State of the U.S. healthcare building and design industry
Many feel that the healthcare building and design industry was born in 1988, when The Center for Health Design's (CHD) founders convened the First Symposium on Health Care Interior Design at the La Costa Spa & Resort in Carlsbad, California. It was the first time that healthcare executives, design and construction professionals, product manufacturers, and related professionals (about 500 total) came together to explore how the design of the built environment affects the quality of healthcare. It also represented a fundamental shift in thinking about healthcare facilities and opened the door for more design creativity and innovation.
Planetree, founded about 10 years earlier, had begun to introduce the concept of patient-centered care and healing environments, but on a very small scale. At the time, less than $10 billion a year was being spent on new construction or renovated facilities in the United States. “In the 80s, healthcare was not considered a desirable market segment in the field of interior design, thought to be institutional and restrictive, with little room for creativity,” says Louise Nicholson Carter, AAHID, IIDA, EDAC, RID, principal and director of Healthcare Interiors for Morris Architects. “Healthcare product options were extremely limited and poor. There were few healthcare specialty manufacturers, and those that were in existence were driven by functional needs, with little emphasis on aesthetics.”
Jocelyn M. Stroupe, AAHID, IIDA, principal, director of Healthcare Interior Design for OWP&P, agrees: “One of the primary changes has been a shift from a focus on high-tech and facility design based solely around function to one where the experience of those who use the spaces-caregivers, family members, and patients-are considered more equally and that the experience is expressed as an important design consideration,” she says. “The expectation that healthcare buildings could be beautiful did not always exist. This is changing dramatically, as hospitals look to respond to their competition but also value the impact of design on outcomes, such as staff retention and recruitment, patient and family satisfaction, increased market share, and philanthropy.”
Last year, about 3,500 professionals attended HEALTHCARE DESIGN.08 (the conference CHD is now associated with), while spending on new and renovated healthcare facilities topped $47 billion. Approximately 150 hospitals and 300 outpatient centers, nursing homes, pharmacies, and home care agencies are now using the Planetree model. It is hard to accurately estimate the number of professionals in the United States who are part of the industry (see sidebar), but it includes architects and interior designers who specialize in healthcare, facility managers working in healthcare facilities, healthcare product manufacturers, academic institutions that offer healthcare design degree programs, and a variety of associations and nonprofit organizations, as well as public and private healthcare systems, hospitals, long-term care/senior-living owners/operators.
“Healthcare interior design has gone from focusing on decorative materials and furniture 20 years ago to a hybrid role between interior design and medical planning,” says Linda Gabel, AAHID, IIDA, senior associate, NBBJ. “With evidence-based design, we are focusing on patient/staff safety first, wayfinding, room function and detail, daylighting and artificial lighting design, framed views, fine details, forms, and visual textures. The integration of our role has grown rapidly, and this is supported by the LEED process for design, BIM [Building Information Modeling], and integrated project delivery (IPD) models of business.”
“The most significant change in healthcare over the past 30 years has been moving the focus of just providing healthcare services to providing healthcare as a business,” says Rick Abbott, healthcare principal/vice-president, HDR, the nation's largest healthcare design firm. “This has brought on the interest in operational issues, evidence-based design, and cost-effectiveness.”
Healthcare has been enjoying a building boom for the past 5-10 years, mostly due to the need to replace aging facilities that were built during the Hill-Burton era, reduce bed shortages, accommodate new technology, and serve an aging patient population. Favorable interest rates also helped fuel new construction. The current recession has put a halt to many projects, but many believe the boom is not over yet. According to Modern Healthcare's 2008 Healthcare Design and Construction Survey published in March, more than $88 billion worth of new facility construction and renovation was in the design stage. The U.S. Government reports $47.6 billion in healthcare construction spending for 2008 (including hospitals, medical office buildings, and long-term care facilities). According to FMI, a management consulting and investment banking firm for the construction industry, the total will fall to $43.8 billion in 2009, with not much change until 2013, when they predict it will jump to $52.7 billion.
“When the recession hit and the market crashed, almost every hospital with a major building project put it on hold,” says Robert Levine, senior vice-president for Turner Construction, the nation's largest healthcare builder. But, as he acknowledges, except for the favorable interest rates, the drivers of the boom are not going away, and this will create pent-up demand. Besides financing, the other factor for the slow down is healthcare reform. “The threat of the unknown of healthcare reform is causing uncertainty,” observes Levine. “Once the unknown is gone and the economy comes around, the healthcare industry will figure it out and move forward.”
Healthcare futurist Ian Morrison believes that in the short term, healthcare reform will put pressure on the economics of hospitals, which will affect the projects underway or planned. “In the long term, healthcare reform will likely change the reimbursement system to reward quality, punish hospital-induced errors, and pay for outcomes rather than volume,” he says. “Broader reimbursement reform and public policy will place greater emphasis on ambulatory and community-based services-including home and workplace-and less rewards for procedure producing palaces.” However, he warns, these changes will take a long time to implement and reach full effect.
“This means designers must straddle the current world and create enough flexibility in design to be able to manage in the new world of reimbursement for outcomes, which may take 10 years or more to achieve in full,” he concludes.
Right now, two big issues facing healthcare leaders, according to Morrison, are “Can we afford it at all?” and “Where do we get the money?” This, he believes, puts even more pressure on the healthcare design and construction industry and healthcare leaders to make the patient safety, quality, and business case for better buildings.
Jim Browning, vice-president and director of Healthcare for Turner, and colleague Levine are concerned that financial pressures may make healthcare facilities more “commodi-sized” because they can't afford to include extras, particularly if the research and data to back it up are limited. “If you can't get an administrator to spend the money when there is science, how are you going to do it with some of the softer stuff?” says Levine.
“The economy has brought to the forefront the importance of financial performance and a demonstrated return on investment for the decisions made in the design of facilities,” says OWP&P's Stroupe. “The design team needs to be prepared to address such issues. Healthcare providers cannot afford to make mistakes in the design of their facilities, whether it is planning for new construction or a replacement of existing finishes.”
Although evidence-based design is still an emerging field, many in the industry acknowledge that there is a need to qualify a professional's knowledge and establish a context and process for evaluating, interpreting, applying, and measuring data. Some, however, are cautioning the field to be more realistic, modest, and qualified in the claims of evidence-based design's ability to affect outcomes.
“We should look to the history of environment-behavior research in the 60s and 70s to understand the pitfalls,” says David Allison, AIA, ACHA, professor/director of Graduate Studies in Architecture + Health at Clemson University, and a member of The Center for Health Design's Research Coalition. “Early claims based on limited studies, which were then often misused or misunderstood by designers, led to the design of architectural settings that ultimately failed to deliver as promised-at times dramatically. The whole field of architecture then pulled away from research as a result.”
“As an industry, we need to validate these assumptions with new research in order to be able to truly determine their effect,” observes Stroupe, who is one of the first design professionals to become EDAC accredited. “There is an expectation that evidence will be used to support design, and we are challenged to ensure that it is used properly.” She thinks that the current scrutiny and debate about evidence-based design is healthy and will result in credible evidence that can positively inform healthcare projects.
In terms of the research, Roger Ulrich, PhD, Fellow, Center for Health Systems and Design at Texas A&M University, a pioneer in the evidence-based design movement and lead author of “A Review of the Research Literature on Evidence-Based Healthcare Design” (Center for Health Design and Georgia Institute of Technology, 2008), acknowledges that there are still lots of gaps, but the evidence linking the design of the built environment to outcomes is growing. “This is particularly true in the areas of infection and safety,” he says. “There have been scores of new studies on infection from the medical community every few months. And the launch of the HERD Journal has placed a new emphasis on quality evidence-based design research.”
Ulrich believes that it is important for more funding to become available at the federal level to support large-scale, multi-year, evidence-based design research projects. “There are lots of forces in the United States and abroad-nursing shortages, infection rates, falls, mistreatment of pain-that all point in the same direction, that signal there is no end in sight for evidence-based design research,” he observes.
Green and Lean
Other processes besides evidence-based design are influencing how healthcare facilities are being planned and designed. These include IPD, BIM, Lean, and LEED for Healthcare. The green design movement is finally impacting healthcare, with 49 LEED-certified buildings and 264 more registered to become LEED certified. The LEED for Healthcare accreditation program will be formally launched later this year. But more than that, the healthcare industry is also becoming more environmentally friendly in its operations. According to Gary Cohen, codirector of Healthcare Without Harm, a nonprofit advocacy organization for environmental health and sustainability, at least 1,000 hospitals in the United States are working on environmental sustainability issues, which, in addition to green design, includes reduction of chemicals, reduction of waste, energy efficiency, reduced water consumption, etc.
“The evidence that changes in the built environment can improve patient safety and worker safety is strong and getting stronger,” he continues. “The evidence that reducing chemical use in hospitals and reducing reliance to fossil fuels can help prevent illness is strong and getting stronger. The healthcare sector needs to incorporate this new evidence into its core mission and business plan.”
Kaiser Permanente, which is currently carrying out a $36 billion capital construction program involving plans to build, renovate, and expand more than 150 hospitals between now and 2014, is incorporating sustainable and energy-saving features into its facilities. Some of those features that are now Kaiser design standards include permeable pavement; PVC-free rubber floors and carpet; motion-sensor-operated faucets, toilets, and lights; heat-reflective roofs; and cogeneration plants that cut C02 emissions nearly in half. Kaiser is also researching additional ways to reduce toxins and greenhouse gas emissions, and to conserve water to provide healthcare in a way that protects the environment and our communities, now and for future generations.
Kaiser also has been the major force behind the formation of the Global Health and Safety Initiative (GHSI). This coalition of seven hospital systems and three nongovernmental organizations-Health Care Without Harm, Practice Green Health, and The Center for Health Design-is promoting and facilitating the adoption of a “no harm” agenda at the policy and system level to create safe, sustainable facilities. GHSI is still somewhat in development, but has the potential to impact the industry in a big way.
Some estimate the market potential is $2 billion a year for clinical spaces alone-more if you factor in administrative areas. Furniture giants such as Herman Miller, Nurture by Steelcase, KI, Krug, and Global command the largest market share in terms of sales, and in a down economy, many manufacturers suddenly shift into healthcare-often by simply marketing their existing products to healthcare.
In recent years, Herman Miller and KI have built their healthcare business by acquiring smaller specialty companies such as Nemschoff, Brandrud, ADD, and AGI. After attempts at selling its existing furniture lines to the healthcare sector, Steelcase founded Nurture three years ago to specifically develop and market healthcare furniture. Other Steelcase-owned companies with healthcare offerings, such as Brayton and DesignTex, help bolster Nurture's product line.
“Healthcare is different,” says Michael Love, president, Nurture by Steelcase. “Product needs and characteristics are not the same as offices. Steelcase found this out twice before in its history, before launching Nurture. The aesthetics, palettes, and attributes are different. You need to be concerned with infection control, clean-sweep areas, sleepers, and high-performance surfaces. There also is more customization of exiting products.”
Love says that another factor is that the sales cycle is much longer in healthcare. “Many times, decisions are made one to three years before a facility opens and companies are not willing to wait this time to see a return on their investment,” he offers. “Also, their sales forces don't understand healthcare and have a difficult time speaking the language with clients, architects, and designers.”
Current challenges and opportunities
While no one is quite sure what healthcare reform will bring, the evidence is growing that the design of the built environment can help improve quality, lower costs, reduce errors, and save lives, all key objectives of healthcare reform plans.
Healthcare reform aside, government stimulus money is already flowing to some U.S. providers. According to a recent article in the San Francisco Chronicle, stimulus funds are providing $851 million to about 1,500 community clinics nationwide to help pay for new equipment, facility improvements, and adoption or expansion of the use of health information technology and electronic health records.
According to a recent article in AHA News, a bright spot for healthcare construction is the Federal Housing Administration's (FHA) Section 242 Hospital Mortgage Insurance program. Up to 99% of construction loan amounts for projects such as remodeling, expansion, modernization, and equipment purchases are insured under this initiative. “Federal backing can shave percentage points off the interest rate and mean the difference between going forward on a project or not,” the article says. “The program has not been popular with hospitals because of the federal red tape involved, but hospital construction experts say it is worth a look, especially for small, rural hospitals that don't have a bond rating.” HD
Sara O. Marberry, is an author, blogger, tweeter, and Executive Vice-President of The Center for Health Design, which is located in Concord, California. She has worked in the healthcare building and design industry since 1988 as a marketing consultant, speaker, and nonprofit executive.
Top 10 healthcare architecture firms by fees
Perkins + Will
Hellmuth, Obata, & Kassabaum
Source: Modern Healthcare, March 2009
Top 10 healthcare systems by revenue
U.S. Veterans Affairs Department
Tenet Healthcare Corporation
New York-Presbyterian Healthcare System
Catholic Health Initiatives
Community Health Systems
Catholic Healthcare West
Source: Modern Healthcare, December 2008
By the numbers
U.S. Hospitals: 5,700
U.S. Long-term Care/Senior Living Facilities: 70,000
Members of the American Institute of Architects/Academy of Architecture for Health: 5,339
Members of the International Interior Design Association who specialize in healthcare: 1,349
Facility managers who work at hospitals that are members of International Facility Management Association: 400+
Sources: AHA, Long-Term Living, AIA/AAH, IIDA, IFMA
Healthcare Design 2009 September;9(9):26-32