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Despite A Surprising Boost To NIH Funding, Boston's Hospitals Look To Curb Costs Amid Building Boom

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After Congress reached a spending deal Sunday night that boosts the National Institutes of Health's funding by $2B, Boston hospitals are now focused on building for the future and conquering their next challenge: the rising cost of building in Massachusetts. 

Despite A Surprising Boost To NIH Funding, Boston's Hospitals Look To Curb Costs Amid Building Boom

“The construction escalation in New England is one of the strongest in the country,” said Wendy Gettleman, vice president of facilities management and real estate at Dana-Farber Cancer Institute. “Everyone is vying for the same skilled workers, and when that happens, it impacts your budget.”

Healthcare construction nationwide is expected to double in 2017 from the $19.6B in costs seen in 2016, according to Architect Magazine. The 2017 Dodge Construction Outlook anticipates a 7% increase in healthcare facility construction, stemming from growing needs of the elderly and aging Baby Boomers. The report anticipates more off-site facilities will be built to meet the demands of patients closer to their homes.

These micro-hospitals are already gaining popularity across the country, as they have lower construction costs and usually garner higher reimbursement than an urgent care facility.  

Despite A Surprising Boost To NIH Funding, Boston's Hospitals Look To Curb Costs Amid Building Boom
Dana-Farber Cancer Institute in Boston

Dana-Farber is focused on building to enhance research capabilities as well as boost its clinical care services. Its construction projects are meant to tackle increased volume and find new discoveries in cancer research.

In order to reach more patients outside of the core of the city, Gettleman said she expects her hospital to announce in the next 12 months the opening of multiple treatment centers in more suburban locations. Other hospitals in the vicinity of Dana-Farber are looking to expand while maximizing costs via efficiency.

“We’re taking a hard look at how we occupy our space, how it’s used and if we can add density,” Lisa Hogarty, senior vice president of real estate planning and development at Boston Children’s Hospital, said. “The private sector has been on this for 10 years. Healthcare is just catching up.”

Despite A Surprising Boost To NIH Funding, Boston's Hospitals Look To Curb Costs Amid Building Boom
Rendering of the new clinical tower at Boston Children's Hospital

The biggest roadblock for the industry when it looks to drive down costs is the cost of space, Hogarty said. Maximizing the use of existing structures by consolidating back office space before embarking on new construction is how her hospital is focusing on streamlining expenditures.

As the largest recipient of NIH funding among stand-alone pediatric hospitals in the country, the hospital can be relieved by the rebuff of Trump’s proposed $6B in cuts to the organization, which Hogarty said the hospital was monitoring closely.

Boston Children’s is underway with a hotly contested expansion currently in the site preparation phase. A new ambulatory building in Brookline will be the first component of the expansion to be complete, while a $1B clinical tower will add 71 beds to the hospital’s current 404. The project is scheduled to be completed in 2020. 

Learn more about how Dana-Farber, Boston Children’s and other key players in Boston’s healthcare and construction industries are building for the future at Bisnow’s State of Boston Healthcare event May 23 at the Life Time Center in Chestnut Hill. Register here.