In the wake of the recent news of esteemed architecture firm Karlsberger shutting its doors forever, I have been re-evaluating my thinking. Given a number of indicators, I was under the impression that things were looking up a bit out there on the front lines.
At a session titled “Research on the Future of Health Care Construction: An FM Perspective” at the recent ASHE PDC 2011 conference in Tampa, Florida, Jeffery Campbell, PhD, of Brigham Young University, and two of his students--Brian Sorensen and Kimberly Mendez--shared results from an independent study that sought to establish a baseline of the perspective of owners and facility managers for the next five years. The good news is that the group forecasted steady growth, stating that after the all-time low in 2008-09 (the largest industry decline in 50 years), healthcare construction has actually seen a steady rise.
Between those findings and lots of anecdotal evidence gathered by talking with various industry folks, you'd think that things were starting that slow walk uphill toward recovery. But now comes the Karlsberger closing, as well as continued reports from the construction industry to the contrary. I wonder, are things just as bad as they have been? Are they worse?
One of the things that I had predicted around this time last year was that we would start to see some of the larger firms swallowing up some of the smaller firms. While we have seen some of that already, I look for that trend to continue both in the A/E world, but in the healthcare systems as well. But to what end for the industry? Or for the public? Are we headed toward a handful of mega-firms and uber-systems? Are the days of the large independent numbered?
With all that in mind, where do you see the healthcare design industry today? Is it healthy or hurting? Is there an end in sight? I am deeply curious to hear the thoughts of those in the field, so please do respond here or e-mail me if you prefer not to have your comments be made public.
Comments
consolidation
Todd,
In terms of consolidation among hospital organizations and medical groups into larger and more comprehensive integrated health systems, you're absolutely right, that consolidation is continuing and indeed ramping up.
Driven by a number of industry and policy trends, physicians are increasingly seeking "protected status" either as direct employees of hospital-based organizations, or in some form of integrated relationship; while smaller, standalone hospitals are becoming rarer and rarer except in rural areas.
What's more, with numerous reimbursement pressures coming down the pike from federal healthcare reform--particularly as related to the new accountable care organization/shared savings program, value-based purchasing, the patient-centered medical home, and the mandate around reducing readmissions, the economics are now tilting hospital organizations very, very strongly towards consolidation under ever-larger umbrellas.
One added factor in all this that we're seeing from our end of the industry is the impact of the HITECH Act and meaningful use on all this. These core clinical information systems are tremendously expensive--larger hospitals and integrated health systems are spending upwards of $100 million dollars on comprehensive systems--and the economics of that kind of spending further promote organizational consolidation. Indeed, those standalone community hospitals that can't afford to implement core EHRs and other systems are going to be further endangered both in terms of reimbursement cuts (after 2015), and with regard to the ability to compete in their local and regional markets for patients--and for physicians.
So you're absolutely right about what you're seeing--the consolidation express is definitely on a roll these days, and looks to continue in that mode for the foreseeable future.
All the best,
Mark Hagland
Editor-in-Chief, Healthcare Informatics