Hospital construction costs skyrocket

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Issues as diverse as Hurricane Katrina, Chinese use of steel and high oil and copper prices are impacting the cost of hospital construction in the midst of an industry-wide building boom. For about 20 years, hospital building costs rose only two to three percent a year. Since 2004, however, the cost of building a hospital has risen as much as ten percent a year, averaging "between $265 and $275 per square foot…up from less than $100 in 1995," according to the Birmingham Business Journal.

Jim Poole, a Birmingham-based hospital construction firm manager, observed that the expensive new buildings are often more than than hospitals can afford. "I worry about this for our industry because reimbursements haven't changed and these healthcare guys [have] to provide the same quality of care for the same reimbursement, but the costs keep going up and up and up," he told the paper. But hospitals face a lot of competition (see story below) and can't afford to run outdated facilities. This is just one of many factors that play into high healthcare costs.

For more on skyrocketing hospital construction costs:
- read this piece from the Birmingham Business Journal

PLUS: The Journal also explores how hospital administrators can work effectively with general contractors while building a new facility. Article