As the health care industry works toward a new normal—a time of recovery and eventual re-emergence from the pandemic—providers are taking a hard look at their physical infrastructure and rethinking what they will need in the future.
Key considerations as providers rethink their capital plans.
This rethinking has been prompted in no small part by the explosion of telemedicine during the pandemic and the continued movement from procedures performed inside hospitals to ambulatory settings. The result is a growing realization among providers that their current facilities either must be reconfigured, or that they need to build new ones.
Fueling this fire to update structures or build new ones is the continued demand for high quality municipal debt as well as a current low interest rate environment in the economy.
However, as health care providers look to re-engage on their capital plans and consider improvements, projects and initiatives, there are a few new items to keep in mind in the age of the new normal:
- COVID-19 costs: Many general contractors are incurring costs related to COVID-19. These are being passed through to the owner of the project through COVID-19 surcharges and increases in labor and supplies. It is important to evaluate the reasonableness of these costs as well as how they are treated within the contract you have executed with your general contractor. This is critically important when it comes to any cost reimbursed items.
- Retainage laws: We are seeing innovative yet complex strategies being used to promote fairness and compliance with applicable retainage statutes and contract requirements. State guidelines and contracting approaches are frequently changing. If you have not stayed up to date with the retainage laws and practices in your state, be sure to seek advice on how any changes may affect your organization.
- Data management: The data evolution is fully upon us, and the construction industry has not been spared from the changes. Many contractors and project owners are implementing technology tools to specifically track and monitor projects, costs, contract compliance, scheduling and more. Often project stakeholders are provided access directly into the contractor’s management and accounting systems, but some owners procure their own technology systems to manage this large and valuable dataset.
- Disruption: Depending on the type of construction project, there is often disruption to your typical workflow and patient experience. A consideration may be to use prefabricated or modular construction if it’s possible to do some of the construction offsite and minimize the disturbance to day-to-day operations.
What does this mean for health care providers? Construction projects can be exciting, they can bring growth to your health system, spur economic development in your service area and bring attention to your mission. However, there are risks when undergoing projects of any size. Many health care providers may want to engage professionals, either internally or externally, with expertise and tools to assist them in evaluating contract compliance, cost reimbursed items and other critical elements.