McGraw Hill Construction
  subscriptions     advertise     careers     contact us    my account  














Health-Care Owners Seek Cure For Projects

by Paul Rosta
The author is a correspondent for The McGraw
-Hill Cos. He lives and works in Los Angeles,
where he reports on industry issues in California.

America's varied health-care institutions are caught in a competitive vise as they struggle to expand
facilities, keep up with new technology and still contain costs. A small but growing number of owners are breaking with traditional project delivery and are using design-build to address their needs.

     Design-build has been around for years in the health-care community, but primarily for medical office buildings and other relatively small facilities. When it comes to hospitals, design-build is still relatively new. "The larger, more sophisticated hospitals, particularly major urban or suburban facilities and teaching hospitals, have not been quick to grab the design-build approach," says Bud Guest, senior vice president for St. Louis-based McCarthy Building Companies, Inc. "So major projects have been few and far between."

     Large or not, design-build is winning enthusiastic supporters. "I think design-build is the up-and-coming change as more and more owners become knowledgeable of its benefits," says John Carter, a longtime construction executive and now director of construction for Phoenix-based Banner Health System. "If I had my druthers, I would go with design-build first, then design-bid-build."

     Currently overseeing construction of a 60,000-sq-ft regional hospital in rural Susanville, Calif., by St. Louis-based HBE Corp., Carter gladly reports: "This is just great for me. I haven't had to sweat bullets on anything."

Long-term Care

Houston's M.D. Anderson Cancer Center is using design-build for the first phase of a campus development.

Despite plaudits, design-build's role in health care may still be limited largely because hospital owners tend to stick with tradition. "I just don't think that the health- care industry has reached the point where they're comfortable using design-build across the board," says Dan Johnson, senior vice president for Minneapolis-based M.A. Mortenson Co. Owners seem to feel more comfortable trying design-build on smaller, less complex projects like medical office buildings or ambulatory care centers. "The biggest hurdle that design-build has to get over in health care is the general feeling [among owners] that what they have is working fine," Johnson says.

     Misconception is another problem. "I think a lot of owners are confused about design-build, linking it with lower quality or higher costs," says Bill Daigneau, vice president for operations and facilities management at the University of Texas' M.D. Anderson Cancer Center in Houston. Some owners feel uncomfortable without a low bid. But Daigneau counters, "You get a very low bid at the front end [with conventional design-bid-build], but you're not getting a low bid on change orders."

     Another misconception is "that you can use design-build only for the plain-Jane" projects, but not for large, complex facilities, says Tim Hess, director of preconstruction services in the Houston office of Hensel Phelps Construction Co. Belying that point, the firm currently is teaming with Houston-based FKP Architects on the Anderson Center's $347-million, 746,000-sq-ft ambulatory clinical building. The building is part of a development that ultimately may include 2 million sq ft of space in four clinical buildings and two parking garages.

     Clients and consultants most often place schedule at the top of their list of reasons for using design-build. Hospitals "have a revenue stream that's waiting to happen and it can't start until that facility opens," says Doug Wignall, vice president and principal for health care with Omaha-based HDR Inc. Hess estimates that design-build can cut the usual 6 to 10-year lead time for major medical facilities by up to 50%.

     That thought led the University of Colorado Hospital to switch gears and choose design-build for it's new $110-million Anschutz Outpatient Pavilion, part of a $744-million development in Aurora at the site of the old Fitzsimmons Army Medical Center. The new facility includes primary and secondary ambulatory care, 180 exam rooms, outpatient surgery and recovery rooms, and diagnostic facilities. The hospital selected a team led by McCarthy that included Denver-based contractor Gerald H. Phipps Inc., HDR and Denver-based H+L Architecture. The project could have taken anywhere from 38 to 45 months to complete, but design-build allowed occupancy in just 24 months and final completion of the 476,000-sq-ft facility in March 2001, only 27 months after contract award, says Guest.

Acute Care

Designing and building each type of medical facility presents a unique challenge. "There's a tremendous difference between a medical office building and a tertiary or primary medical facility," says David A. Reece, vice president at Etkin Skanska Design-Build Inc., Farmington Hills, Mich.

     A hospital is "a very complex building type," with a bewildering variety of systems and spaces, says Jim Young, partner in charge for integrated delivery in the Columbus, Ohio office of NBBJ Inc. And the design itself has long-term implications. With nurses and other staff at a premium, "operational efficiency has to be built into the facility, because staffing is so hard to come by," notes HBE's Steve Cobb, regional vice president for business development at St. Louis-based HBE Corp.

Equipment purchases complicate project process. (Photo courtesy of HBE Corp.)

     The variety of functions and services within a hospital requires the design-build team to absorb extensive input from hospital staff. That interaction requires the design-builder to perform a delicate balancing act, incorporating recommendations and requests without compromising quality of care or busting the budget.

     The work is demanding. HBE's Cobb, who spent 25 years working as a health-care administrator and consultant, says that many health-care executives "really don't have a good comfort level for what they're planning. Their goals may not be as realistic as they should be."

     With 40 different user groups at the Anderson Center, three to four sessions per group are "what it takes to get where you're headed, and that's a lot of meetings," Hess notes.

     Design challenges also impact team leadership. Some contractors say that perhaps 60% of hospital projects tend to be contractor-led. Yet the complexity of hospital projects, and design's traditional preeminence with owners, has encouraged an unusual number of designer-led design-build projects.

     "Design still has a very strong focus in terms of patient care and how the facility functions," says Mortenson's Johnson. "Rather than have the contractor leading the effort, the owner is more interested in stronger design input," says Jim Pine, HDR's national director for health care. Wignall contends that "your typical builder, and even your atypical builder, doesn't have the ability to do the [design] complexity required" for a big medical center.

      In contractor-led design-build, "the owner doesn't get to pick his architect. The building is really the commodity," claims NBBJ's Young. As a result of these and other issues, "I think designer-led design-build is probably better positioned to have that comfort level of trust within the industry," says Betsy Downs, president of design-build practice for Chicago-based OWP/P Inc. As team leader, OWP/P holds the contract with the owner and assumes the risk for construction and design. "We have to be very careful about teaming with a contractor we know and we trust," says Downs. But the increased risk usually turns out to be more benefit than burden: "We actually like it because it puts us back in the master builder position," Downs says.

     Warp-speed scientific advances also add to the challenges of the design-build process. "The technology changes every day," says Anderson's Daigneau. A leader in both research and patient care, the institution offers what Daigneau calls the "bench to bedside" approach, giving its patients the benefits of its latest research. But rapidly changing technology compels designs that are both flexible and forward-looking. Complicating the task, Hess finds that "institutions want to delay programming decisions as long as they can so they can fit new facilities with state-of-the-art equipment." For example, "we find that our clients don't want to make their major equipment decisions until less than a year before completion," he says. NBBJ's Young says that owners "are continually making really significant decisions all the way to the end of the project," a practice that makes completing the project "really tough in the traditional design-build mode," Young says.

Alternative Therapies

At Anschutz, like many other facilities, the solution turned out to be a change-friendly, highly adaptable modular design, says Guest. And, the team of LCF/Etkin Skanska is going to great lengths to guarantee easy future expansion of William Beaumont Hospital's $70-million, six-story west wing in the Detroit suburb of Troy. The entire third floor is dedicated to mechanical systems, a strategy that will make for easier expansion of the 240,000-sq-ft facility. Waterproof floor slabs protect the noise and leak sensitive surgical suites that will be directly below, Reece says.

     The fast pace of many hospital projects raises both pressure and productivity issues. For the Anschutz project, "the front end was critical. We had to get a lot figured out fast because ordering structural steel depends on completion of the basic grid. We went from a blank sheet of paper to a steel mill order in a little over three months, and a schematic design for the entire 476,000-sq-ft facility in six months," says HDR's Wignall.

     Design-builders say owners also must step up to the plate to assure a project's success "If time is of the essence, the owner has to be prepared to make decisions quickly and stick with the decisions that are made," says Downs.

     Owners, designers and contractors all agree on the importance of having at least one seasoned construction pro on the staff. "My personal opinion is that you need more knowledgeable staff to do design-build than to do CM-at- risk," says Bruce Ringwald, general manager of construction for the Arizona Dept. of Adminstration. "If you have a design-build company doing work for your hospital, you should probably have an experienced construction professional on the staff," says Banner's John Carter, a construction industry veteran before he joined the health-care company.

Sun Health used hybrid design-build to have maximum design input on its Del. E. Webb Memorial Hospital in Arizona. (Photo courtesy of McCarthy Building Co Inc.)

     Two projects in Arizona, both of similar contract value, suggest the varieties of design-build in play in health care. This fall, the Arizona Dept. of Administration is overseeing completion of its first-ever design-build project–a $34.5-million mental health facility in Phoenix built by a team led by McCarthy that includes local architect Gould Evans Associates, and Los Angeles-based Cannon & Associates. Ringwald says that "we signed a contract for the full amount of the project before we started the design."

     Another Arizona owner wanting a strong say in design took a much different approach. After selecting McCarthy, Dallas-based HKS Inc. and Stein/Cox of Phoenix for an expansion and renovation project at its Del E. Webb Memorial Hospital in Sun City West, locally based Sun Health essentially told the team: "We'd like you to proceed but not take risks."

     Sun Health used what Richard M. Crowley Jr., McCarthy's project director, calls an unusual hybrid approach–to accept a guaranteed maximum price only after completion of design. Only then did the firm take subcontractor bids. This approach resulted in a $34.5-million price and "gave the owner maximum input in design," says Crowley. And because delaying the GMP reduced risk to the design-build team, the contingency could be reduced accordingly, says Crowley. "We were able to offer the owner a GMP with low risk to us," he says. "It's a new twist."


E-Mail This Story

Site Sponsors

McGraw-Hill Construction Brands

This site best viewed in Netscape Navigator 4 + or Internet Explorer 4 + at 800x600 screen resolution