Wisconsin's health care construction boom is over.
Two-thirds of the respondents to a recent Wisconsin HospitalAssociation survey reported cutting back on planned construction inthe coming year, according to WHA Vice President George Quinn.
That's a sharp turnaround for an industry that has been buildingat a breakneck pace for the past five years. Several large cities --including Milwaukee, Madison, Green Bay, Wausau, Racine, Kenosha,Janesville, La Crosse, Eau Claire, Appleton and Waukesha -- built amajor hospital project during that time.
Health care was among the top performers in the constructionindustry last year. Nationally, health care construction grew 7.1percent in 2008 compared to the previous year, according to the U.S.Census Bureau. General construction dropped 5.3 percent over thesame period.
Builders and architects say they hope President Barack Obama'sstimulus plan revives the industry, but a tight credit market andhits to corporate profits do not create a good environment.
'Right now I see a lot of caution in the market,' said MichaelScherbel, partner in the health care division at Plunkett RaysichArchitects, Milwaukee. 'A lot of projects are getting hurt by a lackof financial backing. Nobody can get loans.'
Obama's stimulus plan could create jobs building data centers athospitals across the country, Scherbel said. The centers would bepart of the new administration's plan to create universal electronicmedical records by 2014.
Some money also may be made available to build critical-carecenters in rural areas, he said. Until then, firms are waiting forthe financial markets to rebound to free up money for new projects.
'We still see demand,' Scherbel said. 'The market possibilitiesare strong.'
Hospital construction during the past five years was fueled by aneed to upgrade hospitals built in the 1950s and 1960s, Quinn said.Congress passed the Hospital Survey and Construction Act, or Hill-Burton Act, in 1946 to improve the country's hospitals. Federalgrants led to a wave of hospital construction at that time. And,some 50 years later, those facilities are due for upgrades.
But that work appears to be on hold until the economy recovers,Quinn said. Hospitals' endowments and investment portfolios took ahit in the recession.
One project moving forward is a $60 million renovation at St.Catherine's Medical Center Campus in Pleasant Prairie. Kenosha'sRiley Construction Co. Inc., the project's general contractor, hastwo years of work left on the two-story addition and new emergency-response department.
But other planned projects have been delayed or put on hold, saidMatt Prince, Riley's vice president of operations.
'We've probably seen fewer opportunities,' he said, 'but ithasn't dried up completely.'
Prince said this year looks OK for Riley, but anything beyondthat is unsure. The company specializes in health care and publicbuildings. Federal stimulus money may help with those types ofconstruction projects, Prince said.
'Our backlog is adequate,' he said. 'It isn't exactly where wewant it to be. We may have to pursue other markets as necessary. Ourbigger concern now is 2010, and we're not going to see what that'slike until the middle of the year.'
The state's research community expects to benefit from the Obamaadministration taking office, said Jim Leonhart, executive directorof the Wisconsin Biotechnology and Medical Device Association.
Federal officials are expected to ease restrictions on stem cellresearch and restore National Institutes of Health grants to supportscientific research. Both moves should help start-up companies, andthat growth eventually could lead to new construction, particularlyin the Madison area, Leonhart said.
A wave of stem cell research at the University of Wisconsin-Madison in the 1990s led to major building projects on the campus,including the $100 million Wisconsin Institutes for Discovery and anexpansion of the University Research Park. It also spawned severalnew companies, including TomoTherapy Inc., and attracted Roche, amajor drug manufacturer, to the Madison area.
The market has dramatically changed from just a few years agowhen state Senate Majority Leader Russ Decker, D-Schofield, backed abill to institute a moratorium on hospital construction to preventhospitals from driving up health care costs. An aide in Decker'soffice said he remains interested in the idea, but has no specificproposal.
Jim Boullion, director of government affairs for the AssociatedGeneral Contractors of Wisconsin, said a hospital moratorium isunnecessary in the current economy.
'The market has naturally taken hospital construction down,' hesaid. 'Companies have backed off.'
