Construction: looking up

Modern Healthcare - - Special Report -

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.

—An­dis Robeznieks

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.”

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