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What Facility Expansions Are Hospitals Investing in and Why?

December 26, 2016 | 3 min read

All across America, hospitals are expanding their facilities to accommodate new and existing patients, aging populations, and outdated infrastructure. Many healthcare facilities are also adopting a spirit of collaboration and teaming up to build new facilities to cut costs, streamline care, and expand service offerings.

We at VIATechnik have been particularly interested in which types of facility expansions that hospitals have been investing in lately and why these projects are so important. The results of the Health Facilities Management/American Society for Healthcare Engineering 2015 Hospital Construction Survey emphasize the point that this is a booming industry with many opportunities for AEC professionals.


As we touched on just a moment ago, more and more hospitals are collaborating and consolidating, which requires new space and using old space differently. Just this fall, for example, Vincent General Hospital in Leadville, Colorado and Centura Health in Englewood, Colorado announced that they would be jointly planning, developing, and building a new facility together.

Repurposing Old Facilities

To make the most of facilities that already exist, many hospitals are looking to repurpose space. According to the survey referenced above, almost 67 percent of respondents indicated that they are repurposing health care facilities or assessing existing space for other needs. This is most common among outpatient facilities, but administrative areas are seeing a lot of this repurposing action as well.

Budget Constraints

While there has been much speculation about hospital expansion actually driving up costs for patients instead of cutting them, budget constraints still drive much of the decision-making process. Most hospitals are assigned a strict capital budget for construction projects that includes facility renovation, facility infrastructure, and new construction. As a general rule, budgets for renovations and upgrades have been higher than those for new construction lately.

Higher Demand for Services

With baby boomers entering their golden years and the obesity epidemic getting worse by the year, hospitals are seeing increased demand for services. Also, a lot of the increased demand can be attributed to Medicaid expansion under the Affordable Care Act. For example, St. David’s HealthCare in Austin, Texas made plans to invest over $275 million in its facilities over a two-year period, which involves acquiring a new hospital and expanding others. The hospital’s Texas Cardiac Arrhythmia Institute has seen such rapid growth that it’s getting $70 million for new ICU beds, surgical beds, and operating rooms.

Response to Health Care Reform

The state of healthcare in America today has had a huge impact on how hospitals choose to spend their money. For instance, healthcare reform has made it necessary to create new reimbursement models and deal with revenue challenges. The biggest investments that hospitals are making in this regard typically involve better technology to support registration and patient education, medical office building expansion and community care centers.

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