Health Care Construction Market Trends

Health Care Construction Market Trends

By Kevin Haynes

Between 2012 and 2015, the U.S. health care construction market is forecast to grow by more than 30% to reach $55 billion. During the last several years, our clients have frequently asked us to provide insight and analysis on this market. The graphic below shows where the projected demand will be most likely to occur by state. To create this map, the top 100 planned health care projects (by volume) across the country were segmented by location. As depicted in the graphic, the leading states for future hospital work include New York, California, Illinois, North Carolina and Texas.

Leading States for Planned Health Care Construction Projects

While it is important to know where the opportunity is, it is crucial to understand what the customer wants in this market. Contractors that are successful in the health care construction market truly recognize the needs of their customers and are able to deliver solutions. A few of the key customer trends that we are noticing in the market include:

• Increased opportunity for varying project types and sizes. Larger projects are fewer in number. They may decrease the number of bidders, but also require different skills and resources. Smaller renovation or retrofit opportunities have increased in the market and provide a platform for building future relationships. The increased owner focus on the bottom line has led to more infrastructure-related projects (e.g., parking garages) as well as facility system upgrades.

• Business development skills and competency are more critical now than ever. While price is important, robust business development practices will open doors and provide opportunities for prequalification or negotiated situations. To find opportunities sooner in the development cycle, relationships have to be developed. As markets are pursued, business development competency will define success or failure. Demonstrable specialist expertise may be needed to position a company favorably for specific market opportunities.

• Shifts in buying practices and customers’ businesses require sophisticated front-end services. While design-bid-build is still the flavor of the day, owners are increasingly familiar with other delivery systems (e.g., design-build, program management, etc.) that require greater stakeholder collaboration. As their exposure to more sophisticated CMs has increased, so too have their expectations for design and preconstruction services, including the use of BIM/VDC during all phases of the process, from sales to project completion.

In conclusion, health care customers are more active and more engaged than in the past and have high expectations for service providers. In large part due to the demographics of this country, the health care construction market will continue to grow. Is your company positioned to meet this projected opportunity?