Whitepaper: 06.15.2014

Trends in Healthcare

McCarthy Vice President of Operations Ben Johanneman Talks Healthcare and Construction Trends
As the market begins to recover, healthcare construction activity in Texas heats up.

The construction industry in Texas began to recover from the recession in 2013, and industry experts state the recovery will continue in 2014. One market of particular interest is healthcare, which contractors expect to heat up this year. We recently spoke with Ben Johanneman, vice president of operations for McCarthy’s Houston Division and one of McCarthy’s healthcare construction specialists, about the healthcare construction market in Texas and what owners should know to ensure the successful completion of their projects.

How has the healthcare construction market changed in Texas over the past several years?
Due to the slower economy, a lot of projects had been put on hold. However, healthcare was the last sector of the overall market to feel the effects of the recession; therefore, non-healthcare builders attempted to enter the healthcare building market. Now, with the healthcare construction industry beginning to pick up across Texas, an abundance of marginally qualified contractors has surfaced. A careful review of proven experience in the healthcare industry, especially on projects where work is done inside and around functioning hospitals, is critical for owners looking to select the builder of their next project.

Are any areas of Texas particularly busy for healthcare construction?
Healthcare construction will be busy throughout Texas as the population in our state continues to grow and the population ages. The healthcare institutions based in the Texas Medical Center in Houston continue to build and we are also seeing large expansions in the suburbs around the city. For example, McCarthy is currently working on a project for The University of Texas Medical Branch (UTMB) in League City, a suburb in the greater Houston area. The $52.3 million UTMB Victory Lakes Specialty Care Center expansion is a design-build project including an addition of 142,000 square feet to the existing outpatient center on the UTMB Victory Lakes campus. This is one example of a large healthcare institution investing in facilities outside the Texas Medical Center.

How has the functionality of hospital design changed over the years and is this impacting construction?
Rapidly advancing medical technology, along with an influx of patients as our population ages, has resulted in a need for more and better programmed spaces. The move to private patient rooms that are larger to accommodate patients and their families is here to stay.  Procedure rooms have also gotten bigger. Along with many of these changes, we are also seeing a trend of more direct involvement from physicians, surgeons, nurses and other hospital staff in the design process, helping to improve workflow productivity and in turn improving other hospital operations.

To ensure the design and construction process runs smoothly and to better incorporate all end-user input, McCarthy is increasingly utilizing the design-build construction method to provide the owner with a single point of accountability. Design-build generates consensus from the earliest stages of a project, enabling the owner, design and construction teams to collaborate in real time, review constructability and budget issues early on and ultimately streamline the process for end users.

Has (or will) the Affordable Care Act affected healthcare construction?
The types of healthcare facilities being built is changing due to the impact of the Affordable Care Act, moving from treatment to prevention. With more affordable insurance options, the general population is expected to increase their healthcare visits to improve overall wellness yielding an increase in new construction and healthcare facility renovations in the coming years. There are also fewer acute-care hospital projects under consideration with more of a focus on outpatient centers and medical office buildings because these facilities can provide lower-cost procedures than in-hospital stays. However, this increased healthcare construction is being impacted by new reimbursement guidelines. Healthcare organizations are keeping a close eye on ways to make design and construction more efficient and cost-effective due to the limits being set on reimbursement levels to these facilities.

Have the advancements in medical technology impacted the overall design/construction of healthcare facilities?
The industry is seeing a major emphasis on investments in information technology and efficiency with a lesser focus on bricks and mortar and the overall “hospitality trends.” With the increased use of telemedicine, in addition to more requirements for specialized equipment during patient procedures and overall patient care, there is a greater focus on how to maximize the functionality of space and efficiency while minimizing cost.

McCarthy utilizes Virtual Design and Construction (VDC) to help generate and manage digital representations of projects. This is now an integral part of the entire building process. VDC is advancing every day, and McCarthy is focused on determining how we can use these tools to best benefit our clients during construction and beyond once the facility is in operation.

What are some of the top qualities owners should look for when choosing a contractor?
The most important quality is extensive experience with healthcare construction, particularly when working inside and around a functioning healthcare environment. For example, when McCarthy took on construction of The University of Texas MD Anderson Cancer Center Alkek Hospital Expansion, one of the biggest challenges was building on top of a fully functional hospital. McCarthy was hired to construct a 12-story tower expansion placed on top of the existing 12-story Alkek Hospital. In addition to this challenge, the tight site space around the existing facility left room for one only tower crane on a project that would typically use three cranes. McCarthy developed an innovative solution -- building the 12-story expansion around a tower crane erected in the existing elevator shaft. In the end, McCarthy worked night and day for 31 months to deliver the $240 million design-build project ahead of schedule and on budget.

What sets McCarthy apart from its competitors in the healthcare construction market?
The McCarthy team is comprised of builders who understand every aspect of a healthcare project. We have greater control over the entire construction process — from project/risk management to cost/quality controls. We thrive on the challenge of working 'hands-on' and owning responsibility for the most complex and challenging of projects, both large and small so that we can deliver the best final cost, every time. And, we take customer service to the next level, which is something every owner should expect from their contractor. When we were building the MD Anderson Alkek Hospital Expansion, not even Hurricane Ike in 2008 was enough to put the project behind schedule or create even one water leak. We realized the impact this project had on not only the staff but also the patients and their families fighting an uphill battle against cancer, and we were proud to deliver.

Want to continue this conversation? Contact Ben at bjohanneman@mccarthy.com

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