Building With Care: Texas' Health Care Market Remains Vital
Even though the recession has hurt the Texas health-care market, numerous jobs are moving forward.
“Texas is the best health-care market in the United States now,” says James King, director of health care for Turner Construction’s Texas Region in Dallas. “There are still large projects coming out, and several more will come out.”
King attributes the progress to the state’s pro-business environment and to the fact that Texas does not require a certificate of need before a hospital proceeds with expansion plans. Turner is working on a $22-million, 65,000-sq-ft addition to Weatherford Regional Medical Center in Weatherford for Community Health Systems of Brentwood, Tenn. Turner also recently finished a 14,000-sq-ft renovation at Medical City Dallas and is completing an interior fit-out of a two-story, 40,000-sq-ft clinic for Cooper Clinic in McKinney.
On the design side, John Crane, CEO of FKP Architects in Houston, adds, “Texas is in better shape than a lot of states. I would rather be here than anywhere else in the country.”
He says owners have not abandoned any of the firm’s major Texas projects, although a couple of them have slowed down.
FKP continues working on design drawings for the $575-million, 700,000-sq-ft, 15-story Texas Children’s Maternity Center in Houston. W.S. Bellows Construction Corp. of Houston began construction on the concrete-frame structure in 2008. FKP also designed the $40-million renovation of a former patient-care facility at Texas Children’s into the Feigin Center, a research facility completing construction this fall.
Texas Children’s is in the midst of a $1.5-billion expansion program. In addition to these two projects, the health system is building the Texas Children’s West Campus, designed by PageSoutherlandPage of Houston. Tellepsen Builders of Houston is constructing the 294,000-sq-ft, 96-bed hospital and a 220,000-sq-ft ambulatory care and medical office building, set for completion in late 2010.
“I’m seeing [the health-care market] beginning to trend upwards, especially in Texas,” adds Allan Dedman, vice president of J.E. Dunn Construction Co. in Austin.
J.E. Dunn began a $27-million, 75-bed, two-story, 66,000-sq-ft project in January at the Texas Center for Infectious Disease. It’s renovating a radiology space and laboratory and constructing a central utility plant on the San Antonio campus for the Texas Department of Health Services.
The company also was recently awarded an expansion project by HCA in El Paso.
Meanwhile, private hospitals are in a wait-and-see mode, says John Castorina, senior vice president with RTKL in Dallas. “Their capital investment dollars have shrunk, and donations and philanthropy have decreased,” Castorina says.
He adds that institutional and government projects have increased.
RTKL and Overland Partners of San Antonio are working on the design for a $121-million clinical services building and renovation at the University Health Center – Downtown, which is part of University Health System of San Antonio’s $899.4-million Target 2012 capital improvement program.
“It’s the largest capital expenditure project in the history of Bexar County,” says Rick Archer, principal at Overland...
...Partners of San Antonio. “San Antonio has been fortunate in that we have been slower in decline and benefited from a diverse economy.”
Skittishness in the industry
“There is a substantial rethinking in the industry about where they spend their dollars,” says Kregg Elsass, director of health-care services for PageSoutherlandPage’s Austin office. “We’re not hearing they are killing jobs or stopping jobs. They are putting them on an indefinite hold.”
PageSoutherlandPage designed the new $337-million 474,000-sq-ft, six-story, 112-bed Methodist West Houston Hospital in the Katy area for Methodist Hospital System in Houston, which has more than $1 billion in expansion projects under way.
Austin Commercial of Dallas broke ground in April 2008 on the West Houston Hospital. Hensel Phelps Construction Co. in Austin continues work on the $331-million Methodist Outpatient Center at the Texas Medical Center, with completion set for mid-2010. Vaughn Construction of Houston is building a $250-million expansion at Methodist Willowbrook Hospital in northwest Houston, set to wrap up later this year.
Randhir Sahni, president of Llewelyn-Davies Sahni, a Houston architecture and urban design firm, also reports health systems are cutting back, but smaller projects are proceeding.
Dedman adds that more owners are opting for design-build contracts.
“People are thinking out of the box about how they will deliver projects and be as efficient as they can be,” Dedman says.
Multiple industry experts report concern among owners about health-care reform plans circulating in Congress, which has hospitals fearful about how it might affect their revenue.
“We have been through these dips before, and this one has been similar to ones we have seen in the past, where there is a slowdown in the health-care market, generally, created when the government starts talking about health care,” Crane says. “Everybody goes on hold, and the activity seems to be more planning. We’ve had more requests for proposals this year than we have had in the last two or three years combined.”
Financing projects
Crane says private hospitals, typically, rely on endowment funds for many capital projects, which were hurt badly in the stock market fall.
“They are looking for other financing vehicles because the bond market is not attractive to them right now,” Crane says.
Elsass says, “A lot of the successful institutions can get money, but they are not willing to compromise the bond ratings. They know, ultimately, things will turn around.”
Lakeway Regional Medical Center in Lakeway, now in design by PageSoutherlandPage, worked with its lender to obtain U.S. Housing and Urban Development guarantees on the loan for the $250-million, 270,000-sq-ft, 103-bed greenfield facility. Hoar Construction of Birmingham, Ala., received the construction contract.
“If the facility defaults, the loan will be paid off by the government,” Elsass says. “There are available dollars, but you have to be crafty and know how to find them.”
Elsass says some hospitals have turned to private developers to build medical office buildings. For instance, PageSoutherlandPage was working on an emergency department and surgery expansion at Scott & White Healthcare in Temple, but the facility put it on hold. However, it is proceeding with a medical office building with a developer from Minnesota.
Keith Guidry, vice president with RTKL, also has noticed a trend toward third-party ownership. However, Crane says he has not seen that happening, citing developers’ difficulty with securing financing.
Funding amenities
Castorina says evidence-based design has always been a part of good design, and those elements that enhance the bottom line continue, if proven cost-efficient and beneficial.
Barger adds that the military has incorporated evidence-based design and LEED Silver standards into its requirements.
Sahni says health systems often delete healing gardens and other soft features from plans as they try to conserve costs, but Mark Meyer, managing principal of the Dallas office of TBG Partners, says hospitals have not abandoned healing gardens and are securing donations so they can include those amenities in their projects.
“They work through their foundations,” Meyer says. “They found people are more likely to fund a garden people see than a bed in a trauma room.”
TBG Partners designed a 1-acre healing garden at Children’s Medical Center of Dallas, adjacent to its...
...new $105-million, 389,000-sq-ft, 12-story medical tower being built by Balfour Beatty Construction and Pegasus Texas Holdings, both of Dallas.
Children’s Medical raised more than $2 million to fund the healing garden, which contains donated art pieces, water courses populated with cast-glass fish, cast-glass monuments and a 40-ft long carved limestone wall.
Public hospital projects
UHS, also known as the Bexar County Hospital District, has embarked on Target 2012. In addition to Overland and RTKL’s five-story clinical services building, the capital-improvement program includes a new $778-million, 1 million-sq-ft tower at University Hospital.
UHS selected a joint venture among Zachry Construction Corp. of San Antonio, Vaughn Construction of San Antonio and Layton of Phoenix to build the University Hospital expansion, designed by Perkins+Will of Dallas with Garza/Bomberger & Associates and RVK Architects, both of San Antonio.
Although the Zachry-led joint venture’s construction management proposal included the second-highest fee of the four competing bids, UHS considered it the best value because that team planned to place more dedicated professionals on the job and made a substantial commitment to local and minority participation, says UHS spokesperson Leni Kirkman. She expected ground breaking in 2010.
In addition, Overland Partners has designed the $47-million, 440,000-sq-ft Haven of Hope, a clinic for the homeless, adjacent to the UHS facility. It includes detoxification and a crisis-care facility.
Haven for Hope will wrap up in February.
HDR Architecture and Corgan Associates, both of Dallas, have begun design on Parkland’s $1.27-billion replacement hospital in Dallas. The public hospital selected a joint venture team called BARA to build the facility. Joint venture partners include Balfour Beatty Construction, Austin Commercial, H.J. Russell & Co. and Azteca Enterprises, all with Dallas offices.
Bovis Lend Lease broke ground on a $102-million expansion and renovation at Guadalupe Regional Medical Center, jointly owned by the City of Seguin and Guadalupe County. Perkins+Will designed the project, which includes 141,000 sq ft of new construction and 65,000 sq ft of remodeling.
Military health care
RTKL is working on the $556-million, nearly 1-million-sq-ft San Antonio Military Medical Center at Brooke Army Medical Center, known as SAMMC North. Construction began on SAMMC North in spring 2009 with completion set for 2011. The contractor for the U.S. Army Corps of Engineers Fort Worth District Project is a joint venture between Clark Construction Group of Bethesda, Md., and Hunt Construction Group of Dallas.
The military also plans a replacement facility at Lackland Air Force Base, which will be called SAMMC South. Wayne Barger, senior vice president at RTKL in the health-care practice group, says that, combined, the Base Realignment and Closure-related projects total more than $1 billion.
“Among the military health-care projects around the state, San Antonio has two of the biggest ones,” Barger says. Other projects are taking place at Fort Hood, north of Austin and Fort Bliss in West Texas.
The American Recovery and Reinvestment Act included $621 million to replace Darnall Army Medical Center at Fort Hood. In July, the U.S. Army Corps of Engineers, Fort Worth District, advertised for architectural and engineering services for a replacement hospital at Fort Bliss.
Duke Realty Corp. of Indianapolis will develop and manage the new 213,029-sq-ft Veterans Affairs Outpatient Clinic...
..in Fort Worth. PageSoutherlandPage designed the building, now under construction, with completion set for 2011, by Duke’s construction division. The Dallas Morning News reports the cost at $50 million. Duke did not return a request for confirmation
Walton Construction of Dallas and Kansas City, Mo., is working on a $42-million design-build medical clinic at Fort Bliss in El Paso.
Embracing technology
RTKL and Overland designed the UHS downtown project using building information modeling, which the owner required as part of the selection process.
“The BIM model, when the client takes possession, evolves into a management tool” and can be used for maintenance, Castorina says.
Crane agrees that BIM factors into owner’s selection of architects.
“I suspect within a year or two, it will be expected by clients and not questioned anymore,” he says.
Although the design for the Texas Center for Infectious Disease was completed before BIM became the norm, J.E. Dunn has pushed to have mechanical, electrical, plumbing and structural work completed in BIM.
Keith Guidry, vice president with RTKL, says his firm has been producing work on BIM for five or six years, mostly for planning mechanical, electrical, plumbing and structural systems.
HKS of Dallas has used BIM and LEAN construction and operations principles on its design of Presbyterian Hospital Flower Mound in Flower Mound, which Balfour Beatty topped out this year.
Useful Sources:
Weatherford Regional Medical Center:
www.weatherfordregional.com/commitment/Pages/Investing%20In%20Our%20Community.aspx
Texas Children’s Hospital Vision2010:
http://www.texaschildrenshospital.org/web/2010/03maternity.htm
University Health System Target 2012:
http://www.universityhealthsystem.com/capital-improvement-program/default.shtml
SAMMC-North:
http://www.sammc-north.com
The Methodist Hospital System Facility Expansion:
http://www.methodisthealth.com/tmhs/expansions.do?channelId=-96401
Lakeway Regional Medical Center:
http://www.lakewayregionalmedicalcenter.com/project.html
Parkland:
http://www.parklandhospital.com/newparkland/about_the_program/
