Construction, Health Care, and Real Estate

Skanska exec predicts increase in hospital construction

Affordable Care Act is a done deal so hospitals will ‘retool’ with outpatient facilities.

November 21, 2012
| By Pete Daly |
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Skanska exec predicts increase in hospital construction
Skanska serves the Michigan market from offices in Kalamazoo and Detroit. Photo via fb.com
The “big thing” right now in the hospital construction industry is the growth anticipated in the next two years, according to Andrew Quirk, senior vice president in charge of Skanska USA’s health care division.

Quirk said the increase nationwide is expected to move from 2 to 3 percent in 2012 to 6 to 8 percent in 2014, and 2014 may see a double-digit increase in health care facilities construction.

“The way it was prior to the financial fallout of 2008,” he added, saying that “there is a huge upside for design and construction of health care space.”

Skanska USA is a division of Skanska AB of Stockholm, Sweden, one of the largest construction companies in the world. Skanska USA has been involved in a lot of health care construction, including at Holland Hospital and right now, at Detroit Medical Center, where it and a partner, Jenkins, are building a $59 million cardiac care facility. It also got the contract for the recent $115 million renovation and expansion of the MidMichigan Medical Center in Midland.

Skanska USA, which has an office in Kalamazoo, also built the Gun Lake Casino, a new terminal at the Kalamazoo/Battle Creek International Airport and a $67 million project for Battle Creek Public Schools.

Quirk said the November election — and the uncertain future of the Patient Protection and Affordable Care Act — seemed to be the last hurdle in front of hospitals that had plans to “start retooling a little bit.”

“I think we’re already starting to hear a buzz,” said Quirk. “Some projects will be released in 2013 for sure, probably by the second quarter at least.”

Hospital CEOs Quirk has talked to lately have mentioned the same thing to him: They had already begun changing their health care delivery model since PPACA was passed in early 2010, and now they can move ahead with their plans.

“What they are doing is moving to more of the outpatient model,” he said, the idea being to treat patients before their problems become so serious they require hospitalization.

Medical office buildings will be more comprehensive and more of the specialty centers will be outpatient-focused, said Quirk.

With all the political controversy over PPACA over the last two years, hospitals had been “reluctant to spend any money, other than what they were forced to, for upkeep.” Now, he said, the momentum is growing to either build outpatient facilities or renovate existing hospital space — “retooling hospitals,” he said.

Construction companies are seeing hospitals around the nation renovating emergency departments “to make them more efficient, resizing them.”

“The interesting thing is, with the 30 million-plus people about to come under the health care system in the next year, that’s not equating to new beds being added to the system. What hospitals are actually doing is renovating, making floors more efficient for … seeing patients,” said Quirk.

Quirk was asked if the trend toward private patient rooms in new hospitals will continue, at a time when health care is being forced to hold down its annual double-digit cost increases to the consumer.

“Yes. Just about everywhere, they are going to continue that trend, I think, until almost every hospital bed in the U.S. is going to be (private),” replied Quirk.

“I think it’s also linked to the Affordable Care Act, where you’re responsible for the care outcome,” he said, because it is now accepted that the clinical outcome of care in a single-patient hospital room is “much better than having a semi-private room. And so that’s going to continue.”

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