Healthcare construction company revenues soared by $3 billion last year, although the number of construction projects remained flat, according to MODERN HEALTHCARE's 1999 Construction & Design survey.
Construction costs jumped 28.5% to $14.86 billion from $11.56 billion the previous year, while the number of projects edged up to 3,687 from 3,642. Last year's survey showed cost growth of less than 1%. This reflects several trends in the industry, the most dominant being patient satisfaction. The push to offer more comfort features, such as private rooms with sleeping areas for family members, has made facilities more expensive.
MODERN HEALTHCARE's 20th annual construction survey reveals that some of the other forces affecting industry building are modernization, payer pressures, physical therapy, sports medicine, preventive medicine, mergers and an aging population.
This year's survey had 196 respondents, up from 189 last year. Participants included 131 architects, 19 contract managers, 15 developers, 15 general contractors, 12 design/build firms and four program managers.
In contrast to last year's results, foreign construction is down. Only 8.7% of the respondents completed foreign work, compared with 16.9% in 1997. Because of the economic slump overseas, foreign building averaged 7.5% of these companies' completed projects.
According to the survey, 135 older, less-productive facilities were brought up to modern standards in a drive to increase competitiveness in the marketplace and attract patients.
New demands. Several forces are driving the renovation/expansion movement. The healthcare market is becoming more sensitive to patient demands and increasing competition among systems. At the same time, managed-care organizations, Medicare and Medicaid have adopted more severe payment regulations.
Outpatient facilities are much in demand. The number of projects rose nearly 17% from those reported in last year's survey. Hospitals are trying to accommodate a greater volume of ambulatory surgery in a more homelike setting.
Saint Barnabas Medical Center in Livingston, N.J., retained AHSC Architects, of Tarrytown, N.Y., to convert a 230,000-square-foot office park complex into a new off-site ambulatory-care center. On the site of a former bank, AHSC connected three separate buildings by constructing glass atriums between them. The conversion cost a total of $26 million.
To provide a low-stress environment for patients, a generous amount of natural lighting was used. The hospital is now furnished like a fine hotel. The roof is constructed of translucent panels, and the atriums are primarily made of aluminum and glass. Extensive wood paneling and trim are used in public areas to add warmth to the spaces.
"Since it was a large, bulky office building, the medical center wanted to use natural light whenever possible, especially at the end of corridors," says Doug Gordon, AHSC vice president and principal. "The new atrium and lobby create a focal point for arrival and orientation of patients."
As one of the nation's most sophisticated outpatient healthcare facilities, the hospital provides patients with primary-care services-including examination and testing, imaging, surgery and rehabilitation-under one roof. The medical center has no inpatient beds but provides observation beds for stays of less than 24 hours.
Saint Barnabas includes specialty departments such as dialysis, cardiology, ophthalmology, speech and hearing, and diabetes care. Also included are patient-friendly areas such as a food court, a patient education space and a playroom/child day-care center.
The separation of work zones and public areas contributes to the smooth operation of the facility and improves the quality of life for building occupants. "All sterile areas are fully removed from the patients' end (of the facility)," Gordon says. "The staff can come and go without disturbing or interacting with patients in areas specified for (patients) and their rehabilitation."
Hot trends. Other hot construction trends going into the 21st century are alternative-care, preventive-care and sports medicine centers. Hospitals and healthcare organizations often combine these services in a single building or complex.
According to this year's survey results, completed construction for physical therapy and sports medicine rose 320% to 333 in 1998 from just 104 projects in 1997. Insurance companies also are embracing the health club idea as a cost-effective treatment alternative.
One of the largest new facilities in the country is the Westview Hospital Healthplex in Indianapolis, which covers more than 167,000 square feet and cost more than $11 million to build. The facility was designed as a health club with medical office buildings to continue care after patients leave the hospital. It also provides physical therapy for discharged patients.
The health club is operated in conjunction with Westview Hospital and St. Vincent Hospitals and Health Services, part of Daughters of Charity National Health System. Both hospitals are in Indianapolis. The complex opened in October 1998.
The project was completed by Browning Day Mullins Dierdorf Architects in Indianapolis. The firm has been involved in sports medicine and recreation work for more than 20 years. About 50% of its projects are healthcare-related.
Craig Mullins, president and chief executive officer, says his company was chosen because of its expertise with ventilation design, which can be difficult. For example, fumes from hazardous chemicals like chlorine used in indoor swimming pools can pose a problem.
The health club covers more than 73,000 square feet. It houses a basketball court, two volleyball courts, two squash courts, a day-care center, exercise equipment, a lap pool, a therapy swimming pool, saunas, steam rooms, a whirlpool and a massage room. Another 44,500 square feet are used for six tennis courts.
"The healthplex is the new front door of the hospital," Mullins says.
Other hospitals are thinking along similar lines. The construction survey results show that waiting area, lobby and entrance area renovations and expansions for outpatient facilities skyrocketed to 233 from 82.
"Westview Hospital is trying to move from being a sickness system to being a wellness delivery system," Mullins says. "They are moving from intervention to prevention, and this particular project embraces and serves the older population."
Coping with aging. Another major factor in construction is the aging of the population. That trend is creating more demand for assisted-living facilities and skilled-nursing facilities along with outpatient, post-acute-care, adult day-care and ambulatory-care facilities.
The number of assisted-living facilities rose 49% in 1998. There were 138 projects completed, with more than 7,000 beds and $703 million spent on construction.
Architects in the Birmingham, Ala., office of Nashville-based Gresham, Smith and Partners completed the Live Oak Assisted Living facility in Foley, Ala., last year. The $4.9 million, 560,000-square-foot complex is C-shaped and consists of 60 units, all on one level.
"Some elderly people may have limited mobility or short-term memory loss and need minimal assistance with things such as housekeeping. These facilities are giving the resident and the family options outside of traditional nursing homes," says Robert Gower, senior principal at Gresham, Smith.
The facility provides full-time nursing care for patients and is blocks away from the hospital. Also offered are several levels of care, depending on a patients' limitations.
Studio or one-bedroom apartment suites offer patients and their families the security of knowing that patients are eating a proper diet and are safe from injury or theft.
The ranch design makes the facility appear residential and makes it easier for elderly residents to get around. The facility uses numerous windows and glass walls to provide natural light in public areas, and each room is customized with bay windows to promote light, health and healing.
Merger pressure. Mergers and consolidations have forced several major changes for physicians and systems. Physician practices and hospitals are consolidating and often providing care at one site.
Cousins/Richmond, a development firm based in Atlanta, leases and manages a four-story, $27 million medical office building containing physician practices. The operation is sponsored by Northside Hospital, Saint Joseph's Hospital and Scottish Rite Children's Medical Center, all in Atlanta. Northside and Scottish Rite also offer outpatient services at the facility.
The office building sits on a corner that is about one-half mile from all three hospitals and is convenient for patients from all three facilities.
"Meridian Mark Plaza is unique because each floor has 40,000 square feet, which allows each hospital to use a floor to provide a specific specialty service," says John McColl, chief operating officer and senior vice president at Cousins/Richmond. "Our goal is to help the client carry out their mission and be as patient-friendly as possible," he says.