Construction: looking up
Experts expect the healthcare construction market to reawaken for three reasons: the capital is there to borrow; whatever emerges from the healthcare reform debate, access to care will be expanded so more facilities will be needed to handle the volume; and the demand for new facilities never went away.
James Brownrigg, vice president and director of healthcare at Turner Construction Co., says a spike in municipal bond rates halted projects in 2008 and 2009—not a lack of demand.
“The money is available again,” Brownrigg says, but he added that the rules of borrowing have changed. Before, investors were just interested in an organization’s bond rating, but now—especially with the reimbursement picture so murky—he explained that buyers of 30-year bonds will be making deeper inspections of facilities and operations before embarking on a long-term relationship.
The bond houses that buy these 30-year bonds “are asking questions that were not asked before. People providing funding are asking more questions to evaluate the risks.” Brownrigg says a lot of campus planning and designing is going on, which won’t result in actual construction until late 2010 at the earliest, but should result in a lot of activity for the next three years and even more once access issues are resolved. “The demand for infrastructure is going to increase,” he says. “How can adding 47 million or some portion of that number to the market be bad? It can’t be.”
Mark Kearschner, director of construction services for the Premier healthcare alliance, says “people are nervous” but added that “projects are being pulled out of the mothballs,” and he expects healthcare construction to be on a small upswing in 2010—particularly in the South and West.
Projects such as the $190 million Clarian Saxony Medical Center near Indianapolis are moving forward. Work on the 44-bed facility was halted last February but resumed in October.
Brownrigg: Money for healthcare projects “is available again.”