Survey responses varied widely. On average, the companies reported slow but steady growth in total dollar volume of construction and design services in the healthcare industry, but that only captured part of the picture. Many firms reported large swings year to year.
Forty of the 119 (34%) construction management, design, development, general contracting and architecture firms analyzed experienced either no increase or up to 30% growth year over year, while 22 (18%) saw either no decline or up to a 30% drop. Thirty-eight companies (32%) grew by more than 30% and 19 organizations (16%) reported a decline of more than 30%.
Providers were hesitant to invest given the political and policy uncertainty that mired the past two years, they said.
"Healthcare clients are still facing a lot of uncertainty, reimbursement is changing and decreasing, and the model of care is being forced to accommodate these changes," Pepper Construction Group wrote in the survey. Pepper saw its total dollar volume decline by 65% from 2016 to 2017. "As a result, clients tend to be focused on smaller projects, more renovations and outreach projects in their communities that are not on main campuses."
Providers are only building what is necessary, said Andrew Quirk, senior vice president and national director of the Skanska USA Healthcare Center of Excellence. The construction company's total dollar volume ticked up 5% year over year.
"Now, technology is in a much greater way informing what the architecture will be," Quirk said. "We got rid of function follows form. Operators are keenly attuned to the efficiencies of buildings they design and how they operate."
On the other end, some construction, development and design firms significantly benefited from an uptick in lower-acuity outpatient locations, behavioral health facilities, senior-living centers and adaptive reuse of existing facilities.
Virtua Health System in New Jersey is one of the many healthcare organizations that are transforming vacant retail buildings as they look to provide an all-in-one option for patients' healthcare needs closer to home. Virtua, with the help of architecture firm Francis Cauffman, is turning a 66,000-square-foot former supermarket across the street from its outpatient hub in Moorestown, N.J., into a cancer center.
Skylights will illuminate the main corridor with natural light and patients receiving infusion treatments will have views of a garden.
"We wanted our design to emphasize hope," said Aran McCarthy, a principal at Francis Cauffman.
Rendina Healthcare Real Estate is helping Campbell Clinic build a 120,000-square-foot outpatient center featuring an orthopedic clinical space, physical therapy services, imaging suites and an ambulatory surgery center that's adjacent to its main campus in Germantown, Tenn.
"It is going to be a one-stop shop for orthopedic patients," said Brad Shockley, Rendina's senior vice president of design and development. "Staff will be more efficient because they don't have to drive to different locations and it will improve patient satisfaction."
Campbell Clinic is building a 120,000-square-foot one-stop shop for outpatient care.
The drive to boost patient satisfaction and streamline clinical operations coupled with the progress of new technology, undersupply of medical office space and a ballooning aging population will fuel demand. Consolidation has also bolstered systems' financials and will kick-start capital spending, experts said.
The impact of acquisitions by retailers like CVS Health's of insurer Aetna will be interesting to see, according to officials from Gilbane Building Co., which saw its total dollar volume jump 80% year over year, led by growth in urgent care, standalone emergency centers and outpatient centers.
"A focus on lowering the cost of construction and care delivery will continue to offer the largest volume of growth in terms of projects in 2018, but if a few replacement towers hit the market, they could reflect the largest volume in terms of dollars," the company wrote in its survey questionnaire.
Consulting services are also in high demand. Providers will look to upgrade equipment to save on energy expenses, create flexible clinical spaces that can optimize new technology and reduce their footprint to maximize return.
"We are continuing to advise providers on a very wide range of strategic and operational issues, including on how to maximize the value and efficiency of their facility assets," HKS Architects wrote in its survey responses. It experienced a modest decline of 5% in its year-over-year dollar volume.