Some hospital building projects are being put on hold amid inflationary pressures as potential final costs threaten to exceed original budget plans.
Whether such project delays reflect a growing trend of healthcare building delays remains to be seen, but persistent concerns over inflation, and perhaps recession, will likely continue into 2023, raising questions over whether a trickle could turn into more of a flood.
Here are three projects that have been delayed amid such concerns:
Mercy Health is putting a hospital project in Champion Township, Ohio, on hold, citing economic volatility, inflation and financial challenges as factors for the decision, CBS affiliate WKBN reported Dec. 12.
The Cincinnati-based health system announced plans for the 241-bed St. Joseph Hospital two years ago and said in May that it expected to complete the development in 2025.
"However, due to the current national economic volatility, inflationary pressure and financial challenges healthcare systems nationwide are experiencing, we've made the difficult decision to temporarily pause the project at this time," Mercy Health said in a statement, according to WKBN.
Replacing Virginia's Central State Hospital in Petersburg could cost up to $400 million, approximately $50 million higher than current estimates, the Richmond Times-Dispatch reported Nov. 27.
State officials said in October the project would be delayed, with completion expected by 2026. The psychiatric hospital was the first founded exclusively for Black patients when it opened in 1870.
Now, on top of the delay, the budget is estimated to have increased from about $350 million to $400 million, State Sen. Creigh Deeds told the newspaper. The new budget estimate was not confirmed by local authorities, but a spokesperson acknowledged the final cost would likely come in higher than the original $315 million estimate due to inflationary pressures, according to the Times-Dispatch.
Concerns over the ability of Oroville (Calif.) Hospital to pay for a delayed hospital tower have been raised by the project's general contractor.
In February 2019, the hospital received $200 million in bonds to cover the cost of the project it said would cost $178 million. The five-story tower was slated for completion in April 2022; that date has now been pushed back to November 2023.
General contractor Modern-Sundt has the right to request financial evidence that the hospital can pay for the construction, but its two most recent requests for evidence have gone unanswered by the hospital, according to the Chico Enterprise-Record.