Healthcare Market Trends Q2 2023

by Hamilton Espinosa and Sean Ashcroft

Two healthcare workers with medical imaging equipment.

2023 is a year of cash conservation and evolution for health systems.

A recent Kaufman Hall report states the issue is “primarily an expense story,” with growth in expenses vastly outpacing growth in revenues. This math does not work for healthcare providers. Many systems are operating with lower revenues.

This is causing many healthcare providers to have a “wait and see” attitude about their design and construction projects, with projects being temporarily paused or deferred to later dates.

Healthcare’s rapidly evolving realities of caring for an aging population, workforce shortages, burnout, increased uninsured, stressed operating margins and lower reimbursement contracts are challenging healthcare providers to deliver care at a lower cost more efficiently than ever within an environment where capital investments are scrutinized. Additionally, the industry forecasts strong growth in the care shift from acute care hospitals to lower-cost outpatient settings.

Providers are seeking greater speed in project delivery, cost certainty, increased efficiencies, increased connectivity, and coordination of services focused on one goal—demonstrated value.

Shifting to

A Total Cost Mindset

The design and construction industry is in a period where cost-cutting strategies for project delivery have become table stakes—necessitating new ways to evolve how we engage with our clients and their capital strategy.

As an industry, how do we shift thinking from an episodic projects approach to one that is broadly focused on the provider’s sustainable cost reduction goals?

Delivering Cost Certainty

There is a new imperative for the design and construction industry to find ways to reduce project delivery costs. Accelerated shifts already taking place before the pandemic are challenging existing project delivery models as care increasingly goes to lower-cost sites of care and the providers shift to acclimate to technology disrupting traditional health care.

New Care Models

In a cost-constrained environment, considering the changing needs of regulatory guidelines and local Authorities Having Jurisdiction (AHJ) becomes essential to manage the total cost of a project. As funding increases drive the rise in behavioral and mental health facilities, a thorough understanding of AHJ requirements is imperative to deliver cost-effective spaces with minimal rework and speed to market in mind.

Digitally-Forward Healthcare

Healthcare and technology industries are inextricably linked, and likewise, the Digital Care Environment is becoming more intertwined with the Built Care Environment. But simply adding technology to old processes risks creating a more costly and inefficient system. Early alignment with the health system’s strategic and tactical plans will become critical in ensuring that intentional selection, implementation, and training on these technologies deliver value for providers and patients.

Buildings as Products

Providers seek to limit the variability and volatility of their capital construction programs, whether initiating their expansion plans or because of merger and acquisition of assets. Through investment in building standards and prototypes, organizations can shift project delivery from time-intensive processes to address accelerated speed to market, cost certainty, consistency in quality, and branded user experience across sites of care leveraging best practices to enhance care delivery efficiency in parallel with achieving a reduction in operating expenses.

Healthcare Insights

Healthcare Insights is a series from DPR Construction’s healthcare core market team designed to consider how new pressures on the market will transform the delivery of care.

Focusing on rapidly addressing today’s environment, our teams advance value to health care providers through strategic assessment, program and cost validation, and informing capital investments in real estate and technology—enabling strategic decisions much earlier in the delivery cycle.

Report pages

Looking for more general market insights? Take a look at our full market conditions report of Q2 2023. Or take the full report with you by downloading the PDF.

Photo: Warren Patterson Photography

Continue reading

Explore Other Markets

Life Sciences

Life Science Trends

Market remains strong in 2023 but a sense of normalization to pre-pandemic levels is emerging

Learn More

Commercial Trends

Challenges will continue in 2023 given a difficult debt/equity marketplace and workplace strategy redefinition

Learn More
Higher Education

Higher Ed Trends

Recent changes to higher education ecosystem will influence and evolve the student experience

Learn More
Advanced Technology

Advanced Tech Trends

Mission critical and advanced manufacturing construction markets continue their growth in 2023

Learn More
We think you'll like this, too.