Once plagued by concerns over healthcare reform—Will it pass? Will it be overturned? What happens now?—healthcare architecture, engineering, and construction (A/E/C) firms are taking a step out of the legislation’s shadow as the industry collectively moves forward, albeit cautiously.

If anything, the Affordable Care Act is presenting new opportunities to collaborate with clients on built environment solutions to evolving care delivery models. While in past years, the industry reported being essentially in limbo until ACA aftershocks had run their course, this year, Healthcare Design’s 2016 A/E/C Survey registered a new swell of activity in its place. 

But that’s not to say that those aftershocks haven’t inflicted some damage.

Respondents to the survey—78 firms in total, large and small, spanning regions of the U.S.—shed light on new challenges surfacing. While healthcare providers are, indeed, pursuing projects once again, new operating realities have also set in. Budgets are thin and expectations for lower fees and shorter schedules are making the more robust workload pretty daunting. Plus, competition is fierce, especially for large new-build projects that remain few and far between.           

The survey was conducted online in January and February and open to all domestic A/E/C firms. On average, participants reported that about 50 percent of their work was dedicated to healthcare in 2015, with 37 percent reporting the majority (60 percent or more) of work in this sector.

And, overall, two key words stood out in their answers regarding the state of business last year and in the future: more work. It’s an opportunity, and sign of a market shift, that exists despite the pressures that come with it. (For charts capturing the results, see the image gallery.)


The nitty gritty
For 2015, 48 percent of firms reported completing more healthcare projects than they did in 2014, and 52 percent reported receiving more RFPs. Thirty-six percent saw about the same number of projects completed and 34 percent the same number of RFPs, with 16 percent and 14 percent reporting fewer completed projects and RFPs, respectively.

When Healthcare Design last gauged renovations versus new construction in 2013 (via the magazine’s former Corporate Rankings Survey), renovations just slightly outweighed new construction at 51 percent of completed projects. Two years later, 2015 saw a more marked difference, with 54 percent of business occurring in renovations and 46 percent in new construction.

As for building size, the industry is staying small, with 58 percent of projects reported completed in 2015 falling between 5,000 and 20,000 square feet. Just a quarter were between 20,001 and 50,000 square feet, with ranges between 50,001 and more than 1 million square feet all in single-digit percentages. Sixty-two percent of firms said this falls in line with what they saw in 2014, with just 29 percent seeing larger projects than the year before and 9 percent reporting a trend toward smaller work.

And when it comes to opportunity on the horizon, another notable trend stood out (signaled by that size data)—outpatient projects. Back in 2013, survey respondents estimated about 17 percent of projects were in that space, while 53 percent of jobs were dedicated to hospitals. For 2015, the margin between the two nearly disappeared, with 52 percent of completed projects in hospitals and 45 percent in outpatient facilities.

Projects based in senior living saw an uptick, too. In 2013, only 6 percent of respondents reported work in long-term care, whereas 2015 saw that more than double to 14 percent. Infrastructure projects, such as parking or physical plant upgrades, rose slightly from 6 percent to 9 percent.


The why
Of course, no project gets off the ground without a very specific organizational need behind it. And for 2015, the needs that A/E/C firms heard expressed by clients offer an explanation for many of the shifts noted in the hard data. Thirty-seven percent of respondents reported that the renovation of existing space was the single most common client need influencing projects last year. That was followed by the addition of new outpatient facilities at 22 percent and the repurposing of existing space for new use at 19 percent. 

When asked what other high-ranking needs existed, 58 percent identified the expansion of existing facilities, 54 percent the renovation of existing space as well as the repurposing of existing space for new use, and 43 percent the consolidation of existing buildings/services.

So what are healthcare providers trying to achieve by moving in these directions? Firms say it’s all about future flexibility/adaptability—the single most common client goal reported for 2015 healthcare projects, according to 36 percent of respondents. Other popular goals were improved patient satisfaction/HCAHPS scores, tagged by 25 percent of respondents, followed by supporting population health at 11 percent.

However, for secondary goals, improved patient satisfaction/HCAHPS scores rose to the top of the list with 54 percent of votes, followed by creating future flexibility/adaptability and supporting population health—both selected   by 43 percent—and adding service lines at 37 percent.


The wake
As providers answer those needs and goals with this incoming wave of projects, firms are finding that despite the increase in workload, they’re struggling with a few obstacles of their own—the most common being talent acquisition, identified as the greatest challenge A/E/C firms faced in 2015 by 23 percent of respondents.

“Talent pool,” “continuing to find great people,” “need high-caliber staff to remain competitive,” and “matching and bringing our clients the very best talent within the firm” were among numerous similar comments speckling responses to an open-ended question on the greatest challenges and opportunities firms face today.

Among the comments that shed light on the shape that the healthcare A/E/C landscape is taking today: “Owners have an expectation to complete projects sooner in order to stay ahead of competitors.” “Hospitals place higher demand on design and construction professionals to increase efficiencies and reduce change orders” was another. And appearing numerous times was the issue of fees. 

To that end, following talent acquisition, 21 percent of respondents reported pressure to lower fees as their greatest challenge in 2015, followed by increased competition at 17 percent and shorter project schedules at 15 percent. Together, these details paint a picture of a complex work environment that could affect recruitment.

Additionally, several respondents recognized the loss of skilled tradespeople to the recession, which is being answered by subcontractors raising prices and being more selective in taking jobs. “There aren’t enough workers to build, and that’s impacting schedules, costs, and quality of work,” one respondent noted.

But as the data revealed, there’s still plenty to be optimistic about, thanks to swelling workloads, starting with outpatient care. “As health systems work at keeping the patient healthy, the greatest opportunities are in concert with this effort to keep the patient out of the hospital,” one survey-taker said. It’s a shift t
hat was cited numerous times by firms as the greatest opportunity available today, with nuances in more specialty-based and emergency care as well as wellness-oriented efforts given nods, too.

Others recognized growth in developer-driven projects and alternative delivery methods, and designing for emerging technologies in care delivery.

But, overall, it was the issue of healthcare reform that so many were leery of in 2013 that revealed itself as possibly worth having around. That’s not to say its challenges weren’t noted: “Some clients are still reluctant to proceed with major projects,” “trying to project for upcoming years due to uncertainties with the upcoming election,” and “help clients develop a strategic vision under healthcare reform” were all concerns that were recognized.

However, feedback hit positive notes, too. Perspectives such as “opportunities to leverage design that … reduces the cost of healthcare delivery” and “the ACA provides a platform for architects to get involved in strategic planning” were among comments that shaped opinions on a shift that’s largely behind a lot of the new work emerging.

It’s what one firm referred to as a “crossroads for our national health system, which is experiencing transformational pressures that are driving the evolution of our entire model and culture of care” that’s influencing where we’ve been and where we’re going. And while no industry is ever without its ups and downs, results indicate that this one is working its way up.

Jennifer Kovacs Silvis is executive editor of Healthcare Design. She can be reached at jennifer.silvis@emeraldexpo.com.