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VOL. 126 | NO. 65 | Monday, April 4, 2011

'More Opportunities'

Health care projects help building industry remain afloat

By Sarah Baker

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Despite scarce commercial construction and soaring gas prices, the health care industry is turning to builders and contractors perhaps more so now than ever before.

Crews install a fire compartment for the new lobby area at Methodist Le Bonheur Germantown for general contractor The Flintco Cos. Inc. Hospital construction has increased 35 percent increase from 2009.

(Photo: Lance Murphey)

Two-thirds of hospitals nationwide are undergoing construction projects this year, a 35 percent increase compared with 2009. That’s the findings of a capital survey conducted by Irving, Texas-based VHA Inc., a national network of community-owned health care systems and their physicians.

“A lot of businesses have paused over the last year and a half,” said Kevin Moyes, president of The Flintco Cos. Inc.’s Memphis division. “With the economy now finally looking like it’s taking hold, they’re feeling more comfortable and I think that’s spurring some of this activity.”

Of the 67 percent of hospitals undergoing renovations or additional construction, the study found that 79 percent of the projects are focused on patient care.

Whether that entails retrofitting a space to install new equipment or even revamping nurses’ stations, the goal is to make the operation more efficient. Some renovations are also corresponding to insurance requirements between Medicare, providing patient care under the proper guidelines for reimbursement.

No matter the cause for the construction, about 31 percent of VHA’s respondents consider making their facilities environmentally sustainable a definite priority. Locally, Methodist Le Bonheur Hospital has been leading that effort. The new Women & Children’s Pavilion that Flintco recently completed for the hospital in Germantown achieved the LEED (Leadership in Energy & Environmental Design) Gold Certification. It was the first building in Shelby County to have that distinction, and one of the first medical facilities in the Southeast.

About 30 percent of Flintco’s business is made up of health care clients. Other projects in the pipeline include the University of Tennessee Health Science Center Cancer Research Facility and the renovations of Baptist Memorial’s hospitals in Memphis and DeSoto County.

Tulsa, Okla.-based Flintco has a green initiative in all eight of its offices to be a good steward of the environment. The company recycles most of the steel and drywall used for projects, and it separates the debris from construction cleanup and transports the excess materials to an area where it can be recycled.

It isn’t the only one. Memphis-based Inman-EMJ Corp. is in the foundation stage of the $10 million, 32,000-square-foot LEED-certified facility for the Shelby County Regional Forensic Center on Poplar Avenue, in the former parking space for Juvenile Court.

“The economy slowed down a couple of years ago at about the time the LEED stuff was really gaining steam,” said company executive vice president Page Inman. “We fully expect that LEED-type projects or green construction will continue to garner a bigger and bigger share of overall construction as we move forward.”

But as the cost of construction materials rises, so do the price tags for these projects. Prices for construction materials rose 1.1 percent in February, according to the March 16 Producer Price Index report by the Department of Labor. That’s the fifth consecutive month of increases.

While rising material prices may seem contradictory in a depressed construction industry, the manufacturers of those materials have cut back proportionately with the demand, Inman said.

“As things start improving just ever so slightly, the supply is still quite low, which increases the price,” he said.

And with all of the manufacturing and delivery costs associated with what it takes to make a building, the freight charge is a direct correlation to fuel cost.

But for Inman-EMJ, whose client base is about 60 percent health care, demand appears to be alive and well. Recent clients include Baptist Memorial Healthcare in Columbus, Miss., UT’s School of Medicine Wittenborg Building and Harden County Medical Center in Savannah, Tenn.

“It’s slowed some, but not as much as other market types,” Inman said. “We are seeing more opportunities coming up than we have in the last couple of years. It does look like it’s improving.”

PROPERTY SALES 41 308 2,265
MORTGAGES 47 379 2,607
BUILDING PERMITS 128 1,018 6,068
BANKRUPTCIES 53 255 1,787