What it Means for Construction Firms
Moving Forward

Over the past several years, multiple acute care institutions and healthcare systems have integrated or been acquired throughout the tri-state area.

In New York, we have seen major systems such as Mount Sinai, Montefiore, North Shore-LIJ (now Northwell), and Westchester Medical Center acquire and expand into the Hudson Valley, Long Island and Staten Island. In New Jersey, we’ve seen Barnabas Health and Robert Wood Johnson merge to form RWJBarnabas, Hackensack University Medical Center and Meridian Health System merge to form HackensackMeridian and Atlantic Health System continue to grow with the acquisitions of Chilton Medical Center and Hackettstown Hospital.

Philadelphia and South Jersey are no strangers to mergers and acquisitions as Jefferson Health has acquired both Aria Health and Kennedy Health System. Several other South Jersey systems are in talks or have signed letters of intent to merge operations.

Hospital consolidation presents both challenges and opportunities for construction firms. Clearly, there are less “independent” hospitals and medical centers in certain geographic areas. Also, the decision making process on the selection of a CM/GC may have shifted to the acquiring system or entity, possibly leaving long standing relationships and contacts without a clear voice.

However, with financially stronger institutions acquiring or merging with weaker institutions, healthcare facilities are being modified to improve both the delivery of services and the financial margins of each institution.

Profitable services such as Emergency Departments and Radiology Departments, with MRI’s and CT’s, are being expanded rapidly. Cardiac Catheterization Labs, Endoscopy Suites and Dialysis Centers that generate revenue for the institution are being constructed or enlarged to accommodate more patients. Off-site Ambulatory Care Centers (ACC) and Medical Office Buildings (MOB) are also being developed in underserved areas of the community or region to deliver needed healthcare and also generate revenue with patients by forging new relationships with their parent organization.

All of this expansion and development presents an opportunity for construction firms to develop new relationships throughout the marketplace, and reinforce healthy relationships with Architects, Engineers and Owner’s Representatives/Project Management firms that healthcare systems have utilized to help ensure that critical projects are moving forward.

Senior Manager – Business Development
Bob Gerard