MAX data shows construction projects on the uptick across the country
By Caroline Anschutz
Hospital and healthcare-related construction thrived in 2014. According to data from the Major Accounts Exchange (MAX) and multiple sources such as Becker’s Hospital Review and Health Facilities Management, a publication of the American Hospital Association, the trend looks to continue in 2015.
After a couple of years of decline in construction, things picked up last year, in part due to the Affordable Care Act (ACA), which, along with the economic slow down, likely contributed to a downturn in the first place. Now that most of the uncertainty of the ACA has passed, IDNs are expanding in part to meet the demands that more insured Americans will place on the system. IDNs are also more focused on outpatient care, meeting the demands of value-based versus fee-for-service care, and reducing costs.
The MAX is currently tracking more than 1,800 construction projects that are estimated to cost $5 million or more and are in various stages of completion, from announced but awaiting CON approval to nearing their scheduled opening date. In 2014, the MAX reported more than 500 new projects (estimated to cost $5 million or more).
A February 2014 survey by Health Facilities Management[1] found that 51 percent of respondents are “considering the ACA in senior leadership discussions about potential changes needed to existing facilities or campus design,” compared to only 34 percent in 2013. The survey was completed by almost 500 hospitals and health systems, and it also reported that IDNs are focused on ambulatory care settings, urgent care, and emergency department patient flow.
The survey also found “hesitancy” around new hospital construction. In 2014, MAX data tracked plans for approximately 55 new hospitals, compared to about 70 in 2013, a decrease of about 20 percent. According to the AHA survey, approximately 41 percent of respondents said they are “less likely or not likely to proceed with plans [for new hospitals] because of the ACA.” Some health systems are also scaling back on the size and complexity of larger projects, but nonetheless are moving forward with projects that may have stalled in 2012 or 2013.
These trends definitely reflect a change in thinking since the recession and introduction of the ACA, when new hospital construction was booming. MAX data indicates that the Southern Atlantic region is seeing the biggest boom in construction. This region includes Florida; Georgia; Maryland; North Carolina; South Carolina; Virginia, Washington, DC; and West Virginia. It’s safe to predict that the construction will continue to prosper in 2015, with a definite shift in focus over just a few years ago.
[1] http://www.hfmmagazine.com/display/HFM-news-article.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle/data/HFM/Magazine/2014/Feb/0214HFM_FEA_CoverStory