Hospital Development Moves Toward Smaller, Specialized Facilities

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ucsf missionbay hospital dpr construction san francisco real estate The Registry

By Michele Chandler

It’s hard to miss the flurry of hospital development and renovation projects, large and small, that are happening across the San Francisco Bay Area.

[contextly_sidebar id=”40b6bdd4a84ec0f7ece151dfc0058d6e”]Fremont’s Washington Hospital will soon start work on its long-planned, 250,000-square-foot, $300 million Morris Hyman Critical Care Pavilion. In Palo Alto, both a new $2 billion Stanford Hospital and a $1.1 billion expansion of Lucile Packard Children’s Hospital Stanford are underway. And, over in San Francisco, the UCSF Medical Center at Mission Bay is about to unveil a state-of-the art, $1.5 billion complex including three specialty hospitals—one for children, one for women and one for cancer patients—along with an outpatient center and even a rooftop helipad.

Expect more projects to break ground in the months ahead.

Throughout the nine-county Bay Area, about $4 billion in hospital-related building projects valued at $50 million or more were in progress as of March, according to statistics from the California Office of Statewide Health Planning and Development, which oversees hospital construction.

Another $3.6 billion of hospital projects slated for the Bay Area are either undergoing state review or have been approved but haven’t started construction yet, the agency said.

Driving much of the activity: SB 1953, a state law requiring hospitals to upgrade or replace their buildings to be structurally sound enough to withstand any future earthquakes, said Jan Emerson-Shea, spokeswoman for the California Hospital Association industry group. That mandate was enacted back in 1994, following the devastating Northridge earthquake that shook 23 California hospitals out of commission after it damaged their mechanical and plumbing systems.

Making those mandatory seismic renovations is estimated to cost the state’s 430 hospitals a collective $110 billion according to a RAND Corporation study, Emerson-Shea said.

With a 2020 deadline to have earthquake-proof improvements in place, many hospitals are also using the opportunity to make elective upgrades to their facilities as well.

While it’s not a state requirement, equipping hospitals with all or mostly private rooms is a major emphasis in many of today’s renovations.

A large number of hospitals in California were built in the 1940s through the 1970s and just aren’t configured for today’s best practices in medical care, Emerson-Shea explained. “Some of those [older] hospitals have semi-private rooms, and some even have four or six-person rooms, what they used to call wards. For infection control purposes it really is state-of-the-art to build single private rooms for every patient,” she said.

In 2006, the American Institute of Architects called for single rooms in all new hospital construction going forward.

Rich Henry, president of McCarthy Building Companies’ Northern Pacific Division, expects that once current hospital construction projects are completed, the next building wave will consist of outpatient centers, doctor’s offices and other providers locating nearby.  That will create a “cascading effect” as providers begin “getting into position for having the best new office right across the street” from an impressive new medical facility, he said.

While the seismic upgrade requirement has sparked much major hospital construction, that furious pace is now slowing, according to McGraw Hill Construction, a company that tracks industry trends.

“Hospital construction starts, particularly big projects, have been soft over the past few years due to the uncertainties brought about by changes in the Affordable Care Act,” said Kim Kennedy, the company’s manager of forecasting, research & analytics.

Industry experts predict medical-related construction will shift from pricey inpatient centers to less expensive outpatient care in the wake of reimbursement changes brought about by healthcare reform.

Kennedy forecasts “wheel-and-spoke” networks of medical offices, outpatient surgery centers and other providers that are located across wider geographies, expanding their central hospital’s reach.

That strategy is already playing out at Lucile Packard Children’s Hospital Stanford, part of Stanford University’s medical system. The Palo Alto-based pediatric facility has 30 physicians’ offices in satellite locations across the Bay Area, and is expanding its presence in Los Gatos, where an outpatient clinic opened in 2007.

Stanford Hospital is in the process of leasing and building an ambulatory care clinic in Santa Clara designed to serve employees working at nearby technology firms; corporate partners include Apple, Cisco Systems, eBay and others.

“It becomes more efficient for us to provide a clinic that can support multiple companies instead of each one of these companies opening their own proprietary clinic,” said Mark Tortorich, vice president of planning, design and construction at Stanford Medical Center.

That “near site” clinic will handle general care needs and open at the end of this year, Tortorich said.

Other future trends include a shift toward smaller “boutique” hospitals focused on a particular condition that are easier and faster to design and build, said George Hurley, a project executive with DPR Construction.

“Rather than these big 400 and 600-bed hospitals, you’re looking at probably 60 to 80 bed hospitals,” said Hurley. “There are quite a few healthcare providers considering that. Possibly those will be the wave of the future.”

Photo courtesy of DPR Construction

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