Another compelling argument for capital investments in buildings is the need to be ready for a natural disaster.
Depending on geographic location, hospitals may have to spend money to be sure their buildings can endure certain natural events. For example, California hospitals have until 2030 to meet the state's seismic safety standards, established in 1994 by a state law intended to make sure hospitals are earthquake-safe.
"Hospitals need to be able to withstand a major earthquake and stay intact," says Alison Fleury, senior vice president of business development at Sharp HealthCare, an integrated health system based in San Diego.
California hospitals that do not meet certain compliance standards by 2030 will face serious consequences, Fleury says. "If a hospital doesn't meet that level of requirement, it has to close down. It can't be used for inpatient care."
Severe weather also affects hospital capital needs.
Terry Bader, vice president of design and construction at Mercy, an integrated health system that spans six states, mostly in the Midwest, knows about natural disasters. Mercy's St. John's Regional Medical Center—now known as Mercy Hospital Joplin—was destroyed by a tornado that ripped through Joplin, MO, on May 22, 2011.
I remember clearly the images of the demolished hospital on the nightly news and the harrowing stories from those who lived through the experience. And, of course, not everyone survived—six people lost their lives inside the medical center that day.
I asked Bader about the cost to replace the hospital and the safety lessons learned. All told, he estimates the new construction represents a capital investment "somewhere in the area of $300 million," with $7 million to $8 million extra being spent on materials intended to fortify the hospital in case of another tornado.
The new safety precautions include shatterproof, laminate windows and frames that can hold them in place in high winds, and wide, windowless corridors on the bottom levels of the hospital where people can ride out the worst of any storm