Recession may technically be over, but healthcare construction lags

When architect James Arends, Midwest regional healthcare services manager for Gilbane Building Co., asked at the Healthcare Facilities Symposium and Expo in Chicago last week how many people were with organizations that had killed or delayed construction plans since the global financial crisis hit in September 2008, more than half those present raised their hands. Even though Federal Reserve Board Chairman Ben Bernanke recently said that the recession likely is over, there remain plenty of questions about whether healthcare construction will break out of its funk anytime soon.

"Realistically, construction and design is a lagging indicator in the economy," Arends said. However, the $787 billion federal stimulus package enacted in February is heavy on infrastructure funding, and construction costs have plummeted in the past 12 months due to sagging demand. "Cash is king," according to Arends. If you've got the money, you should be able to get some good deals, and get the shovels in the ground in relatively short order.

"It might not be completely gloom and doom, but we can see we're going to be bouncing around the bottom for some time," added Richard Galling, president and chief operating officer of the Hammes Co., a Brookfield, Wis.-based healthcare facilities planning and consulting firm. With CFOs demanding more bang for a smaller amount of bucks, many healthcare organizations will need to find ways to squeeze costs out of either construction or renovation projects without sacrificing revenue-generating elements of their plans.

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