Prognosis Positive

Health-care construction will maintain its vitality in ‘08

By Debra Wood

Despite downturns in residential and other markets, hospitals and health systems throughout the Southeast will continue to upgrade or replace facilities at a hectic pace in 2008, pushing the value of new construction starts up significantly.

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“The health-care market is terrific,” says Steve Gressel, senior vice president of Skanska USA Building of Atlanta. “There are a lot of opportunities. Georgia may be a little less so because a lot of building is finishing up. There are still plans some for construction but not quite at the pace of the last couple of years.”

McGraw-Hill Construction Research & Analytics projects a 23% increase in health-care starts this year in the Southeast region of Florida, Georgia and the Carolinas, for a $3.7 billion total. That’s up from the $3 billion in new health-care projects that started in 2007. 

“Projects are getting larger, and fewer of them are being released,” says Rod Creach, senior vice president and principal in charge of health care for Bovis Lend Lease in Maitland, Fla. “Many are getting delayed because of a host of reasons.”

Bovis currently has eight projects under way in Florida.

Creach says that, in many instances, hospitals established their budgets before recent “unprecedented” escalations in material and labor costs and now are faced with needing more money to complete their projects. One example he gave was West Kendall Medical Center in Miami, which was awarded in 2004 and is still delayed.

Boca Raton Community Hospital announced an indefinite hold on construction of its $400 million replacement hospital and academic center, the Charles E. Schmidt Medical Center, due to financial losses and local economic conditions.

Market Trends

Florida and North Carolina are still hot, and South Carolina is more stable, Gressel says. Work includes replacements and renovations.

Trey Sanders, regional vice president for health care at Brasfield & Gorrie in Kennesaw, Ga., says most hospital systems are completing master plans, looking out about 10 years to anticipate needs. He says those systems are purchasing land as far as 60 mi from the city for satellite hospitals.

In addition to dealing with an increasing population that is older and more in need of services, as well as obsolete structures unable to accommodate modern technology, health systems want to operate more efficiently and create a more therapeutic environment, Gessel adds.

“It’s competition,” he says. “Even small community hospitals feel compelled to do things to prevent people from going to other cities or towns nearby. In middle- to large-size cities, competition is a big driver.”

Gressel says that people equate nice-looking facilities with quality care. Up-to-date hospitals also attract physicians and staff who want to work with the latest technology.

“Bigger rooms and the latest equipment are functions of the highly competitive market in health care,” Creach says. “They are trying to provide something the competitors are not.”

Creach adds that in most cases the general level of finishes have improved, both in public spaces and patient rooms.

Robert Levine, senior vice president of the Turner Construction Co. health care group in Nashville, Tenn., says that nationally health systems began upgrading earlier in the decade. He now sees a leveling off of health-care starts, something he attributes primarily to escalating material and labor costs, which hit 8% last year and are projected at 7% this year.

“You can cut a swath across the bottom third of the country, and that’s the busiest,” Levine says. “The Sunbelt is where the demographics have shifted, and we are seeing more pressure on hospital development.”

Levine says hospitals are reversing a 25-year trend and are now adding beds to either meet current demand or prepare for the future.

Turner is building the Cape Fear Medical Center Valley Pavilion, a $92 million, 90-bed expansion of a Fayetteville, N.C., hospital. Groundbreaking took place in December 2005. Scope of work included demolition of existing buildings, construction of a new parking deck and six-story bed tower and renovation of existing spaces.

Levine says there is some interest in sustainable designs, mostly from academic medical centers, although community facilities are starting to inquire.

Specialty centers

Construction of specialty facilities remains stable, with no big increases, Gressel says.

Sanders, on the other hand, has found an increased interest in cancer centers.

“It seems to be a major focus everywhere we work,” Sanders adds. At this time, however, Brasfield & Gorrie does not have any cancer center projects, he says.

Skanska began building the $60 million, three-story Boca Raton Community Hospital Lynn Cancer Center in June 2006. The 100,000-sq-ft project is scheduled for completion in August.

At the University of North Carolina-Chapel Hill, Skanska topped off the $144 million, 429,000-sq-ft North Carolina Cancer Hospital in September. The project includes outpatient facilities and a 50-bed hospital. Work should wrap up in summer 2009.

Skanska also began work in February 2007 on the $258 million, 480,000-sq-ft, nine-story Shands Cancer Hospital at the University of Florida in Gainesville. It includes 192 private rooms, diagnostic and therapeutic oncology care. Completion is planned for September 2009.

N.C. Stays Hot

At Duke University in Durham, N.C., Skanska recently completed the 77,000-sq-ft, two-level Duke Medicine Emergency Department Expansion, with 23 adult beds and 12 pediatric beds. The company is also building the Duke Medicine Hospital Addition for Surgery, an eight-story, 132,600-sq-ft project scheduled for completion in June 2010.

T.A. Loving of Goldsboro, N.C., and McCarthy Building Cos. of St. Louis have teamed up to build the $110 million Pitt County Memorial Hospital-Eastern Carolina Cardiovascular Institute in Greenville, N.C.

“We needed some national health-care expertise, but we wanted to keep a local contractor engaged,” says Tim O’Donnell, chief design and construction officer for the owner, the University Health Systems of Eastern Carolina.

The six-story, 168-room, 375,000-sq-ft center includes six operating rooms. Patient rooms will be outfitted to serve critically ill and other cardiac patients. Construction began in February 2006 and is expected to wrap up in September.

Brasfield & Gorrie’s Kennesaw office is overseeing construction of a $116 million, six-story North Patient Tower at the Northeast Georgia Medical Center in Gainesville, Ga. The 454,000-sq-ft addition includes a central energy plant, 300-ft-underground utility tunnel and 738-space parking deck. The project is scheduled for completion in January.

Florida’s Robust Market

“Florida is a hot bed of activity,” Gressel says.

Skanska began construction in April 2006 on the $175 million, 445,000-sq-ft Gulf Coast Hospital Consolidation and Renovation project for Lee Memorial Health System in Fort Myers. The 220-bed facility replaces two aging hospitals Lee Memorial purchased for $250 million from HCA in 2006. The new hospital will have 22 operating rooms.

“We see a lot of OR expansions,” Gressel says. “Surgery is the lifeblood of a hospital. Two-thirds of revenue is generated directly or indirectly by the OR.”

This summer, Skanska will wrap up a $153 million, four-year, phased project for Tampa General Hospital. The 350,000-sq-ft project adds a new emergency department, more operating rooms, women’s center, intensive care suite and digestive diagnostic and treatment center.

The company began building a $55 million, 143,000-sq-ft, 70-bed replacement hospital for Glades Regional Hospital in Belle Glade in fall 2007. 

Brasfield & Gorrie of Lake Mary, Fla., topped out a $150 million, 16-story addition to Florida Hospital Orlando in June. The 600,000-sq-ft facility includes a cardiovascular institute and an enlarged emergency department. The project is on schedule for an end of 2008 completion. A 24-ft-diameter glass curtain wall architectural element will run the full height of the building and rises 80 ft above the roof level.

At Florida Hospital Memorial Ormond, Robins & Morton of Orlando is continuing work on a $155 million, 600,000-sq-ft, 12-story replacement hospital. The 245-bed facility topped out in December. Project manager Ron Bowes expects completion in summer 2009.

Robins & Morton also is building a $124 million five-story, 435,000-sq-ft patient tower at the Dr. P. Phillips Hospital for Orlando Regional Healthcare. The project includes a central energy plant and renovations and will wrap up early in 2010.

Bovis recently began St. Joseph’s Hospital-North in the Tampa suburb of Lutz for St. Joseph’s-Baptist Health Care in Tampa. The $142 million, 400,000-sq-ft project is seeking a LEED-NC certified rating and is expected to wrap up in 2009.

The company also is working on a new 100-bed hospital in Viera for Health First of Melbourne, Fla., now in design, and a $46.8 million, 155,236-sq-ft, three-story addition to Palm Bay Community Hospital in Palm Bay, Fla., which will increase bed capacity from 60 to 152.

Useful sources:
St. Joseph’s Hospital-North
http://www.sjbhealth.org/body_north.cfm?id=1102

East Carolina Heart Institute
http://www.uhseast.com/cardio_body.cfm?id=132

Cape Fear Medical Center Valley Pavilion
http://www.capefearvalley.com/construction/index.htm