Is Recovery in Sight?
While noting that healthcare construction has taken a “bit of a breather” in the last two years may be an understatement, a new report from consulting firm FMI also says the market will recover. And we're talking a double-digit recovery.
This week marked the annual release of FMI’s 2013 U.S. Markets Construction Overview, which reported that construction-put-in-place (CPIP) growth rates are expected to grow overall by 5%, and up to even 7% in 2013.
But what’s more important is the firm predicts healthcare CPIP to reach double-digit growth by 2015, reching record highs of around $52.6 billion, the report states.
FMI says the expected surge is predominantly a product of aging baby boomers’ demand for care and less about any economic growth. But the real hitch comes in regard to healthcare reform.
“[The law] reaffirmed by the Supreme Court, will continue to be the elephant in the room that could add millions of newly insured needing healthcare, depending on what the next Congress will do after the elections,” FMI states.
In terms of what those projects will look like, the firm agrees with what many industry pros have been predicting—more ambulatory care centers and consolidations of physician-run practices into health systems
Here is a wrap-up of the additional trends noted by FMI as shaping the healthcare construction landscape:
- Total personal healthcare expenditures are on the rise, growing from $1.1 trillion to $2.1 trillion between 1999 and 2009, including a rise in Medicare, Medicaid, private insurance, and out-of-pocket expenses.
- The percentage of adults ages 18 to 44 with private insurance took an 11% dip between 2000 and 2010, while Medicaid coverage increased by 5%. At the same time, that same group of adults saw an increase by 5% in those without coverage.
- Healthcare construction dropped 10% in 2010 and was flat in 2011—but, again, strong growth is predicted by 2014 and on.
- The boomers alongside an uptick in new technologies and expectations for single-bed rooms will shape future design decisions.
- Renovations and modernizations continue to represent the majority of construction projects at 73%, with those updates often focused on sustainability, IT infrastructure updates, and patient-friendly design.
- And, finally, healthcare construction is expected to use more modern techniques going forward, including prefabrication, BIM, and integrated project delivery.