MHA's Executive Briefing

Report examines health care construction trends

A new report from the Healthcare Financial Management Association examines trends affecting future health care construction, according to AHA News Now. Prepared in partnership with GE Healthcare Financial Services, the report says factors driving new construction include aging facilities, increases in patient volume, changes in demand for new technology and a continued shift of care to outpatient settings.

“Consumer needs are also driving the hospital of the future,” said HFMA President and CEO Richard Clark. “Health care villages – where you can do everything from visit a doctor to visit a gym to enjoy a healthy meal on one campus – are an example of an emerging trend to meet those needs.”

New Face for an Old Hospital

There is no question that the hospital industry has been in the midst of a building boom. Between 2000 and 2005, the industry spent $100 billion to build new facilities and expand existing ones, according to the U.S. Census Bureau.

And it seems the construction cranes will be around for a while; the hospital industry is expected to invest about $200 billion in new construction from 2005 to 2015, according to The Robert Wood Johnson Foundation. Yet for many hospital chief executive officers, one of the most challenging questions is not necessarily where to build the new facility, but rather what to do with the old hospital building.

That was the question CEO Heidi Lennartz faced in 2002 when Mission Community Hospital moved the last of its services - acute psychiatric - out of its old hospital building in Panorama City, CA. Finding the cash to remodel the old hospital was a difficult endeavor, she says. "We had just finished construction and didn’t have a lot of cash reserves to invest in a new building.”

For the full story, click here.

Avoiding 'builders' remorse'

Few things are more discouraging than the remorse of executives and trustees who realize too late that scarce capital invested in facilities has not met their organization's strategic, service and business goals. There is a reason that accountants refer to facilities investments as "sunk costs." These are "bet the ranch" projects. Getting it wrong is simply not an option. Based upon the authors' observation and experience in working with hospitals and health systems throughout the various phases of the facilities development cycle, this article offers suggestions for avoiding builder's remorse.

Read the full article in Trustee magazine.