How Financial Strains in Healthcare are Affecting AEC

How Financial Strains in Healthcare are Affecting AEC

June 19, 2020

While COVID-19 has undoubtedly put an unforeseen strain on the healthcare industry in terms of supplies and capacity, they are also feeling the financial burden along with other businesses. Some systems are reporting losses up to $2 million per day. Large capital projects have come to a complete stop in some cases, and expansion plans that would address the need for capacity have been put on indefinite hold as owners switch to survival mode, addressing the current crisis.

“The healthcare sector is currently experiencing unprecedented financial difficulty,” Healthcare Market Leader Kurt Young emphasizes. “Providers are attempting to restart elective procedures as local economies open up. They are optimistic about replacing lost revenue from the shutdown period. There has been a surge of hospitalizations and increased use of ICUs, beyond what has been needed for COVID-19 treatment, as patients who deferred taking care of significant healthcare issues have returned to the hospital as restrictions have eased across the country.

Facing Impending Challenges
While healthcare owners triage the situation and handle challenges such as the relocation of workers and possible furloughs, life safety projects and code compliance projects are projected to remain at the forefront. Owners have worked creatively with design teams and AHJs to obtain remote/virtual certifications in a concerted effort to keep things moving. “Most healthcare owners are in crisis mode,” adds Young. “Offers have been made to help with creating surge capacity, but almost all solutions have been architecture and MEP focused, such as the creation of new negative pressure rooms.”

Established norms continue to be challenged, and operational strategies of the past are being revisited. Issues of distancing, hand washing, sanitizing, plexiglass shields, signage, rearranging rooms, and occupancy limits occupy the thoughts of many medical facilities in addition to focusing on quick operational changes. Flexibility has proven key across all markets, and healthcare has not been immune.

Significant limitations on visitations have seen a rise in telehealth demands. Facilities that were used to an average of 100 virtual visits per month are now experiencing upwards of 3,000 a day. Shifting demands and growing technology is projected to continue to be a driver for development over the next few years.

Addressing what this means for the future of healthcare, design partners are discussing solutions such as including more robust MEP systems and increasing the number of acuity-adaptable rooms which would flex from normal usage easily, better equipping facilities to handle surge situations and pandemics.  “Walter P Moore’s Healthcare Community of Practice (HCoP) has been at the forefront of developing innovative, flexible, and adaptable structural designs in the healthcare industry for decades,” says Young. “The future will provide even more opportunities for our engineers to work as a true design partner to our architect clients and OAC teams to further evolve healthcare structural design in the ‘new normal.’”

Repairing Existing Facilities
Our Diagnostics experts are expecting an uptick in 2021 of restorative and repair projects as owners overcome the crisis and focus more on their existing buildings. “The essence of what we do is evaluate and repair existing facilities,” says Mark Williams, Managing Director for Houston’s Diagnostics Group. “Our focus has always been built facilities that we’re trying to either extend their life or repurpose to give them new life.” A vital service may prove even more important in the coming years as facilities may not be able to move forward on larger design projects they had envisioned.

“As facilities begin to rebuild their cash position, they will need to find ways to keep their existing facilities running safely and in compliance,” adds Young. “We also need to remain positioned to respond to emergencies as they may arise.”

A caution of engineers is that many repairs may be deferred due to financial constrictions. This could potentially mean that problems will worsen, and when they are finally addressed, repairs may be more extensive and costly.

Future Forward
As cities begin to open, some facilities are choosing to resume select operations even at limited capacity, new opportunities may be created for research facilities and evaluating non-acute care spaces for future conversion to pandemic floors. Trends in master planning are expected to increase as owners look to plan for the future with minimal capital outlay.

“The seismic disruption of the healthcare sector will certainly cause owners to take pause and take a fresh look at their physical assets once the current crisis has abated,” says Young. “Providers may well put their market strategies and capital plans to the test, thinking toward an uncertain future with a keen eye towards weathering future surges and pandemics.”

Conversations are taking place amongst architects, owners, and engineers about what the future holds. How much flexibility will be incorporated into prospective facility design? As a result of COVID-19, surge situations will almost certainly play a role in future planning.  “The most important piece at hand is supporting our clients,” stresses Young. “They are in survival mode. It is critical for us to not only understand how the current situation is affecting them but to show empathy. We are partners in this.”