In an effort to generate revenue and bring services closer to where patients live, healthcare companies are building smaller clinics and outpatient centers.
Healthcare Construction Trending Smaller Post-Pandemic : U.S. hospitals, according to the American Hospital Association, lost $323 billion in 2020 revenue, primarily due to the elective and non-emergency procedures that were canceled last year so that COVID-19 patients could be given priority. The association estimates that 2021 will see losses between $53 billion and $122 billion.
“That’s enormously hurting the bottom line [for] all these [healthcare] facilities,” said Walter Marin of Marin Architects, “and so that has limited the capital projects that the hospitals are doing.”
This flies in the face of many projections at the beginning of the pandemic that healthcare construction — and the contractors working within that specialty — would not see the same uncertainty that other sectors have. After all, hospital construction was deemed an essential service even in parts of the country where other types of construction projects were shut down.
Part of the hospital capital cash problem, said Mike Pedersen, strategy and market development director at Mortenson, is that hospitals are still tussling with the federal government and private insurers over COVID-19 patient reimbursements, which do not lend themselves to the same patient volume projections that hospitals use in their budget forecasting,
One year into the pandemic, it’s a mixed bag as far as project activity, said John DiCapua, executive vice president at AECOM Tishman.
There are some clients, he said, that are still working on increasing their surge space, or areas that can be quickly converted for different uses in case there is another pandemic or for additional waves of COVID-19 patients. And then some projects have been put on hold, he said, while, at the same time, other clients are planning hundreds of millions of dollars’ worth of projects.
“There are cautious and optimistic clients across the board,” Di Capua said.
Smaller centers
Healthcare Construction Trending Smaller Post-Pandemic : Aside from lessons learned during the pandemic, though, future projects look very similar to pre-pandemic ones. Healthcare facilities, Marin said, will continue to look a lot more like hotels, with a focus on luxury and making patients and visitors feel at home, from room decor to the quality of waiting room chairs.
“It looks like you’re going into a five-star resort and not a hospital,” Marin said. “The hospitals are all heavily investing in making those a much more pleasant environment.”
The trend toward specialty clinic construction, Di Capua said, will also continue. Pushing procedures like laser eye surgery and follow-up checkups and appointments out of the main campus allows the main campus to be more efficient, he said.
Another advantage, Di Capua said, is that specialty clinic and surgery centers also keep those undergoing relatively simple procedures away from where the very sick and most vulnerable are being treated.
Large hospitals, Pedersen said, are investing in these facilities because they’re closer geographically to the patient as well. This is especially important during and post-pandemic because many are homebound and don’t want to travel far for healthcare services.
“The data is very clear,” he said, “that the consumer — the patient — when they have the choice, is going to choose convenience.”
In an effort to get more services closer to patients, he said, hospitals will likely start building new, relatively smaller clinics in the 20,000 square foot range versus the standard 50,000 square foot and 100,000 square foot facilities that have been so popular.
An emphasis on outpatient care
Healthcare Construction Trending Smaller Post-Pandemic : Another reason healthcare providers are making the move toward smaller care centers, including those created in partnership with outlets like CVS or Walgreens, Pedersen said, is revenue.
“Almost 50% of revenue for health systems comes through outpatient facilities,” he said.
But this move toward smaller facilities doesn’t mean construction opportunities for large hospital projects are going to vanish.
“They’re never going to go away,” Pedersen said. “There’s still a major demand for the large campuses, especially the large academic medical campuses. That’s where research and training take place, and that’s generally where you’re going to go when you have an important procedure.”
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