Renovate or Build New: The Right Prescription

August 31, 2008
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Existing buildings can pose very expensive challenges

The healthcare industry is facing an epidemic of challenges to its business model. Its facilities as well as the baby boomer population, are aging concurrently, leading to a recent healthcare building boom that will continue for decades. Along with growth challenges are several other concerns: ever-increasing financial constraints, increased value placed on physician integration and patient satisfaction, and the problems of legal and quality issues facing the industry. With all of these headaches, many hospital leaders are questioning whether their existing facilities can be adapted to respond to these new demands or whether new construction is the prescription for future financial wellness.

Strategic direction and market dynamics

The demographic baseline: According to the U.S. Census Bureau, the segment of the population aged 65 and older will represent 19.7% of the population and a total of 71 million people by 2030, compared to only 12.7% (35 million) in 2000. This group is the largest user of healthcare resources, and thus a significant increase in the demand for healthcare services is anticipated.

The varying nature of the services being demanded will continue to change. More emphasis will be placed on wellness, convenient outpatient services, 23-hour interventional services, assisted living, and increasing shifts to oncology, neurosciences, orthopedics, and vascular service lines. In response, many healthcare facilities have shifted from a single monolithic hospital structure to a series of coordinated facilities that house different services on a large campus or sprinkled throughout a market.

Community location, access, and campus growth potential must also be jointly considered when deciding whether to funnel resources into an aging facility or to start from the ground up.

Facility and site constraints

As providers begin to define solutions to meet today's facility requirements, they increasingly find themselves out of options when developing existing space consistent with contemporary design standards and best practices. New types of spaces are necessary to keep pace with medical equipment, technological advances, and care delivery trends relative to privacy and flexible, functional space.

Many healthcare providers have developed short-term solutions to immediate problems, resulting in limited opportunity for rational expansion and fragmented facilities with dysfunctional space adjacencies. Retrofitting older facilities to current industry standards proves costly, if possible at all, and typically results in undesirable space quality variations in the facility. Older facilities may be bound by arterial roadways, residential development, and other business developments. Expansion or “replace-in-place” strategies are often hindered by these physical factors, as well as issues relative to zoning and community NIMBY (not in my back yard) opposition.

Even if the size of the site and the layout of current facilities are not barriers to renovation, building infrastructure elements frequently are. Post-tensioned structures severely limit the ability to effectively retrofit space for adaptive reuse. Elevator and vertical transportation cores are typically landlocked, with no room for significant upgrades or the additions required for increased patient, visitor and staff traffic. The shallow floor-to-floor heights of older facilities (10′6″ to 12′ versus the 15′ to 16′ required today) and outdated structural designs may not allow appropriate space or loading capacity for new medical technologies, efficient/safe MEP design, or information technology infrastructure.

The increased scrutiny on life safety, patient safety, and environments of care (EC) standards from The Joint Commission puts many facilities in need of upgrades to critical infrastructure components, which proves to be challenging, costly, and disturbing.

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