Recently, I had written a piece on the state of the Houston construction industry. And if you recall from that piece, aside from a few minor highlights, Houston is not doing too great. However, one of those aforementioned minor highlights was Houston’s healthy medical construction industry. Actually, it’s far better than healthy, it’s booming.
And it isn’t just Houston that’s doing fantastic, either. The entire state of Texas has multiple medical construction projects in the pipeline. And according to a recent study from Revista—a major medical real estate data firm—the Lone Star State is second in the country for most medical construction projects in the works, with $15.8 billion invested. Several major cities around Texas have quite a few projects coming up—San Antonio has 9 and Austin has 8— but Houston has by far the most. Between hospitals and medical office buildings, Houston has a whopping 31 projects slated for construction, totaling $3.8 billion.
So why is Houston’s medical construction industry so healthy? Well, according to a Dallas News report, it very well could be that these multiple healthcare facilities are simply competing with each other.
That competition comes in two separate forms. Firstly, and most obviously, medical institutions are competing with one another in the traditional sense. Houston’s population is growing, and as the population grows, the number of potential patients who need medical attention grows as well. These medical facilities are then constructed in order to compete for the area’s patients, much like any other large scale business would compete. More specifically, developers and investors are targeting the area’s high-income residents, as the population continues to increase.
Secondly, a majority of the competition comes in the form of renovation. You would probably expect every hospital construction project to be nothing more than a new building, but surprisingly more often than not, a large portion of Houston’s medical construction is due to renovations. Many of the hospitals in Houston—and any city really— can become outdated quickly, considering how fast medical technology advances. And any new hospital built today will, obviously, look modern and sleek and contain the latest technology as opposed to a hospital built 30 years ago. In order to stay relevant, older hospitals are pumping millions of dollars into renovations for more contemporary designs as well as cutting edge technology. In doing this, patients feel safe and comfortable knowing that they are being treated with the latest in healthcare tech.
This type of competition creates something of a perpetual cycle. Some even theorize, potentially jokingly, that Houston’s medical construction will always be prevalent. New hospitals pop up, older ones get facelifts in order to compete and the cycle continues.
And don’t get me wrong, clearly medical construction—and construction of any kind, really—is a good thing. However, some fear that we are reaching an age of “over-bedding,” as a Memorial Hermann executive describes it. Basically, the population growth that I mentioned earlier is adversely affecting Houston’s hospitals. According to the Houston Chronicle article that the executive was quoted in, healthcare reforms are focusing more on preventative healthcare, as opposed to intensive care. And that leaves a lot of vacant hospital beds, which worries industry experts considering Houston’s current construction issues came about due to excess construction.
Now, whether or not this necessarily spells doom for the healthcare industry, I do not know; I do know, however, that Houston’s medical construction isn’t going anywhere for the time-being. Should there be any developments in the story, I’ll be sure to keep you informed.