Hospitals return to construction mode as economy strengthens

In 2009, OhioHealth decided to take a hard look at its neuroscience capabilities. At the time, its program was the fifth-busiest in the state, and demographic changes, such as aging baby boomers, suggested that volumes could continue to increase. “All of that said this is a really robust area for future growth,” said Connie Gallaher, OhioHealth vice president.

The Columbus-based system this month opened a $300 million neuroscience center at Riverside Methodist Hospital, its largest facility. The project, which was funded with cash reserves, will allow the hospital to attract not only patients, but also neurologists. In addition, it will enable OhioHealth to offer private hospital rooms, a trend that has taken over the Columbus-area market, said Dave Blom, the system's CEO.

OhioHealth joins the ranks of a number of systems that are once again in building mode. After a period in which health systems largely turned their attention and capital spending to health information-technology needs, there are signs that the construction industry is getting a second wind—although OhioHealth is also in the middle of a major electronic health-records system conversion.

Most of the focus has been on outpatient services as healthcare increasingly shifts to lower-cost care settings. Health systems and hospital chains also are opening free-standing emergency departments to bring in additional volume. But even on the inpatient side, there's a greater emphasis on service line planning as hospitals seek to become more competitive in high-margin specialties. In addition to the improving economy, health systems feel more certainty around the future of the Affordable Care Act.

“The whole economy is on a slow but steady rise,” said Thomas Gormley, a Nashville-based project executive at AECOM, a global design and construction firm. “There seems to be a lot more money flowing into healthcare construction these days.”

In Dallas, the University of Texas Southwestern Medical Center in December opened the William P. Clements Jr. University Hospital, a move made possible by a $100 million donation from the late Texas governor for whom it was named. The new campus provides more space for research, offers patient rooms redesigned to create a more peaceful environment, and embeds a number of technologies such as videoconferencing at every bedside.

The bond market also suggests that hospitals are financing new projects. In Houston, Texas Children's Hospital is raising $195.7 million through the municipal bond market to fund a new 548,000 square-foot nearby facility at the Woodlands, due to open in 2017. An outpatient facility is expected to be operational as soon as next year.

Texas Children's is also building a 640,000 square-foot tower on its main campus that will allow it to expand its critical-care and surgical offerings and will include a helipad. That project, scheduled for completion in 2018, will free up space in its west tower, and allow it to invest additional capital in an emergency department redesign there.

Presbyterian Healthcare Services in Albuquerque is raising $237.2 million through the bond market, and will direct $100 million of those funds toward capital projects. The system is planning to spend $450 million over the next two years on capital expenditures.

Those projects include the six-story Rust Medical Center Patient Tower and Cancer Center, scheduled to open at the end of this year. The system also recently opened two medical clinics in nearby communities and has plans for two more.

“I'm not aware of any market where there's not activity,” said Dick Miller, president of Earl Swensson Associates, a Nashville-based architecture firm. “It's definitely picking up. There's a lot of activity and a lot of it's focused on outpatient.”

Projects that were on hold are being restarted and healthcare providers are hiring new project management staff, said Gormley, who expects demand to remain high. “There's still this jockeying to get into specialty services,” he said.

Certain states, such as Texas, have recovered faster than others, said Coker Barton, senior vice president and national healthcare director at Birmingham, Ala.-based Hoar Construction.

Construction projects depend on local needs. Rural hospitals, which serve a predominantly aging population, are adding skilled nursing and geriatric-psychiatric facilities, Barton said. In the suburbs, there's demand for free-standing EDs to serve patients who don't want to make the trek into the city for urgent care.

At OhioHealth's neuroscience center, the new space will provide more opportunities for clinical research. Patients also will be able to schedule office visits and diagnostic procedures at a single location. And design details, from soft color palettes to subtle lighting offer a more soothing treatment space.

“We did a lot of things to control the environment,” Gallaher said. “This was very much designed with the neuroscience patient in mind.”