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Abstract
With ageing hospital facilities spanning the USA, the healthcare construction business continues to grow. Today, questions about replacing existing facilities are becoming more common in hospital boardrooms. Given the above situation, TriBrook Healthcare Consultants were recently retained to determine the market, operational and financial impact which facility redevelopment has had on other hospitals and health systems. Out of that effort came this paper. This paper assesses: the factors which are fuelling replacement facility growth; the impact that redevelopment has on market, operational and financial performance; an integrated development process to help organisations determine the feasibility of designing a new facility; and lessons learned working with clients who have pursued a replacement facility strategy. The objective of this effort is to provide hospital executives and board leaders with information that will be useful in reaching a final decision regarding execution of a replacement strategy.
Keywords:
healthcare facility strategy, replacement hospital planning, hospital facility planning, healthcare construction, redevelopment factors, improving operations/financial performance
INTRODUCTION
Anyone who has been on a US hospital campus over the past few years knows that the healthcare industry is in the middle of its largest building boom since the Hill-Burton1 era. Senior management teams and board members of hospitals are increasingly exploring and executing the complete replacement of their physical plants. According to Modern Healthcare's 24th Annual Construction and Design Survey, 82 new acute care hospitals were completed in 2002, with 105 more under way. In addition, an additional 152 were designed.2 Many of these projects are not only replacement facilities and hospital expansions, but new construction of hospitals not in existence before. The TriBrook Healthcare Consultants practice alone has planned for over ten replacement facilities in the past two years.
Pursuing a replacement hospital strategy has tremendous implications for healthcare providers and their constituents. While the potential upside is significant, such a strategy requires large capital resources which place enormous stakes on the success or failure of execution. In other words, current decisions will go a long way towards determining the organisation's position and ability to serve its community for decades.
FACTORS FUELLING REDEVELOPMENT GROWTH
There are several factors which appear to be fuelling the redevelopment activity in the hospital sector.
Population growth
Demographic growth is accelerating the expansion...