Hospital construction--and costs--booming

Current and potential cost overruns on a replacement hospital in New York and ongoing VA hospital projects underscore the cost of building such facilities. 

The replacement facility for Long Island (N.Y.) College Hospital could cost as much as $800 million to $1.1 billion in construction costs, and another 50 percent added to that in "soft costs," such as designing and equipping the facility, far higher than the current estimates, Crain's New York Business reported.

"Our basic position is you can't build a new 400-bed hospital in New York for $300 million," James Crispino, chief executive of the hospital architect firm Francis Cauffman, told Crain's. The firm provided a detailed analysis of the costs of constructing the hospital to another firm, Trindade Value Partners, which lost out on the bid to manage construction of the new facility. Brooklyn Health Partners, which won the bid from the State University of New York system, estimated the construction cost at about $300 million.

Meanwhile, the Department of Veterans Affairs has had difficulties controlling costs on some of its hospital projects, according to the Fiscal Times. As a result, these construction projects are currently running about $1.5 billion over budget, with some projects still years from completion. The Denver VA Hospital on its own is running close to $500 million over budget. Another hospital in Orlando, Fla., won't be finished until next year, five years behind schedule. And two other facilities in New Orleans and Las Vegas also experienced delays and cost overruns, according to the Times.

The costs are the underlying concern for hospital construction, which is currently booming nationwide, driven by the aging population, which requires more hospital care, and changes in healthcare delivery that place more demand on ambulatory surgery and other outpatient services.

To learn more:
- read the Crain's New York Business article
- here's the Fiscal Times article

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