Six years ago, the Lemoine/Brasfield & Gorrie joint venture won a contract to build an addition to Our Lady of Lourdes Regional Medical Center in Lafayette, La. Although the original project fell through, it came back as a full-fledged 396,000-square-foot replacement hospital last year. Having kept in contact with the owner,
Brasfield & Gorrie, LLC, Birmingham, Ala., and
The Lemoine Company, Lafayette, were ready to resume their partnership to manage construction of the new $211 million facility.
“In general, deals are happening slower than they were a year ago, but we’ve seen an uptick in the last few months in projects that are coming back around,” says Todd Jackson, vice president and manager of Brasfield & Gorrie’s Central Region Healthcare Division. “We’re hopeful this will continue.”
Whether the semi-positive trend will last seems to vary by region. Some areas are nearly built out due to the construction boom of the past few years, while others maintain a steady flow of projects driven by competition among hospital networks, population shifts, and new technology and amenities that better serve patients.
From a numbers perspective, the outlook is fairly rosy compared with much of the rest of the nonresidential construction industry. The American Institute of Architects’ annual Consensus Construction Forecast (released in July) projected the health care sector to decline 1.5 percent this year and just 0.8 percent next year. In contrast, the office, retail, hotel, religious and recreation sectors will be largely responsible for the nonresidential market’s total decline of 15.8 percent in 2009 and 11.6 percent in 2010.
Lemoine and Brasfield & Gorrie, which have worked together multiple times during the past decade, are busy with the structural steel phase of work at Our Lady of Lourdes. Up next is the exterior skin, comprised of glass, metal panels and brick masonry.
Though the project is scheduled to wrap up in mid-2011, more work may come on the books. The 45-acre greenfield site was selected to accommodate future expansion—a common strategy in the health care market—including potentially two more floors in the patient towers and additional medical office
buildings.
With such a long-term vision for facilities that significantly impact communities, “owners are really looking for a partner that can team up with them and help lead the effort,” Jackson says.
The Evolution of TeamworkLike many contractors,
Danis Building Construction, Dayton, Ohio, has moved from the hard bids of the 1980s to providing construction management services, and now more design-build services. Although some Midwest medical center owners have been slow to accept design-build as a solution, many are beginning to realize they don’t have the time or resources to go through the design and construction process with an architect.
“To throw in a multi-million dollar project on top of your regular work, you almost had to bring in additional staff,” says Troy Erbes, who worked for a hospital for 12 years before re-joining Danis as director of preconstruction. “Now, you just come to us.”
Building on a 20-year relationship with Danis, Kettering Medical Center, Kettering, Ohio, recently approached the contractor about switching from construction management to design-build delivery for its 142,000-square-foot addition to the Schuster Heart Hospital. The $54 million project, on target for a summer 2010 deadline, entails adding five stories to the top of an existing parking garage and tying the addition into the front entrance of the functioning hospital.
“Design-build helped us figure out a critical path on an aggressive schedule,” Erbes says. “It required a lot of coordination with staff.”
Taking teamwork a step further, some medical centers are requesting that contractors stay onsite to run projects on a near-permanent basis as a way to quickly resolve construction issues that affect employee and patient satisfaction.
“When I worked for a hospital, I took charge of projects,” Erbes says. “Now, hospitals are hiring us to be there almost like an employee to manage projects—whether it’s a small office renovation or a huge clinical renovation.”
Danis has provided this service for two clients, including University Hospital in Cincinnati, where the firm is managing all construction projects through 2011.
Other ongoing projects for Danis, which performs 74 percent of its work in the health care sector (up from 62 percent in 2008), include Grandview Hospital in Dayton and Mercy and Christ hospitals in Cincinnati. The firm also is wrapping up 67,000 square feet of renovations at Dayton’s Good Samaritan Hospital.
Productivity + Profitability = A Happy Owner
Ever aware of the sluggish economy, Danis offers a Speed to Revenue Program that assesses the most beneficial way to build a project from the owner’s point of view.
“In health care, margins are so tight—2 percent to 4 percent on the operational side—that they need the most advantageous way to make revenue sooner,” Erbes says. “If we’re looking at a renovation, the office part may not help revenue, but the clinical part will. It may not make sense from our perspective to start with the clinic, but it’s better for the owner. We focus our business around making owners get from vision to revenue quickly.”
As administrators look for a return on every dollar invested, contractors are spending time upfront analyzing a variety of construction options, such as deciding whether to build a new patient tower or renovate the infrastructure that’s already in place. And in the last 10 years, facility owners have begun streamlining their operations well before embarking on a capital improvement project, rather than relying on a new facility to make the organization leaner—a major paradigm shift, according to Erbes.
Adena Regional Medical Center, Chillicothe, Ohio, evaluated the efficiency of its programs about four years ago, and then adjusted the facility to aid the improved operations. Next year, it will unveil $33 million of additions and renovations performed by Danis.
For most owners, two major factors impact profitability: what patients expect and what the competition offers. Beyond the private rooms required of all hospitals by the 2007 American Institute of Architects Guidelines for Design and Construction of Health Care Facilities, patients are demanding a homey atmosphere with high-end finishes, family zones, technological capabilities and natural elements that aid the healing process.
In particular, satellite campuses in suburban locations are beginning to deviate from the generic, office-like design prevalent in years past. WakeMed, which has a flagship hospital in downtown Raleigh, N.C., recently opened a $20 million standalone emergency care facility in Apex, one of the city’s fastest growing areas. The owner devoted extra attention to architectural features, including a metal and glass exterior, a 32-foot cantilever section over a retention pond and large lobbies with multi-story openings.
“WakeMed spent a lot of time making sure the building makes a statement in the community,” says Scott Duckworth, vice president of Brasfield & Gorrie’s Carolinas Healthcare Division. “They were one of the first hospital systems in the country to build freestanding emergency departments, and we’re seeing more systems
follow that model.”
Interest in the four-story Apex Healthplex stems from WakeMed’s ability to capture its market share in a cost-effective manner. Hospital administrators from across the country have toured the facility to see if it can be used as a prototype.
“With cost being a big issue now, owners are trying to get the most out of square footage,” Duckworth says.
Project: St. Francis Medical Center, Colorado Springs, Colo., featuring trauma and birthing centers, four operating rooms, 156 patient rooms, an emergency department, a pharmacy, a chapel and a cafeteria spread out over 450,000 square feet.
Challenge: The $207 million ground-up project was divided into four overlapping phases. Designs were only partially complete when GE Johnson Construction Company (the general contractor) and RTA Architects brought on board
Spacecon Specialty Contractors (SSC), local metal framing and drywall experts.
Solution: Realizing a conventional subcontracting process would not meet the project’s schedule and budgetary demands, the team went through a series of pricing exercises, and SSC agreed to perform its work under a guaranteed maximum price (GMP) contract worth $10 million.
“It’s not uncommon to have the design ongoing, but it is unusual that they’d go to contract with us based on conceptual costs,” says SSC President John Banks, noting this arrangement is more common for mechanical, electrical and plumbing trades. “It gave us flexibility so that as different phases of design were completed, we could use the definitive outline of what the final cost would be.”
From there, rough-in components could be installed and materials and equipment could be procured while the design was being finalized. Each pay application became a reimbursable cost item based on labor, material and equipment rates established within the GMP.
Result: With more than 140 craft professionals onsite and hundreds of purchase orders written, SSC went through two audits without being challenged on the propriety of a pay request. The firm wrapped up work in July 2008 on budget and ahead of schedule.
Project: Beebe Medical Center, Lewes, Del., featuring 70,360 square feet of renovations and additions to the emergency department; medical, surgical and critical care units; and mechanical and warehouse areas.
Challenge: General contractor
Wohlsen Construction Company, Lancaster, Pa., performed $31 million of work in a fully functioning hospital, including adding two floors to the emergency department and commissioning a new 1,000-kilowatt generator, 600-ton chiller and 900-gallon-per-minute cooling tower.
Solutions: In addition to performing work and system shutdowns during the night shift, Wohlsen constructed infection control partitions—some with negative air pressure—to keep dust away from occupied spaces.
While demolishing portions of the existing emergency department roof to connect columns for two new floors above, Wohlsen placed sealed plywood boxes (that could be quickly and inexpensively removed each day) over open areas in the roof to prevent leaks from affecting the occupied space below.
Result: The medical center debuted its new look in May 2008, with zero lost-time accidents reported.