Inflation, prices, labor, and supply continue to be the main issues in hospital construction in 2024.
This is the main finding of the 2024 Hospital Construction Survey conducted by Health Facilities Management magazine of the American Society for Health Care Engineering (ASHE).
Despite the growing demand, factors such as high inflation and a lack of skilled labor have complicated project execution, a situation worsened by ongoing global supply chain disruptions.
These challenges have forced hospital construction project managers to make difficult decisions under increasing pressure, with delays and cost increases affecting most recent projects.
A Complex Landscape
Nearly half of the healthcare professionals surveyed have experienced cost increases and delays ranging from 76% to 100% of their projects since 2021.
Additionally, two-thirds of managers report that the current inflationary context has led them to reduce the “scope” of their projects. This is particularly significant considering that the survey gathered opinions from over 500 managers and executives from hospitals and health systems, as well as professionals in architecture, engineering, and construction.
“Nearly half of the healthcare professionals surveyed have experienced cost increases and delays ranging from 76% to 100% of their projects since 2021.”
Persistent Challenges
The current situation is undoubtedly complex.
The COVID-19 pandemic, while no longer the primary threat, left a series of structural problems that continue to affect the construction of healthcare facilities. The shortage of skilled labor is one of the main challenges facing hospital construction today. The lack of qualified workers has even surpassed issues related to inflation and supply.
Consequently, competition for labor is fierce, driving up costs and causing project delays. This situation is especially delicate in markets where large industrial construction projects compete directly with healthcare facility projects for the same resources.
To mitigate these issues, organizations have begun to make significant adjustments to their projects.
“65% of respondents have reduced the scope of their projects, while 56% have turned to value engineering to keep costs under control.”
Impact on Equipment and Infrastructure
Cost and availability issues not only affect new construction projects but also the renovation and replacement of medical equipment for hospital operations.
The focus on improving energy efficiency and decarbonization has also led to an increase in demand for electrical and energy management systems.
Investments in Technology and Cybersecurity
The survey also highlights an increase in investments in technology, especially regarding the connectivity of hospital equipment and systems.
However, this increase in connectivity also brings greater cybersecurity risks. As more critical systems are connected to hospital IT networks, the risk of cyberattacks increases.
Improvement in Project Management
Despite the challenges, hospital construction managers have learned to better manage projects in this complex environment.
The 2024 survey shows a slight improvement in meeting deadlines and budgets compared to the previous year. This improvement is less about a reduction in market problems and more about more accurate planning and adjusted expectations.
In summary, inflation has severely impacted the hospital construction and renovation sector, which suffers from a shortage of skilled labor and materials.
This combination of factors has not only caused delays in building and equipping hospitals but also a significant increase in costs.