Hospital construction booming in Maryland, but can be risky

Hospitals in some states are awash in construction projects despite the national recession, but a building boom can bring risks for unwary hospitals that choose the wrong general contractor--points driven home by recent news reports from Maryland and California.

In central Maryland, more than $2 billion in hospital expansion projects are under construction or slated to begin this year, reports the Baltimore Sun. An additional $500 million in healthcare-related projects are being developed near local medical centers in Baltimore and surrounding counties.

Factors driving the boom include outdated facilities, a receptive bond market, higher demand for medical services, changing approaches to clinical care and a trend toward private rooms. The expansion projects include the addition of new emergency rooms, operating suites, pediatric units and other facilities.

Earlier this month, the University of Maryland Medical Center received a "certificate of need" from the Maryland Health Care Commission, allowing the hospital to move forward with a $160 million construction project to enlarge its Shock Trauma Center. Shock Trauma cares for more than 8,000 patients a year in a building designed to serve 3,500 patients a year when it opened in 1989. Construction for the nine-level addition with 10 new operating rooms will begin in May if the state approves funding.

Sinai Hospital is expanding its Herman & Walter Samuelson Children's Hospital with a $29.5 million addition to eliminate semi-private rooms. Mercy Medical Center is building the $400 million, 18-story Mary Catherine Bunting Center to replace a 1950s tower that was built before most bedside monitoring equipment was even invented and that has few private rooms. Anne Arundel Medical Center is adding a $424 million expansion to accommodate military families moving to the area due to base closures in other states. Johns Hopkins Hospital is replacing most of its East Baltimore medical campus. The $1 billion-plus project includes two new 10-story clinical towers and the renovation of older buildings. Other hospitals with expansion projects include St. Agnes Hospital, Franklin Square, Northwest Hospital and Maryland General.

Kindred Hospital in Folsom, Calif., now has first-hand experience in one of the risks of taking on multi-million dollar expansions. Kindred has fired Scottsdale, Ariz.-based Delmastro + Eells Inc., as the general contractor for its $43 million replacement hospital and sued for breach of contract.

Kindred fired Delmastro in December, hiring an on-site manager to finish the project with the same subcontractors. (The project is now expected to be completed in May.) In a lawsuit filed March 11 in Sacramento County Superior Court seeking more than $1 million in damages plus court costs, Kindred alleged that Delmastro didn't meet a December deadline for the first phase of the 58-bed replacement hospital, overstated costs and has been "substantially overpaid."

To learn more about the Maryland boom:
- read the Baltimore Sun article

To learn more about the Kindred lawsuit:
- read the Phoenix Business Journal article

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