For hospitals planning a building program, one of the most fundamental questions is whether to construct a new hospital or expand/renovate the existing facility. Each hospital faces different circumstances, so this decision must account for the approach best addressing the long-term needs of the particular hospital, its medical staff and, of course, the community served.

How do you obtain all the information you need to make an informed decision about this, thereby avoiding serious mistakes and cost overruns? The answer lies in developing a thorough, systematic process. As a beginning framework, some organizations use 3-, 5-, or 10-year strategic plans based on projected facility or system needs; others perform extensive internal audits before consulting healthcare facility planning experts. Either way, start with a comprehensive understanding of your area's healthcare market. Establish clear statements of business and marketing objectives, as well as operational goals for the entire organization. Such factors as building functionality, operations, efficiency, staffing requirements, and upcoming technology advances in healthcare delivery will all affect the build-new-versus-renovate decision.

It is also important for hospitals to avoid making the decision too early in the process. The opportunity to design and build a new facility from scratch is typically very appealing for hospitals, and many architects and builders prefer it. Faced, however, with such an important decision, the best course of action may be to develop master plans for both a new building and an expansion/renovation, and then determine which alternative best meets your hospital's carefully determined needs.

Cost Factors

To grasp the comparative financial impacts of the two approaches, begin with an in-depth cost-benefit analysis, factoring in current and projected financial resources. Beyond basic design and construction costs, the price tag for new construction, renovation, or expansion can vary significantly depending on a broad range of issues, including:

  • Code compliance costs

  • Space functionality and department adjacencies

  • Available space for additional parking

  • Safety issues, such as fire prevention and sprinkler system compliance

  • The cost of new or upgraded landscaping, land acquisition, and utility hookups

  • Cost to close existing facilities

Hospital executives also must remain vigilant to prevent cost escalation during the planning and design phase of a building program. The opportunity to control costs and improve efficiency is greatest during the early design phase of a project. A case in point is Community Hospital of Ottawa, Illinois (figure 1), which faced steadily rising costs in the original design for its expansion program. Our firm recommended an alternative approach that not only resulted in substantial savings from the architect's original plan, but permitted enhanced departmental relationships, improved the flow of patient services, and better optimized the hospital's existing space.

Faced with escalating costs for its original expansion plan, Community Hospital of Ottawa, Illinois, asked HBE Corporation to recommend an alternative approach. The new design resulted in significant savings and enhanced departmental adjacencies compared to the original architect's plan

The hospital's goal was to improve and enlarge its facility to meet the growing demands of its service area. The alternative, more efficient design consisted of one- and two-story additions that wrapped around all four sides of the existing hospital, adding new radiology, emergency, OR, and ICU facilities. The most dramatic aspect of the program was the reversal of the hospital's orientation, so the entrance now faces the main thoroughfare. This change had two advantages: Key services and departments are now located off the main entrance for easy patient access, and the new entrance allowed parking facilities to be reconfigured for greater convenience.

A second expansion, completed in 2001, provided one full level of outpatient physical therapy, a cardiac rehabilitation center, and a fitness center. A third expansion is now under construction, consisting of a two-story addition with two endoscopy rooms, an emergency department waiting area, and a meeting/community room.

Like Community Hospital, Mission Hospital in Mission, Texas (figure 2), is relying on multiple expansions to support its growth. Three new additions were completed in 1999, and now the hospital has embarked upon a $19 million expansion/renovation program that will provide a new five-story patient tower and three single-story additions.

Mission Hospital in Mission, Texas, has launched a $19 million expansion project, which will include a new five-story, 129-bed patient tower and three single-story additions. An expansion completed in 1999 resulted in three additions and renovation of existing facilities

Project design not only determines the cost of a building program, but it also has a direct impact on the operating efficiency of the facility itself. A good example is the new Parkview North healthcare campus in Ft. Wayne, Indiana (figure 3), with its unique configuration of adjoining hospitals and medical office facilities.

Because they are connected, the new Parkview North Hospital and Orthopaedic Hospital at Parkview North in Ft. Wayne, Indiana, share support services, enabling both to operate more cost-effectively

The new complex includes the 38-bed, full-service Parkview North Hospital and the 24-bed Orthopaedic Hospital at Parkview North, one of the few orthopedic specialty hospitals in the United States. Each hospital has its own entrance, but because the two are adjoining, they share support services necessary for both facilities, such as materials management, dietary, lab and x-ray, and other ancillary services. This enables both hospitals to operate more cost-effectively and efficiently.

Infrastructure Considerations

In expansion/renovation programs, infrastructure is often a major factor in determining cost and feasibility. Key questions include the following:

  • Can the existing facility be expanded/renovated to provide enhanced efficiencies in terms of building functionality, operations, staffing requirements, departmental adjacencies, emerging technology, etc., or would a new hospital be more cost-effective in achieving this?

  • What are the life cycle cost issues involving utility efficiency and building life span?

  • What does a professional evaluation tell you about technical aspects, such as floor-to-ceiling heights, mechanical and electrical systems, and life safety issues?

In many cases, a facility simply may not be a good candidate for renovation because of age/obsolescence or other factors, such as aesthetic appeal—increasingly important these days in terms of public image. In other cases, an effective expansion/renovation often can achieve what is, in essence, a “new” building, inside and out, often at a significant savings compared to building new.

Sometimes hospital executives, developers, or outside consultants are too quick to dismiss an expansion/renovation alternative as too difficult or impractical. Even in complex cases, though, a creative solution often can be found that enables the hospital to efficiently reuse existing assets, and to proceed with minimum impact on operations through proper phasing and scheduling of the work.

Design Competitions

Some hospitals facing the need for a building program begin the process by conducting a design competition in which two or more teams composed of design and construction firms submit competitive design solutions, including schematic drawings and firm budgets. The hospitals can then compare the relative benefits of the different pro-posals, with no up-front financial obligation. Companies competing on the basis of design and cost usually invest a great deal more creative energy than fee-based design architects to secure the project. More-over, design and construction disciplines working together at the outset will help ensure the “constructability” of the project within the budget.

For example, for The University of Pittsburgh Medical Center (UPMC), which spends $250 million annually on design and construction, the decision to use a design competition for development of a new replacement hospital in Venango County, Pennsylvania, was grounded in an effort to ensure that this project provided the greatest value at the lowest cost with on-time delivery. UPMC invited local and national contractors and architectural firms to participate in the competition. Following telephone interviews, the field of bidders was narrowed to six teams, who were then invited to UPMC to present their proposals. Our firm was selected to design and build the new $49 million UPMC Northwest Hospital, which will be a 211,000-square-foot, 98-bed, four-level facility (figure 4). The true winner in this process, though, was UPMC, which had the benefit of comparing six well-thought-out plans without having to pay up-front design and development costs, as the traditional building process would have required.

To maximize value and control cost, The University of Pittsburgh Medical Center (UPMC) conducted a design competition for the development of the new UPMC Northwest Hospital in Venango County, Pennsylvania. The $49 million replacement hospital, designed and being built by HBE Corporation, is scheduled for completion in the fall of 2004

Involving Hospital Management and Staff

Ideally, the planning process in any building program should involve staff at all levels. Their input is important, not only in guiding the building project itself, but also in shaping the broader issue of the hospital's mission or vision.

A common pitfall of this approach, though, may be trying to satisfy an extensive “wish list” from numerous internal and external stakeholders. Hospitals often discover that certain features that people want don't necessarily meet the organization's needs. It is important that a knowledgeable designer discourage staff requests that would be unwieldy or result in out-of-control costs. Strategic planning typically requires that the hospital adjust its vision in line with the harsh realities of limited resources. Once key program priorities are in place, based on a master facility plan and cost-benefit analysis, a hospital should involve key department heads, physicians, and board members in the decision-making process.

If the hospital is considering new construction versus expansion/renovation, two internal teams can be set up to independently explore and advocate each approach. This will provide hospital executives with a comprehensive and objective method of making the best possible decision.


With up-front strategic planning, careful cost analysis, and involvement of key hospital managers and physicians in the decision-making process, hospitals will be able to select the building program that best meets the needs of the organization and the community. Ultimately, the hospital's business, marketing, and organizational goals will dictate whether a new facility or expansion/renovation provides that solution.

The methodology outlined in this article will enable the hospital's final design decisions to be both data-driven and intuitive. All organizational sides will have had their voices heard, and all options will have been thoroughly explored. HD

Stephen G. Dailey is vice-president of hospital consulting for St. Louis-based HBE Corporation, a design-build firm specializing in healthcare construction.

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Healthcare Design 2003 November;3(4):32-36