures occur; the recently completed Homestead Hospital in Homestead, FL, is a good example (pictured above). The main lobby has a large rotunda that opens into a 3-story atrium, and high-end finishes are featured. If all other things are equal, a "prettier" building usually draws patients and employees away from the competition.

The U.S. healthcare system is driven primarily by the reimbursement rules and rates of the largest single payer of healthcare services: the government (Medicare and Medicaid [CMS]). While most healthcare providers strive to meet the majority of the public's healthcare needs within their areas of practice, it's in their best interest to provide services that have the highest reimbursement rates and return the greatest profit. Changes or additions to the physical spaces are often required to house the changes in healthcare services in response to the reimbursement rates and rule changes by CMS.

Building age and functionality. In healthcare buildings, the priority is almost always to create an environment in which the clinical staff can deliver the best possible care to patients. These facilities are expensive to build, operate, and maintain. High-performance HVAC and electrical systems with emergency back-up systems are necessary because of the care required and the types of procedures performed. Where patient beds are present, the facility is required to operate 24/7. While first costs and life-cycle costs for the building can have a significant impact on the financial success of the healthcare provider, the healthcare building's ability to support quality, safe care is still the most important consideration; therefore, when a healthcare facility's age, condition, or ability to function begins to compromise quality or safety, changes or upgrades are required.

The age and condition of building components, systems, and design can also directly impact operational efficiency. The more efficiently a healthcare service provider's staff can function, the more revenue they can produce. The increasing costs and decreasing availability of qualified staff are also forcing healthcare operators to look for more efficient ways to deliver services. The attributes of a facility that can impact patient through-put and staff efficiency are:

  • The design/layout of the rooms.
  • The comfort of the environment for staff and patients.
  • The ability of the infrastructure to support the technology used.

When significant changes to these facility attributes are required to augment efficiency, they're usually accomplished through construction.

Advances and changes in technology. A significant component of our current healthcare system is the medical equipment and technology used to diagnose and deliver care. Today's patient is more educated and technologically savvy. As a result, healthcare providers are required to keep up with technology advances and adopt them as soon as possible so they can be the first to offer them and attract patients to their facility. Many factors drive the rapid changes and advancements in healthcare equipment and technology; the end result is almost always frequent changes to the facility and the systems that support them. In most cases, the only way to accommodate these changes is through additions or renovations.

Growth and changes in population. The U.S. population is aging; although Baby Boomers are getting the advertising and marketing attention, the truth is that all generations are living longer. The Boomers are the first big surge in the aging population demographics, but the numbers will probably never recede to the current young-to-old proportions. But, just because people are living longer does not mean that they're living longer, healthy lives. In many instances, advances in medicine are keeping people alive longer, but they're requiring more healthcare services later. As a result, providers are faced with predicting and building the correct capacity for the growing number of aging people who need an increasing amount of care. The good news for healthcare providers: Nobody predicts a reduction in the need for healthcare services. The challenge is determining and meeting the need for more healthcare facilities.

MRI equipment is an example of a medical technology that's constantly upgrading and evolving. In many cases, the only way to accommodate these technology changes is through additions or renovations.

The Challenges of Healthcare Construction
In many cases, healthcare building owners and operators look to construction to solve the challenges presented by the drivers in their industry; however, construction is usually a last resort because of the challenges that arise. Issues, such as the changing government reimbursement rules and requirements of other regulatory agencies with jurisdiction over healthcare providers and their facilities (e.g. the Joint Commission on the Accreditation of Healthcare Organizations [JCAHO] and state health authorities); the advancements in medical equipment, clinical procedures, and building technology; and the increasing expectations of the patient, not only drive healthcare providers to engage in construction to make these changes, but also make the implementation of this process difficult because they can change again during the process.

The most pressing issue in healthcare building programs today is capital cost and funding. Since early 2003, construction-cost escalation has dramatically increased by more than the predictable, low, steady rate of around 3 to 4 percent of the previous 10 to 15 years. Some recent studies state that the cost of a healthcare facility built today is double that of the same facility built in 2002. Where there was already a challenge in making expectations and desires for facility program growth and available funding meet, there is now an even greater disparity. To further compound this issue, the housing-lending collapse and the economic recession have made capital less available and more expensive.

How is healthcare facility development more challenging than other industries? None of the drivers for renovating and building healthcare facilities have diminished - even with increasing economic pressures - like they have in many other industries. The demand for healthcare facilities continues, regardless of the economy and cost escalation. Many people claim that healthcare construction is "recession proof," but that doesn't mean it continues with the same ease as in good economic times. It means that it'll still continue to grow at a moderate pace, but will be more painful.

This is an example of an MEP prefabrication mock-up for Miami Valley Hospital in Dayton, OH. Mock-ups are being done to reduce manpower and the project schedule.

Creative Responses and Approaches
With this information in mind, it's easy to understand why healthcare facility owners and operators want nothing to do with construction. While construction will never be an unnecessary evil, there are a few things that can make it a lot less evil.

The balance between first cost and designing for flexibility and adaptability to minimize the impact of future changes is difficult to evaluate. With increasing first costs and the consequential reductions in facility building program scopes, many providers are spending a little more on a reduced project to build in flexibility for future projects that they can't currently afford. If planned and designed wisely, these provisions can reduce the future costs and time involved in changing or adding specific or unforeseen services in upcoming years. Examples include:

  • Building unfinished or shelled space in strategic locations or entire floors in a building tower to provide room for expansion in service areas where growth is expected.
  • Designing and building acuity-adaptable patient rooms that are easily converted from standard medical/surgical rooms to critical-care rooms.
  • Building additional capacity into system infrastructure.

In terms of creative improvements being made on the project-delivery side to make building programs less painful and challenging, many different tools, practices, and approaches come into play. Many healthcare providers are changing the way they hire designers and builders, and are creating project-delivery teams to get more value out of their investments. An example of an innovative delivery method that's gaining acceptance is the integrated project delivery approach. It differs from traditional delivery approaches because the entire team - including designers, builders, and key design-assist subcontractors - is formed at the very beginning of the project to help the owner develop the scope and budget for the project based on the healthcare program and services being provided. The team members are selected based on qualifications, and the team is built on trust and a predetermined set of rules for sharing risk and rewards with an integrated form of agreement. The goal of this approach is to get all team members pulling in the same direction toward the common goal of a successful project. While some of the components of this approach seem radical, it's being adopted and has already resulted in successful projects for some of the major U.S. healthcare providers.

There are many tools being used to support integrated project delivery and Lean project-delivery approaches to healthcare construction projects. 3-D computer modeling technology can significantly improve the collaboration and performance of a project-delivery team. Using BIM technology for virtual design coordination of building systems, visualization of the design for owner review, and populating the models with schedule and cost information are the most common uses today. The technology has the potential to include much more building information in the models. Information, such as product and equipment specifications, operations and maintenance information, and any other building-related information relevant to the project, can be included in a model.

Another approach to improving the delivery of healthcare construction projects via 3-D modeling technology involves prefabricating sections or assemblies of MEP systems in fabrication shops and then erecting and connecting them in units in the field. This approach improves quality and safety, and reduces manpower peak demands and schedules. The early coordination of all systems required in a healthcare building is facilitated by the use of 3-D modeling. This provides a level of certainty and accuracy, allowing workers to build these systems ahead of time to avoid congestion and clashes between the systems and manpower in the field. 3-D modeling and prefabrication of above-ceiling MEP systems is going to be used in the construction of the patient-room corridors of the heart tower addition at Miami Valley Hospital in Dayton, OH, to reduce manpower requirements in the field and potentially reduce the project schedule (see the photo on page 80). The hospital also expects to gain the benefits of improved quality, safety, and jobsite cleanliness.

While the previous examples provided improvements in early decision-making and labor production, a final example offers improvement on the material and equipment side of construction delivery: Driven by recent increases in pricing and reductions in availability, some healthcare construction companies are re-evaluating the traditional procurement and management of the supply chain of materials and equipment. This change in approach strives to improve the sourcing, pricing, and availability of major commodity items in the construction of buildings by searching for the best available source, aggregating and leveraging purchasing volumes, and managing the supply chain to make sure it's available at the best time. This approach is similar to what many healthcare providers have done with the procurement of their supplies and equipment through group purchasing organizations.

There are many forces specific to healthcare that make construction necessary for it to prosper. But, there are also many opposing factors that make construction and renovation difficult and costly. Experienced healthcare facility owners and construction companies are able to overcome the challenges involved with a healthcare construction building program by developing creative ways of using old and new approaches and tools; however, the ones who create and deliver the most value on a healthcare project are the ones who work to understand the drivers and goals of each other, and identify innovative solutions together.

Walter Jones is vice president at Alexandria, VA-based Skanska's Healthcare Center of Excellence.

Voice your opinion!

To join the conversation, and become an exclusive member of Buildings, create an account today!

Sponsored Recommendations

Decarbonization 2024: How Digital Tools Minimize Your Carbon Footprint

Discover the untapped potential of digital electricity infrastructure in revolutionizing building electrification and decarbonization, unlocking a sustainable future while reducing...

Building Security & Technology Series: Webinar 3 - Proptech

This event was originally held on May 22, 2024and is now available for on demand viewing.Duration: 1 Hour eachGold Sponsors: Genetec, ISS, PrometheusSilver Sponsors: Eagle Eye...

Building Security & Technology Series: Webinar 4 - Lessons Learned

Date: May 29, 2024Time: 1:00 PM EDT / 12:00 PM CDT / 10:00 AM PDT / 5:00 PM GMTDuration: 1 Hour eachGold Sponsors: Genetec, ISS, PrometheusSilver Sponsors: Eagle Eye Networks,...