Healthcare construction companies are discovering new worlds of opportunity-some domestic, some foreign and some unconventional.
MODERN HEALTHCARE's 19th annual Construction & Design Survey shows emergency room renovations and replacements and international projects are on the rise. In addition, the trend toward alternative medicine is altering building projects.
The survey of 1997 activity also indicates more hospitals are using the services of development companies to build without compromising their balance sheets.
Some of the reasons behind these new trends are:
Executives now view emergency rooms as the "front door" to the hospital, an important source of inpatients. Thus, they want to make these areas as inviting and efficient as any other department. This was reflected in a 25% increase in the number of emergency centers that broke ground last year, compared with 1996. It also could be seen in a 34% increase in the number of emergency centers designed in 1997.
International work, especially in developing countries, is booming. Asia, for example, seems especially likely to turn to U.S. companies for assistance when in need of a new facility. Some firms are devoting as much as 20% of their efforts to overseas projects. Cannon in Grand Island, N.Y., has doubled its foreign involvement over the past few years.
Alternative medicine is being accepted in many mainstream hospitals and clinics. The phenomenon is growing as more insurance companies cover alternative services.
Developers, a new business type added to the survey this year, continue to grow in popularity as hospitals choose to invest in their core business instead of bricks and mortar.
Although there was an 11% increase in the number of total projects completed in 1997, the total construction cost was almost unchanged. The number of projects was 3,644 in 1997, compared with 3,290 in 1996. However, the 1997 completed project cost was $11.56 billion, just a hairline below 1996's $11.58 billion. This suggests clients might be demanding lower price tags.
Of the 189 survey respondents, 135 were architectural firms, 15 were contract managers, 10 were design/build companies, 11 were developers, 13 were general contractors and five were program managers.
Emergency boom. The new trend in emergency-care construction is exemplified by 436-bed Sinai Hospital of Baltimore, which in 1993 began plans for a new emergency center.
The hospital had two options: It could gut the existing facility and build a new one, or it could build a new freestanding building. Because it had a lot of campus space to work with, it chose the latter.
ER-7, as the 34,500-square-foot facility was dubbed, did not come cheap. The bill totaled $16 million for the project, which was designed to focus on patient care and family convenience. The name ER-7 denotes the seven distinct care centers within the complex. The facility includes a "fast track" center, where patients with minor ailments receive quick attention. In addition, there is a chest pain evaluation center, an emergent-care center for the critically ill, an observation center for patients whose conditions require extended evaluation and treatment, a pediatric-care center, a trauma center and an urgent-care center.
Hospital administrators also met with executives of the Nordstrom department store chain, which is renowned for its customer service. They wanted to learn more about Nordstrom's philosophy and pick up some ideas on how good customer service could be fostered in the design of the center.
"Better service means better money," says Mohammed Saleem, principal of Anshen & Allen in Baltimore, the architectural firm for this project. "It has only been in the past few years that we realized the importance of emergency room care and the impression it leaves."
Besides valet service, private rooms, bedside registration and the fast-track center, ER-7 also features 22 family suites, which provide patients' friends and family with private, comfortable waiting areas.
Because the center has been open only a couple of months, statistics on productivity are not available. However, Sinai executives are confident of their investment. They have been running commercials to publicize their new addition during the popular TV program "ER."
Conroe (Texas) Regional Medical Center and its architects, Gresham Smith and Partners, Nashville, also implemented the fast-track idea in the design for an emergency room project, completed in February 1997. "The boom is late in reacting to the reality," says Thomas Wallen, a Gresham principal. "More patients are visiting the emergency room, and their complexities and noncomplexities vary. Therefore, the right type of space needs to be created."
The fast track separates the urgent and nonurgent areas so patients can receive the right treatment quickly. To increase efficiency, the facility reduced its number of treatment areas in the emergency room to 20 from 22. Conroe has been extremely successful. For instance, it increased the number of patient visits while reducing the length of stay. In 1997 the facility had 33,000 patient visits, compared with 31,000 in 1996, and the average length of stay dropped to 3.6 hours per patient in 1997 from 8 hours per patient in 1996.
"Some level of fast track is being integrated into every design," Wallen says. "You cannot create an efficient area without it. The bottom line is efficiency, flexibility and quality of care."
Foreign affairs. Of the 189 respondents to this year's survey, 16.9% completed foreign construction in 1997, up slightly from 14.2% in 1996.
Whitby (Ontario) Mental Health Center's plans to build a replacement facility began in 1992 with an international bidding.
John Cannon, a lifelong resident of the Canadian border region, won the contract. He thought his company, Cannon, could provide the quality of design the health ministry of the province of Ontario and the health center sought.
This $200 million project was funded by the province of Ontario. The 86-acre replacement facility serves about 20% of the Ontario province. Designed to be the flagship facility in Ontario, this 325-bed center comprises diagnostic, therapy and outpatient areas; an education center; a recreation center with a pool and a gym; a dining hall; support services and administration departments; and 725 parking spots.
On the other side of the globe is another hospital completed and occupied in January 1997. The owners of the American Hospital in Dubai, United Arab Emirates, realized a need for a healthcare facility there. In the past, most Dubai residents flew to either Western Europe or the U.S. for medical care. The facility's owners, who also own established hotels and wish to remain anonymous, modeled the hospital after one of their four-star hotels.
This $42 million project was launched in January 1993 and took Perkins & Will, Chicago, almost four years to complete. The 200,000-square-foot project houses outpatient and inpatient functions and resembles an American-style building.
"This hospital plays on the amenities portion," says Jocelyn Frederick, principal at Perkins & Will. "This medical mall features retail services such as famous-brand boutiques, flower shops and more." In addition, it features inpatient suites equipped with kitchenettes.
To keep travel costs down during the design and construction processes, Perkins & Will mailed their client a three-dimensional model of spaces and suggestions for furniture, fabric and materials for each department.
Developers. Although the development business category was added to the Design & Construction Survey just this year, it's not new in the industry. In fact, some of these full-service real estate companies have been around for at least a decade. Eleven of 20 known companies responded to this year's survey.
Real estate companies increasingly are becoming involved in healthcare development because hospitals are finding it necessary to keep their balance sheets as clean as possible.
Developers like Dasco Cos., West Palm Beach, Fla., make this happen by providing 100% of the capital required for the projects, leaving the hospitals the option to invest in their core business rather than buildings. Bruce Rendina, president and chief executive officer of Dasco, says company ownership of the facilities is through some type of partnership with the hospitals, physicians or both. In other instances, Dasco is sole proprietor.
Dasco became a wholly owned subsidiary of PhyMatrix, a West Palm Beach-based physician practice management company, in January 1996. Some of Dasco's clients include investor-owned healthcare giants like Columbia/HCA Healthcare Corp. and Tenet Healthcare Corp.
One recent project was a $90 million Palm Beach medical mall, which Rendina defines as occupying more than 50,000 square feet and including at least three types of outpatient departments combined with physician offices. The medical mall is owned by Meditrust, a Needham Heights, Mass.-based healthcare real estate investment trust, and it's operated by a partnership controlled by Meditrust Chairman Abraham Gosman.
The West Coast caught on to this trend some 10 years ago when Robert Rosenthal, president of Del Mar, Calif.-based Pacific Medical Buildings, formed a new company by buying three existing projects with his personal funds and loans. Some of his financial support came from private investor Jeffrey Rush, M.D., whose family built the first freestanding magnetic resonance imaging center in Dallas in 1985. The Rushes built a network of centers, which they later sold.
Jeffrey Rush is Pacific's general partner. His brother owns a major construction and development firm on Long Island, N.Y. The combined net worth of the Rush family is about $100 million.
"We can take full real estate risk because of the Rush family and their financial standing," Rosenthal says.
Just a few months old, the new outpatient building at St. Francis Medical Center in Honolulu is a good example of a Pacific project. The 110,000-square-foot, $35 million project includes medical offices, a renal dialysis center, a cancer center and a residency program. The building also houses Hawaii's only gamma knife facility for inoperable brain tumors, Rosenthal says.
The alternative way. As alternative medicine becomes more popular and insurers increasingly cover it, providers are building facilities to offer both traditional and alternative services.
Rob Hunter, president of the architectural firm Healthcare Environments in Pasadena, Calif., predicts alternative-care centers will move into affluent communities first and then into middle America as reimbursement programs become more accessible.
His firm is designing a facility in Santa Monica, Calif., that will combine the philosophies and practices of Eastern and Western medicine. Among the Eastern influences will be soothingly scented air and streams of water flowing throughout the facility.
The 15,000-square-foot project has an estimated price tag of just under $2 million. The completion date is uncertain.